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The Economic Case for Tackling Climate Change

The Economic Case for Tackling Climate Change

Extinction Rebellion’s controversial decision to blockade three printing presses that print a series of Murdoch-owned titles last week received a great deal of criticism from several senior figures in public life, with Boris Johnson describing it as “unacceptable” to try to limit the public’s access to news, although with newspaper circulation down by 55% in the past decade it is debatable to argue whether blockading the presses does limit access to news – and whether it is an effective protest. The recent commentariat panic about the blockade has meant that discussion of the protests is almost entirely focused on press freedom, and not the environmental issues that XR were hoping to highlight with their actions.

The Conservative party did include a pledge to reach net-zero by 2050 in their 2019 manifesto, but climate action did not feature among the party’s top priorities (Health, education, the economy and crime) – illustrating that the Conservative party are only interested in paying lip-service to climate action and are not willing to take the steps necessary to prevent further environmental damage. Successive governments have claimed to be tackling climate change whilst simultaneously spending billions of pounds on roads and attempting to build a third runway at Heathrow. Boris Johnson has previously received donations totalling £30,000 from Michael Hintze and Terence Mordaunt, who also fund the Global Warming Policy Foundation – a climate science sceptic thinktank – and so it is reasonable to question whether Boris Johnson (and his government) believes in and is committed to tackling climate change.

The science on climate change is clear, and so to many it is baffling that right-wing politicians around the world continue to be sceptical and insist that there is no need for environmental policies. Donald Trump’s rationale for pulling out of the Paris Climate Accords was similarly baffling, as his claim that the accords were an attempt to make American industry uncompetitive with China would be far more convincing if China was not a signatory to the accords. Right-wing governments often believe that the costs of abating pollution are too high, but the hidden opportunity cost of choosing to not do anything about climate change are far higher. Extreme weather caused by changes in the earth’s climate can have serious consequences for agricultural yields, increased numbers and intensity of tropical storms will likely cause more damage every year – particularly in more vulnerable nations that are frequently hit by tropical storms – and rising sea levels have already forced over 1 million people to leave their homes; more climate refugees are inevitable in the coming years. These consequences of climate change will affect markets and supply chains throughout the world and would be far more harmful to growth than making sure that companies have to pay to account for the environmental damage they cause.

Research by economists often shows that future benefits outweigh present costs when environmental projects and investments are being considered – for example, The UK National audit office estimates that for every £1 spent on flood defences, £9 of property damages and wider impacts can be avoided. Despite the evidence suggesting that climate change will have a catastrophic impact on our lives and our economic system (and the fact that measures that can be taken can be seen to be cost-effective in the long run), policymakers continue to drag their feet. Environmental benefits and costs can be difficult to assign monetary values to, and so are often ignored by businesses and governments when considering investments, meaning that sustainable projects are rejected, and unsustainable ones are greenlit. The unwillingness of the government to ensure that businesses take account of the environmental damage their production processes cause is further cemented by the strong lobby sector of businesses that want to avoid the costs associated with environmental policies, such as carbon taxes and emissions permits. Whilst the government and industries remain inflexible on the issue of climate change the UK will perhaps be able to suppress short term hits to output, but this approach also risks the long-term sustainability of the UK economy.

At a time of national crisis for the UK it can be easy to forget that there are multiple ongoing crises that the UK government must contend with, and climate change is one of the most pressing. With a huge recession looming over the UK economy, Chancellor Rishi Sunak should use the fact that the Conservative party’s backbenches are willing to stomach countercyclical spending and invest significantly into green technologies and infrastructure. The Global Commission on the Economy and Climate has suggested that transitioning to a “low carbon, sustainable growth path” could create an economic windfall of $26trn and provide 30 million extra jobs by 2030 when compared with the current trajectory, indicating that by taking action now the government could use the diversified benefits of environmental policy to tackle two of the most pressing issues facing the country over the next decade – climate change and economic contraction.

As average temperatures around the world slowly increase, it is becoming increasingly clear that it is not only sensible to fight climate change from a moral and ecological perspective, it also makes sense to fight climate change from an economic perspective. If Joe Biden is able to win the US Presidential Election in November and implement the Democratic Party’s “Green New Deal” in 2021 and beyond, this could demonstrate to governments throughout the world that in order to keep their economies sustainable they must also sustainably manage their environment.

Jude Stafford

7 Sept 2020

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