On a recent post, some readers recoiled at the idea of putting a monetary value on human life. Yet that happens all the time. Courts come up with damages for injuries and wrongful deaths. Younger people with high earnings are more “valuable” than other people. And remember the Pinto? Companies similarly put a value on how much it is worth to them to spend on safety to prevent deaths and dismemberment.
As this article indicates, this sort of thinking winds up playing a role any time companies or governments look at making financial outlays. And this situation is made worse by the fact that due to reasons of cognitive bias or bad incentives, people and institutions have a predisposition not to do difficult things now. People engage in procrastination and hyperbolic discounting. Politicians find “kick the can down the road” strategies to be the best approach most of the time.
Conventional financial analysis is particularly hostile to long-term investments; the fact that America is neglecting the education of its young is no accident. Even in a low-interest rate environment, financial models tend to go out to at most ten years, and then punt on a residual value. Andrew Haldane of the Bank of England demonstrated what other studies have confirmed: investors also tend to assign an overly high discount rate, which discourages funding projects with long-term payoffs like infrastructure.
The problem is even worse when looking at 50 to 100 year time frames. In 2006, British economist Nicholas Stern argued in a report requisitioned by the UK for urgent action to combat climate change. But to make the math work, he had to assume a discount rate of 0.5%, which was so low, particularly in light of prevailing interest rates, that many took the view that his analysis showed that it didn’t pay to invest then to reduce greenhouse gasses.
The point is that the time value we assign to money, and the way that has become fundamental to assessing investments, has been and continues to be a serious impediment to taking action to fight climate change. And no, I don’t have any good answers. This approach is hard wired into a lot of decision-making.
By Eric Holthaus, a meteorologist and columnist for Grist, covering climate science, policy, and solutions. He has previously written for the Wall Street Journal, Slate, and a variety of other publications. Originally published at Grist
If you’ve heard anything about last week’s huge White House climate report, it might be that climate change could dent the economy up to 10 percent by 2100 — more than twice the impact of the Great Recession.
However, that number is a strange one to highlight. Yes, climate change hurts the economy — the hurricanes of the past two years alone have caused nearly half a trillion dollars of damages — but projecting that forward 80 years into the future is awash with unnecessary uncertainty. It’s a number gleaned from a graph buried deep in the assessment. The real takeaway is that climate change is already hurting people, today.
And as the years roll by, those impacts will get exponentially worse. In an era where the U.N.’s climate body says we only have 12 years left to complete the process of transitioning to a society that’s rapidly cutting carbon emissions, all the attention on far-off economic risks drastically understates the urgency of the climate fight.
Money just isn’t the appropriate frame when we’re talking about the planet. Climate change is a special problem that traditional economic analyses aren’t built to handle. The idea of eternal economic growth is fundamentally flawed on a finite planet, and there is substantial evidence that these economic costs will be borne disproportionately by lower-income countries. There’s no dollar figure that anyone can attach to a civilization’s collapse.
In addition to the widely covered economic risks, there were scads of human-centered impacts listed in Friday’s report: Unchecked climate change will displace hundreds of millions of people in the next 30 years, swamping coastal cities, drying up farmland around the world, burning cities to the ground, and kickstarting a public health crisis inflicting everything from infectious disease outbreaks to suffocating air pollution to worsening mental health.
This process is already in motion. Those of us who talk about climate change for a living should be focusing our dialogue on the immediate danger of climate change in human terms, not making it even more abstract and distant than it already seemingly is.
If an asteroid was going to hit the Earth in 2030, we wouldn’t be justifying the cost of the space mission to blast it out of the sky. We’d be repurposing factories, inventing entire new industries, and steering the global economy toward solving the problem as quickly and as effectively as we can — no matter the cost. Climate change is that looming asteroid, except what we’re doing right now is basically ignoring it, and in the process actually making the problem much, much worse and much harder to solve.
Understandably, Americans’ views on climate change are sharply polarized and have become even more so during the Trump era. In that polarized environment, dry economic analysis doesn’t seem like enough to matter. It’s the human stories that give people visceral moral clarity and firmly establish contentious issues as important enough for a shift in society.
There’s proof of this: In the aftermath of every recent climate disaster Google searches for climate change spike, heartbreaking images of survivors lead national news coverage, and my own Twitter account is flooded with messages from readers asking what they can do to help.
If we are going to take heroic action on climate change in the next decade, it will be because of an overwhelming outrage that our fellow citizens are literally being burned alive by record-breaking fires — not a potential decline in GDP in 2100. In order for people to feel the true urgency of climate change, we’re going to have to talk a lot more about the people it’s already hurting.