The High Cost of Climate Change

By Sarah Titcomb

(Fighting a wildfire near Chelan, WA. Wildfires and droughts are expected to become more common due to rising temperatures from climate change. Photo Source: Ben Brooks from Fife, WA)

We often focus on the costs associated with conservation or environmental work, and ignore the economic benefits and services that natural spaces provide. ROSS partner Earth Economics is making great strides in reversing this trend, and providing scientifically backed economic estimates for the value of open spaces that decision makers cannot ignore. Valuing the benefits of open spaces and the costs associated with their absence is a growing phenomenon around the world as well. A recent study looked at the potential costs the world could bear due to climate change.

Economic models utilizied by researchers suggest that climate change could cost global markets $2.5 trillion! Further, if the most dire climate scenarios come to pass, the costs could actually rise to $24 trillion - a dollar amount larger than the US National Debt, and approximately 17 percent of the world's assets (The Guardian and Forbes).

"Even when the costs of cutting emissions are included" in the economic equation, taking drastic actions to limit the impacts of climate change to below a 2 degrees Celsius (3.6 degrees Fahrenheit) increase could vastly reduce the costs associated with climate change by $315 billion (The Guardian). Although, this also implies that even if the world manages to limit average temperature increases to 2 degrees Celsius (3.6 degrees Fahrenheit), the cascading negative impacts from this increase will still cost us trillions of dollars.

It is also important to remember that these are conservative estimates. They are only based on the expected losses from direct damage to assets after natural disasters, and the decreasing incomes of those impacted by the events.

It could be a lot worse. The loss of financial capital can be a lot higher and faster than the GDP losses [used to model the costs of climate change in the study]. Just look at the value of coal giant Peabody Energy. It was worth billions just a few years ago and now it is worth nothing. - Mark Campanale, Carbon Tracker Initiative

There will also always be winners and losers to every decision. To allow global temperatures a chance of staying below 2 degrees Celsius (3.6 degrees Fahrenheit), most of the fossil fuel reserves of private businesses will need to stay within the ground, potentially costing businesses up to $5 trillion (The Guardian). There are always trade-offs, and this study along with the work of other organizations focused on promoting the value of natural capital, will help government officials, businesses, and citizens become fully informed about the effects of continuing business as usual, versus direct and immediate action.