Climate Change and Breaking the World Economy By 2050

According to an article at www.climateprogress.com, a recent World Bank Reports finds that the worldwide cost of disasters increased 10-fold between 1980 and 2010 (using the ten-year average with 1980 and 2010 the midpoints), to $140 billion per year.  Meanwhile, the world economy is at about $78 trillion (“in nominal terms”).  Projecting both trends forward, in 2040 the cost of disasters will be at $1.4 trillion, and (assuming a 2% growth rate per year) this will be 1% of the world’s economy.  By 2050, with the same trends, the cost of disasters will be about $3 trillion, and the world’s economy will in fact be shrinking.

Up to now, the world’s economy has in effect been able to shrug off disaster cost increases by growing, so that we now have far more in the way of investment resources to apply to any problems than we did in 1980.  Sometime between 2045 and 2050, that process will go in reverse:  we may be growing, but next year’s disaster costs will swallow up the increase.  So if we have not put ourselves on a better disaster path by handling climate change better than we have before 2045, it will be far more difficult to avoid the collapse of the global economy after that – stagnation, followed by spotty and then pervasive national-economy downward spirals.

How do we do better than we have?  Three keys:

1.       Mitigation before adaptation.  Delaying the rise of atmospheric carbon gives us more time to adapt, and less to adapt to.

2.       Long-term adaptation rather than short-term.  Our flawed forecasting, shown repeatedly to be too optimistic, has led us to rebuilding for 2030 at worst and 2050 at best – meaning that we will have to spend far more at 2050 to prepare for 2100.

3.       Moderate rather than modest added spending.  Studies have shown that taking steps to deal with climate change as per preliminary plans costs little in addition.  That means that we should be planning to do more than the “minimal” plan.

We assume that our “self-regulating” world economy can handle anything without slipping permanently into reverse.  Unless we do something more, it can’t, as it has shown over the last 35 years.  And not just our grandchildren but many of our children, children of the rich included, are going to pay a serious price if we fail to do so.