Wednesday, September 30, 2009

More on Climate Change

One of the other things that gets me about the debate on the costs of climate change legislation is that it usually doesn't include the potential costs of inaction. Modeling the costs of inaction is even more difficult, since you have to make assumptions not only about the future of the economy, but also about the future of the weather.

The World Bank just released a new study using this type of guesswork to estimate that the costs of climate change could total as much as $100 billion every year for the developing world alone.

While I put even less faith in this study than I do in most cap and trade studies, it's worth noting a couple of things. First, this is only the cost to poor countries -- the cost to rich countries could be much higher. We have more roads, bridges, houses, etc, so we will have more to rebuild after a disaster (it could also be lower if poor countries get all the bad weather).

Second, $100 billion is a lot, but it's even more when you think about it in relation to the income of developing countries. The GDP of Sub-Saharan Africa (an area larger than the US and China combined) was $1.5 trillion in 2008, so climate change could cost Africa almost 7% of its GDP every year. This can't be good for business.

1 comment:

  1. It won't cost them $1.5 trillion, it will earn them $1.5 trillion. With Cap&Trade, the high carbon output of the developed nations will be offset by the lower carbon output of the developing nations. That's why they are so in favour of Cap&Trade, they will make a killing (especially the dictators). But that's ok, the public wants to pay this so they can have a clear conscience. But once Cap&Trade is in place, if I ever hear an AGW Believer complain that their taxes are too high I think I'll punch them in the nose.