Climate Change Risk: Environment vs. the Economy?

Recently, I’ve become interested in the idea of climate change (environmental) risk being a foundational aspect of modern society, rather than another pillar of our society.

Before: Environment as a pillar of society. After: Environment as the foundation of society.

I think this society house illustrates what I’m getting at; we often think of the environment as an element to be considered in contrast with the development of our economy, or to be considered along with the enhancement of social well-being.

The False Dilemma

I think this is an incorrect framing that leaves decision makers, and society writ large, interpreting a false dilemma between working towards positive outcomes on climate change, and desired economic growth.

This framing misunderstands the fact that everything we do is reliant on the environment as shaped by humans. If it’s too hot (or too cold) to have people living in a certain area, economic outcomes will suffer (as will the people). If there’s sea levels that are 30 feet higher than what they are now, that’ll mean thousands (if not millions) of people not being able to live in their (former) homes. That alone would mean millions of dollars worth of property suddenly gone – and reality companies are starting to take this into consideration (you should too).

However, let’s put specific examples (like real estate) aside – because there’s some interesting stuff happening there (like investment firms purchasing up swaths of homes). I think it’s crucial that we recognize that if we continue to present working on climate change as “climate vs. the economy”, we’ll miss the point: there is no (healthy) economy without a healthy climate.

Researchers ‘…found that keeping global warming to one and a half degrees Celsius (which is nearly impossible at this point), as opposed to two degrees Celsius, would potentially save more than twenty trillion dollars around the world by the end of the century, and significantly reduce global inequality. Beyond two degrees, they wrote, “we find considerably greater reductions in global economic output.”

The GDP of the United States in 2019 was 21.43 trillion USD.

Solutions? Maybe.

Now, there’s lots of ideas of how we can price in the ‘cost’ of climate change mitigation into our economies, namely with the market-based Carbon Pricing or “Carbon Tax”. A Carbon Tax, is good; don’t get me wrong. It’s a good tool, but by no means is it the best – in fact, I can’t say for certain whether any tool is ‘best’. Climate Change is well… a huge issue, and we need all the tools we can get.

Sumedha Basu hints more at the idea of a ‘carbon dividend’ for ideas and actions that reduce carbon emissions. Basu also notes that the price of a carbon tax needs to be much greater than where it is currently to ensure countries hit their Paris Climate Agreement goals.

However, there’s also a deeper conversation at play: perhaps, just perhaps, our economics system in general needs to be re-worked to better work for all in the world. That conversation revolves around the idea of the ‘doughnut’, with the aptly named Doughnut Economics.

This is a good description of how we need to change our thinking:

Seven ways to think like a 21st century economist, from the Doughnut Economics Action Lab (DEAL)
From the Doughnut Economics Action Lab (DEAL)

We need to be talking more about our understanding of the world, our interpretations and meanings of words (like growth vs. development), and think about ways to make it clear that the environment is the foundation on which society lies; society cannot exist without an environment.

By Trey

I'm Trey. This is my website. I don't know if you need any more background information, but head to the About page if you do.

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