Opinion | Can We Put a Price on Climate Damages? - The New York Times

Opinion | Can We Put a Price on Climate Damages? - The New York Times

David Wallace-Wells

Opinion Writer

There is nothing the modern world sees more clearly than a dollar figure. But whenever anyone tries to put an actual price on the damages from global warming — to calibrate a carbon tax, assess past responsibility or aid in litigation against fossil-fuel malefactors — the numbers are almost too much to process.

One problem is that the damage accumulates over time, like a compound interest of climate degradation. Most carbon, once emitted, hangs in the air for centuries — and some of it lingers even longer. We often talk about emissions in terms of what economists call “flows”: How much is the United States releasing into the atmosphere this year, how much is China, and how quickly could either reduce that flow to zero? But the problem of warming is caused much more by what they call “stocks” — the total amount of carbon that is up there already, and how much climate damage will be caused by it as that total continues to grow.

Considering climate as a problem of stocks rather than flows also pulls us out of human or political time and toward a deeper and weirder perspective, in which past, present and future blend together, somewhat like gases in the atmosphere. A lump of coal being burned in Shaanxi or Inner Mongolia today does climate damage equivalent to a lump that was burned in 19th-century Newcastle or 20th-century Pittsburgh, and an oil well decommissioned three decades ago may still be doing climate damage three centuries from now. Which all reshapes the question of responsibility, as well: Is China the world’s most destructive nation when it comes to climate, responsible for a quarter of all present-day emissions and twice as much as the next largest emitter? Or is it the United States, responsible for twice as many historical emissions as the next biggest contributor and one-fifth of the global stockpile accumulated over centuries of industrial activity?

In 2021, I published a thought experiment in which I tabulated the price of historical emissions using the cost of undoing them — how much money it would take to suck all that carbon out of the atmosphere, processing and storing it safely and permanently below ground. I used an optimistically low future price for such technology and assumed no obstacles to scaling that tech, though many analysts see many such roadblocks. The global bill still came to $250 trillion. The American debt, by far the largest, was $50 trillion. China’s, the second largest, came to $30 trillion.

Numbers like these are one reason talk of historical emissions tends to make people quite uncomfortable in the richer parts of the world, and why recent efforts by the world’s poorer countries to push consideration of climate reparations and payments for “loss and damage” from warming have been blocked by outwardly climate-conscious American leaders like Barack Obama and John Kerry. It is one thing to support the theoretical principle that those responsible for warming should be held to some account. It’s another to realize that plausible estimates for damages run into the trillions, making full reparations an exceedingly unlikely prospect.

But not all moral considerations need be reduced to practical politics, and tabulations of climate damages set a very clear standard: They simply show how large a burden is being placed on future generations by warming, and continued fossil-fuel use, than would have been, in a counterfactual world, without that carbon pollution and that global warming.

Sometimes that burden is estimated by what’s called the “social cost of carbon” — the Obama administration calculated that it was $43 per ton, Donald Trump cut it below $7, and Joe Biden raised it to $51, with the E.P.A. suggesting it should be as high as $190. One effect of pricing carbon by the ton is to make the damage seem small. But the world is producing 50 billion tons of carbon dioxide and other greenhouse gases every single year, which makes for a disastrously large multiplier.

In a working paper published this month as a preprint by the National Bureau of Economic Research, a group of prominent scientists and economists have devised a new tool to calculate responsibility and connect the social cost of carbon directly to estimates of loss and damage. Among their innovations is incorporating the distortions of time to model the way the impact of a single unit of carbon accumulates over decades. One ton emitted in 1990, they estimate, produced only $4 of global damages through 2020. But damages from that same 1990 ton, they suggest, could grow by the end of the century more than 80 times over — because even if global temperatures stabilize, impacts from that level of warming will continue to pile up, year after year.

The figures depend on a lot of wonky assumptions: about whether to tabulate climate damages from the top down (estimating economy-size effects, as these researchers do, using the modeled relationship between temperature and G.D.P.) or the bottom up (as some others have done, assembling together many smaller-scale impacts); about whether to start the clock of responsibility with the Industrial Revolution, early warnings about warming and the formation of the U.N.’s Intergovernmental Panel on Climate Change, the Kyoto Protocol of 1997 or the Paris agreement of 2015; about which future emissions scenarios to use as a baseline; and about how to compare future costs with present ones, because most economic calculations deploy a “discount rate” that shrinks the size of the future in calculations made in the present. But the authors also show their work, which means you can toggle around with some of the different variables, and the upshot of all versions is that, even putting aside future emissions, the impacts of historical carbon are set to grow significantly in the decades ahead. As a result, they write, “settling debts for past damages will not settle debts for past emissions.”

They also deliver some carbon footprint reader service. Taking one long-haul flight every year for the last decade — for instance, a round trip from San Francisco to New York — would produce, they calculate, $5,500 in climate damages through 2100. Over the same time period, switching to a vegetarian diet, installing a heat pump or reducing driving by 10 percent would generate climate benefits of just $1,000 or $2,000 through 2100.

When it comes to corporations, and particularly major oil and gas companies, they tabulate a few eye-popping totals. For Saudi Aramco, they estimate that damages from production between 1988 and 2015 have totaled $240 billion, through 2020, and that damages from those same historical emissions could grow more than 50-fold by 2100, to $13 trillion. ExxonMobil’s share of such damages, by 2100, is estimated to be $5.9 trillion.

The authors’ treatment of national emissions is, if anything, even more striking. Just through 2020, the authors suggest, the United States has accrued a climate debt of nearly $2 trillion — and because they can also measure where those damages occur, they estimate that about $300 billion of that debt is owed directly to India. By 2100, the cost of damages associated only with past U.S. emissions could rocket past $100 trillion, with future emissions only adding to the total.

The authors of the new paper — Marshall Burke, Noah Diffenbaugh, Solomon Hsiang and Mustafa Zahid — are known for hair-raising research; some of their earlier work has generated the highest estimates of future damage from warming. But what’s remarkable about the subject of climate damages is that even conservative approaches generate staggering figures. The International Monetary Fund suggests fossil-fuel use is already, every year, imposing worldwide environmental externalities of $5 trillion — the equivalent of 5 percent of the global economy. When climate minimizers, drawing on low-end estimates, suggest that warming might cut only a few percentage points off future global G.D.P., they are still talking about a cost in the tens of trillions. Even the Trump administration’s laughably small estimate of the social cost of carbon implies that annual damages from America’s current emissions run into the tens of billions. The huge range tells you how much uncertainty is folded into each calculation. But any way you cut it, the scale of the damage, like the moral burden it implies, is planetary.

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As part of this year’s Climate Week in New York, The Times is staging a daylong event tomorrow, Thurs., Sept. 21 — a series of conversations featuring Gina McCarthy, Al Gore, Bill Gates and Ajay Banga (among many others). You can watch the livestream here.