Risky Business: Documenting the economic risks associated with climate change
The new Risky Business report was released today. Worth a read. Here a paragraph motivating the report’s conclusions:
Climate Change: Nature’s Interest-Only Loan
Our research focuses on climate impacts from today out to the year 2100, which may seem far off to many investors and policymakers. But climate impacts are unusual in that future risks are directly tied to present decisions. Carbon dioxide and other greenhouse gases can stay in the atmosphere for hundreds or even thousands of years. Higher concentrations of these gases create a “greenhouse effect” and lead to higher temperatures, higher sea levels, and shifts in global weather patterns. The effects are cumulative: By not acting to lower greenhouse gas emissions today, decision-makers put in place processes that increase overall risks tomorrow, and each year those decision-makers fail to act serves to broaden and deepen those risks. In some ways, climate change is like an interest-only loan we are putting on the backs of future generations: They will be stuck paying off the cumulative interest on the greenhouse gas emissions we’re putting into the atmosphere now, with no possibility of actually paying down that “emissions principal.”
Our key findings underscore the reality that if we stay on our current emissions path, our climate risks will multiply and accumulate as the decades tick by.
By putting the risks in financial terms this report makes clear what’s at stake. "Staying the course" has real costs and risks, it’s not just the alternative future that costs something. And all credible analyses show that the incremental costs of making the changes we need are modest (at most 1-2% of GDP, but very likely much less than that, for reasons that I can explain to anyone who’s interested in the details).
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