The cost-benefit on global warming

Marketplace Staff Oct 27, 2006

TEXT OF COMMENTARY

KAI RYSSDAL: The Kyoto Protocol on global warming doesn’t expire for another six years. But the British government says we have to start planning for 2012 right now. There’s a report set to come out in London Monday. Britain’s chief economist will say whatever it costs now to change our business practices will still be cheaper than the long-run economic impacts of climate change.

Commentator Mark Hertsgaard says there’s a new economic logic at work.


MARK HERTSGAARD:When European journalists asked President Bush a year and half ago why he refused to sign the Kyoto Protocol, he said: “Because it would wreck our economy.”

Well, industrial giants have been proving the president wrong ever since. British Petroleum invested $20 million to increase its energy efficiency. Three years later, the oil giant has saved $650 million. This week, Morgan Stanley said it’s investing $3 billion in the carbon trading market.

It’s great that big companies now see that going green can make them green. Now a new British government study gives a second powerful economic reason for fighting global warming. Turning Mr Bush’s assertion on its head, former World Bank chief economist Sir Nicholas Stern warns that NOT slashing greenhouse gas emissions is what will wreck the world economy.

Left unchecked, Stern says, the cost of global warming’s impacts-including property lost and businesses ruined, could cause the worst global downturn since the Great Depression.

Those impacts will cost 5 to 20 times more than the cost of bringing greenhouse emissions under control. A recent Tufts University study estimated the cost will be $20 trillion annually by the year 2100. So, not only can going green make money, NOT going green will LOSE lots of money.

The problem is that markets don’t have long-term vision. But government can send the signals markets need to push innovation forward. The Kyoto Protocol’s emission limits have in effect put a price on greenhouse gases. That has fueled a vibrant carbon trading market in Europe and motivated industry to cut emissions further.

It isn’t enough. Alone, neither government nor markets can slow global warming. But together, they just might if we act fast.

RYSSDAL: Mark Hertsgaard is the author of “Earth Odyssey: Around the World In Search of Our Environmental Future.”

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