Global Warming Will Cost Us More if We Don't Do Enough

Today I had the unexpected opportunity to go to the taping of The Daily Show With Jon Stewart.

Jon's guest, Lawrence Lindsey, was the Bush administration's Director of the National Economic Council from 2001 to 2002.  His editorial in today's edition of The Wall Street Journal is titled How About a Payroll Tax Stimulus?. His is new book is What A President Should Know: An Insider's View on How To Succeed in the Oval Office.  So  I won't be spoiling your evening's viewing by revealing that he and Jon discussed the nation's economic woes, and what the federal government ought to do to fix things.

It got me to considering the pile of money in the Obama administration's economic stimulus plan will channel to weatherization programs, improving mass transit, and other projects that will create green jobs.  Assuming they help curb our energy use, they'll contribute to reducing our nation's contributions to the overabundance of heat-trapping carbon dioxide in the atmosphere.

But so far there's no sign at all that the Obama administration has in its sights a more fundamental fiscal transformation: incorporating the economic harms of global warming into how we calculate the costs of curbing global warming.

It's more than possible to quantify these harms in dollar terms:

• Global warming will affect nearly every aspect of Washington's economy, according to a 2007 study. Hotter temperatures lead to twice as much wildfire damage and double the state's costs to $75 million by 2020. It is likely to worsen health problems such as asthma and the spread of West Nile virus, where were already costing the state $400 million in 2007. Dairy revenues in the Yakima basin could decline by $6 million by the 2040s as the heat affects dairy cows.
• As for Califonia, the losses from the impacts of global warming -- increased wildfires, risks to coastal lands, and more --  will range from $300 million to $3.9 billion a year, according to a similar study released last year.
• A study from Tufts last year calcuated the costs to the nation of a "business as usual scenario," with greenhouse gas emissions unchanged. By 2100, the US would lose around 1.8 percent of our current gross domestic product from increased annual costs caused by climate change, including $360 billion in coastal real estate losses; $422 billion in hurricane damage; $141 billion in increased energy costs; and $950 billion in water costs.
• 2006's Stern Review on the costs of climate change estimated that if the world's nations do not invest 1 percent of annual global GDP in curbing global warming, the harms caused by global warming will lower global GDP by 20 percent.
• Although the report was criticized as much as lauded when it came out, at least one subsequent study -- Australia's 2008 Garnaut Climate Change Review -- suggests that Stern's figures may actually have underestimated the costs of climate change.

Judging from the quality and experience of the people he has picked for his cabinet, such as Energy Secretary Steven Chu and Education Secretary Arne Duncan,  President Obama truly intends to restore the fundamentals of a healthy and diverse economy, such as reforming the nation's education systems, and restoring federal funding for scientific research.

But when it comes to fiscal policy, there's no evidence so far that we'll see the reform that would put the undeniably high costs we'll be paying to create a smart grid, expand clean energy generation, and capping carbon: adding how much more inaction will cost us to the balance sheet.