The Costs of Inaction and the Limits of Economics

The costs of climate change, like the proverbial “death and taxes,” are inevitable, though not entirely fixed or predictable in terms of when they arrive. Humanity has some control over the specifics. As with taxes, different people will be suffering different levels—though when it comes to climate change, the damage can fall most heavily on those least able to bear it. In addition, the costs of inaction will mostly be borne by today’s young people and their children and grandchildren. Thus moral issues arise concerning how the burdens of action should be shared. Many climate scientists see the costs of inaction as very likely immense, making inaction a foolhardy gamble that must be avoided. Many economists, by contrast, are still arguing over how to compute the net benefits of doing anything versus doing nothing. We surveyed the dimensions of the likely damage due to climate change as identified by scientists in Chapter 2. In this chapter our concern is not with the actual content of the damage, but rather with how to put a value on it, and what this implies for the character and magnitude of actions that should be taken. When the costs of inaction are clearly greater than the costs of action, basic economic logic would seem to dictate that action should be taken. Humanity will inevitably bear some mix of the costs of mitigating climate change (especially by reducing emissions), adapting to change, and living with consequences that are not avoided. Doing nothing to mitigate, as has largely been the case so far, results in the costs of inaction we will emphasize in this chapter. If inaction continues, the science tells us that the risks are huge—eventually the future of humanity and all of life as we know it are at stake. No economists advocate driving humanity to ruin, but many seem willing to gamble with that possibility in exchange for the benefits of faster economic development through continuing exploitation of fossil fuels in both the short and long term.