Visiting Fellow Bjorn Lomborg Analyzes The Financial Costs And Benefits Of Mitigating Effects Of Climate Change

Monday, March 9, 2020
Hoover Institution, Stanford University

Climate change is real and manmade, but its economic costs on the environment are grossly exaggerated, argued Hoover Institution visiting fellow Bjorn Lomborg in a lecture at Hoover’s Stauffer Auditorium on Monday, March 9.

Lomborg noted recent statements by UN secretary general António Guterres about how climate change is the biggest threat to the global economy, and that the people of the world are ostensibly in “a fight for their lives” as they face unprecedented levels of severe weather, flooding, wildfires, and droughts.

Lomborg disagreed: “It’s not the end of the world. . . . We need to get a sense of proportion.” In making his case, Lomborg presented data from the UN Climate Panel, which illustrated the costs of environmental damage from natural disasters since 1900.

More than one hundred years ago, Lomborg noted, flooding in proportion to global gross domestic product (GDP) was 0.5 percent. Over the century, it has decreased by a factor of ten, to 0.05 percent. He said that while future global warming will lead to more severe weather patterns, the environmental costs will remain minimal, as growth in prosperity and better technology will help mitigate the impact of natural disasters.

Lomborg added that the current cost of hurricane damage accounts for 0.04 percent of GDP. Projected one hundred years from now, absent of future global warming, the cost will decrease to 0.01 percent. Accounting for global warming, the cost doubles to 0.02 percent of GDP but is still considerably lower than it is today.

“Overall, we will be better off even with global warming,” Lomborg said.

Lomborg argued that climate-change policy has largely been ineffective over the past 20 years given the hundreds of billions in dollars spent. In addition, Lomborg said, the reductions in CO2 emissions pledged by the 2016 Paris Agreement on climate change will only marginally mitigate the rising rate of global temperatures. 

By the end of the century, temperatures are expected to rise to 4.071 degrees Celsius above preindustrial levels, compared with the projected 4.1 degrees absent the Paris protocols. This represents 0.029 of the total Paris goal of a 1.5-degree mitigation in anticipated global temperature rise, with incurred costs between $60 trillion and $120 trillion.

“Spending that much money is a really bad deal,” Lomborg said.

Alternatively, Lomborg favors a progressive carbon tax, which targets CO2 emissions to achieve a temperature rise to 3.75 degrees Celsius above preindustrial levels (versus the Paris Agreement’s 2.6 degrees). He argued that this level is optimal, as it will incur the lowest cost of combined impact on the environment and the economy.

Lomborg holds that policies that promote economic prosperity rather than environmental sustainability present the best option for countries grappling with poverty and environmental damage. He concluded that as countries experience higher rates of economic growth, they will lower the relative costs of climate mitigation and implementing environmentally sustainable solutions.

“Prosperity is an incredible climate policy,” Lomborg concluded. “If you are richer you are less likely to suffer from bad stuff happening to you.”