Global warming: too expensive to fix?

Blog by Dr Andy Bodey, Analyst, 19 January 2012

2011 was not a good year for the planet. Greenhouse gas emissions and extinctions were up; habitats and fish stocks were down. The world faces serious problems, and fixing them will require considerable investment.

 Consider global warming. The Stern Review found that the annual costs of stabilising warming below 2°C are likely to be around 1% of global GDP by 2050. Global GDP is currently $63 trillion, so 1% equates to $0.6 trillion, or $600 billion a year. At first glance this is an eye watering amount, and one could be forgiven for considering the price tag to be too high. In fact, some commentators believe that it is: better to live with it than pay for it. Thankfully, perspective can provide some much needed optimism.

Annual global fossil fuel subsidies are in the region of $500 billion. Each year the world spends around $1 trillion on alcohol. Annual global military expenditure currently stands at $1.6 trillion. In the current financial crisis, the western world has spent over $10 trillion on bailouts so far. When perceived threats (or vested interests) are large enough, the world can mobilise vast sums of money.

Will 2012 see increased efforts to address global warming? Sooner or later, our economies will suffer if we don't invest more heavily. The question is not whether we can afford to fix global warming, but how the necessary funds can be mobilised.

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