“The economic effects of climate change are dwarfed by growth,” writes John H. Cochrane on his blog, “The Grumpy Economist.”
He proceeds to point out:
“Take even worst-case estimates that climate change will lower GDP by 5-10% in the year 2100. Compared to growth, that’s couch change. At our current tragically low 2% per year, without even compounding (or in logs), GDP in 2100 will be 160% greater than now. Climate change will make 2100 be as terrible as… 2095 would otherwise be. If we could boost growth to 3% per year, GDP in 2100 will be 240% greater than now, an extra 80 percentage points. 8% in 80 years is one tenth of a percent per year growth. That’s tiny.”
But what about “equity”?
“It is often said that climate change will hit different countries differentially, and poor countries more, so it’s an ‘equity’ issue as much as a rich-country GDP issue. Yet just since 1990, China’s GDP Per Capita has grown 1,100%, from $729 to $8405 (World bank). As the world got hotter. 1,100% is a lot more than 10%. We’ll look at poor country GDP climate effects, but from what I’ve seen so far, reducing carbon doesn’t get 1,100% gains.”
***
“The share of the world population in extreme poverty is plummeting. No plausible estimate of climate damage comes close to this kind of change. And this change comes in part from increasing diffusion of fossil fuels. People who used to hoe by hand now use tractors.”
There’s much more, but in sum:
“There must be some behavioral name for the bias that focuses on a tiny insignificant little cause and effect, leaving much more important questions languishing. Whatever it is, that’s where we are. “
Image is from John H. Cochrane’s blog, “The Grumpy Economist.”