Thirty-eight trillion dollars per year! Climate change – especially global warming – slows economic growth around the world. By mid-century, year-on-year economic impacts (compared to a non-warming world) grow to that headline-grabbing number, according to a news story in The Durango Herald on May 12.
Annual impacts now are smaller, but no less real. A trillion here, a trillion there – real money.
But the global and the American economies are still growing. Why should we care?
Well, the cost of my homeowner’s insurance went up by 27% this year – and I live in town, not in the forest, where owners pay much more, if they can buy insurance, according to another story in the Herald on Jan. 15.) Global warming and drought increasingly afflict the Southwest with the risk of disastrous wildfires, driving up insurance rates and adding to the crisis in housing costs.
If insurance companies withdraw, states step in to create their own insurance cost-sharing pools. If premiums rise too much, people cannot pay, but then they look to FEMA to compensate for catastrophic losses, ultimately sharing the cost among all federal taxpayers.
Climate change also increases the cost of food. Recently, I paid $2.50 for a small bag of potato chips that cost $1.50 last year! Climate change alone does not account for that sharp rise, but it does contribute to the complex dynamic of supply and demand. Indeed, the economic study cited in the May 2024 Herald article points to lost agricultural productivity as an important way that global warming slows economic growth.
As the global population continues to increase, the world needs more food, but climate change makes growing harder for farmers. The same economists, in another study, explicitly tie food inflation to rising temperatures. They project that by 2035, rising temperatures alone (not including other climate change impacts such as extreme weather events) will contribute about 1% per year to food cost inflation.
But there’s more. Climate change also reduces labor productivity, the value of goods and services produced per hour of human labor. Improving productivity increases economic growth; decreasing productivity reduces it. In hot conditions, workers cannot do as much work. So, beyond their direct impact on crops, higher temperatures increase labor costs, adding to inflation.
Investments to reduce fossil fuel emissions and make our infrastructure more resilient represent the proverbial “ounce of prevention,” greatly reducing future losses. According to the economic study cited in the May 2023 Herald story, even in a low-emissions scenario, the cost of achieving the reduced emissions is six times less than estimated economic losses.
Climate-related investments account for roughly half of the more than $2 trillion in the Bipartisan Infrastructure Bill and the Inflation Reduction Act signed by President Joe Biden. Much of the funding goes to disadvantaged communities that suffer most severely, including rural communities like ours.
Colorado is receiving billions of dollars and La Plata County many tens of millions, in addition to tax credits directly to individuals, e.g., for electric vehicles. Unfortunately, adding such large sums to the economy tends to increase demand and that too contributes to inflation.
Short-term economic costs and the associated political challenges almost certainly account for the glacial progress on international efforts to slow climate change. Inflation hurts and people vote with their pocketbooks.
I think that pre-election political polls this year reflect that challenge. Biden has done more than any other American president to address the clear and present danger posed by climate change, but many voters only perceive the altogether too real short-term costs.
Many of us remember the 1970s “Mr. Goodwrench” TV commercials. The same idea applies today to climate policy and the 2024 election.
Will you vote to pay now or pay much more later?
Dick White is a former two-term City Council member and served as mayor of Durango.
