Climate change has certainly received immense exposure among the most eminent issues of the 21st century so far.
Dr. Bjørn Lomborg
The United Nations (UN) Secretary-General, Ban Ki-moon argues that it is “an existential challenge for the whole human race.”
On the other hand, when over seven million people were asked by the UN what they saw as most important, climate change came at the bottom of the list of 17 issues: way below healthcare, education, corruption, nutrition and water — and even below phone and internet access.
This is startling, particularly given the consensus that climate change is real and happening. Are people right to be sceptical about current policies?
The Copenhagen Consensus, my think tank, has asked teams of expert economists to analyse all options facing humanity — from health and education to violence, water and global warming — to estimate where we can do the most good for our money.
This matters, because the UN is about to set its next set of targets for the world from 2015-2030.
Like the Millennium Development Goals, set 15 years ago, these targets will determine where trillions of dollars will be spent. In order to make progress, we cannot afford to pour money into projects which pay back less than what we put in.
Likewise, we cannot afford not to focus on projects that will do immense amounts of good.
The author of the main paper, economist Isabel Galiana, comes to a conclusion which is sure to be controversial: that present policies designed to reduce emissions of greenhouse gases are failing and cannot be effective until better technology is available.
Despite the Kyoto Protocol and many national initiatives, the fact is that emissions have increased by almost half since 1990 and will continue to increase for many decades to come.
In stark contrast, the UN and many governments aim to keep the average temperature rise below 2°C above pre-industrial times. However, the problem is: there is no realistic chance of keeping to this limit with current trends in fossil fuel use.
To do this, emissions would have to peak and then be drastically cut with some technology capturing Carbon dioxide, liquefying it and injecting it deep underground.
But this technology needed on the vast scale does not exist yet. Moreover, solar and wind, though very popular, will even in 2035 contribute just a tiny fraction of global energy needs.
The upshot is that pursuing this 2°C target is very costly and not guaranteed to be successful. Estimating all the economic, social and environmental costs and benefits are difficult, but one thing is clear: the programme would cost much more than the benefits it would bring.
In the meantime, that money could have been used to improve people’s welfare in much more cost-effective programmes.
Galiana suggests that investing 0,5% of global GDP, which would be around US$70 million for Zimbabwe, into development of better energy technology would be a much better use of money.
This could be funded with a slowly rising carbon tax (giving businesses an incentive to cut emissions but not telling them how to do it) and could give a payback of US$11 for every dollar spent.
Galiana also suggests the world should spend 0,05% of GDP for adaptation, essentially helping many nations to cope better with specific climate impacts. Every dollar spent will likely do more than two dollars of social good.
The cost of action on climate change rises rapidly as the targets get tougher, points out Robert Mendelsohn, another economist who has contributed his perspective. Keeping average temperature rises below 5°C might cost about US$10 trillion, but aiming for a 2°C target would cost 10 times as much.
Much better, then, to target a maximum of, say, 3°C rise, which will cost about US$40 trillion but avoid most damages.
If we insist on 2°C, we will pay an extra US$60 000 billion, but only prevent a stream of US$100 billion damages that begins in 70-80 years. Moreover, all of these estimates assume cost-effective climate policies, whereas in real life they have often become many times more expensive.
Climate change is a big issue and cannot be ignored. But we need to take the emotion away and look at the facts; otherwise it will be the world’s poorest that will suffer. Money which is not spent on costly, ineffective Carbon dioxide cuts can be used to fund programmes which are guaranteed to improve their lives.
Dr Bjørn Lomborg, an adjunct professor at the Copenhagen Business School, directs the Copenhagen Consensus Center, ranking the smartest solutions to the world’s biggest problems by cost-benefit.
He is the author of The Skeptical Environmentalist and Cool It. His new book is How To Spend $75 Billion to Make the World a Better Place.