What climate spending really costs the world

ACROSS the world, public finances are stretched dangerously thin. Per person growth continues dropping while costs are climbing for pensions, education, healthcare, and defence. These urgent priorities could easily require an additional 3 to 6 per cent of GDP. Yet green campaigners are loudly calling for governments to spend up to 25 per cent of our GDP choking growth in the name of climate change.

If climate Armageddon were imminent, they would have a point. The truth is far more prosaic. Two major scientific estimates of the total global cost of climate change have been published recently. These are not individual studies which can vary (with the costliest studies getting copious press coverage). Instead, they are meta-studies based on the entirety of the peer-reviewed literature. One is authored by one of the most cited climate economists, Richard Tol; the other is by the only climate economist to win the Nobel prize, William Nordhaus.

The studies suggest that a 3 degree Celsius temperature increase by the end of the century – slightly pessimistic based on current trends – will have a global cost equivalent to between 1.9 and 3.1 per cent of global GDP. To put this into context, the UN estimates that by the end of the century, the average person will be 450 per cent as rich as he or she is today. Because of climate change, it will feel like “only” 435 to 440 per cent as rich as today.