It’s no secret that the current administration is not a fan of efforts to reduce climate change. Trump already rolled back policies to reduce carbon dioxide emissions. However, studies have shown that each ton of carbon dioxide released into the atmosphere costs about $40 in damages in today’s dollars. The actions the federal government takes to reduce climate change depends entirely on how they value the damage of carbon dioxide. President Bush valued damages at zero while President Obama first valued it at $25 then up to $40. President Trump scaled back these measurements to $5 costs.
It’s most important when looking at climate change to examine cutting carbon emissions with a cost-benefit analysis. The benefits of cutting carbon emissions have already been seen in Britain. Britain has been leading the world in reduction of carbon emissions and their companies have already seen a return of 83 billions pounds. U.S. companies are experiencing an increase in socially- minded investors due to companies’ shareholders increasing their focus on climate risk. Now with the roll back of carbon emissions, investors could decide they don’t care as much about focus on climate risk.
The costs of climate change are obviously rising temperatures and increases of natural disasters, but what are the economic costs? The average global income is expected to be 23% less by the end of the century than it would have been without climate change. The rising temperatures will have an impact on labor supply, labor productivity, and, as to be expected, crop yields all drop off drastically between 20 °C and 30 °C. Even in the U.S. at temperatures of over 30 °C would cost each resident $20 in unearned income due to these impacts on productivity and crop yields.
Overall, climate change has serious impacts on the economy and the way we act now will greatly influence the future costs to the global economy. If other countries act now, we might experience a disadvantage while trying to catch up in the future. Is cutting costs now worth it to have increased costs in the future? How much is ideology worth compromising global income in years to come?