The cost of doing nothing

Apathy has never looked so unappealing: According to a new study published by the Natural Resources Defense Council (NRDC), global warming is likely to cost the US trillions of dollars a year if left unchecked.

That would be big news at any time - but it’s especially pertinent now, as the Senate limbers up for a debate over legislation designed to reduce America’s greenhouse gas emissions. Inevitably, much of the congressional discussion will focus on the legislation’s expected price tag - and on climate skeptics’ continuing claims that it’s simply too expensive to put a halt to global warming.

“Any way you look at it, Lieberman-Warner will result in major disruptions of our economy, soaring energy prices, and millions of lost jobs," Keith McCoy, vice president of the National Association of Manufacturers, said earlier this month. His group estimates that using a cap-and-trade system to redress climate change would cost the US $669 billion annually, leading to the loss of 4 million jobs.

McCoy’s estimates are likely somewhat inflated; industry studies tend to neglect the potential for green-collar job creation, for example, and to underestimate companies’ ability to adapt to and profit under new regulatory systems. Still, it’s undeniable that the new legislation would lead to price increases in some areas: The whole point of cap-and-trade, after all, is to create financial penalties for companies that produce emissions - and, by extension, for the consumers who use their products.

What the new study makes clear, however, is that simply doing nothing is at best a false economy. The NRDC study predicts that unless we act now, by the end of the century global warming will be causing $422 billion in annual hurricane damage; $360 billion in annual real estate losses, mostly on the Gulf coast and in Florida; a $141 billion increase in annual energy costs; and nearly a trillion dollars a year in extra water costs, mostly in the parched American West.

That’s the equivalent of an annual loss of 1.8 percent of GDP. And that’s only considering the direct consequences of global warming; when researchers factored in other economic and non-economic losses ranging from health impacts to wildlife losses, they calculated that the total annual cost of inaction could be as high as 3.6 percent of GDP.

In today’s dollars, that adds up to a massive $3.8 trillion in climate-related losses each and every year. In that light, comprehensive climate legislation begins to look like a pretty sound investment.

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