Oxfam has decided to treat us to a new report on the costs of climate change. It’s a lousy, no good, report too – but then it’s from Oxfam, isn’t it?
The economies of rich countries will shrink by twice as much as they did in the Covid-19 crisis if they fail to tackle rising greenhouse gas emissions, according to research.
No, that’s not even what the report says but then economics and The Guardian, eh?
The G7 countries – the world’s biggest industrialised economies – will lose 8.5% of GDP a year, or nearly $5tn wiped off their economies, within 30 years if temperatures rise by 2.6C, as they are likely to on the basis of government pledges and policies around the world, according to research from Oxfam and the Swiss Re Institute.
The economies of G7 nations contracted by about 4.2% on average in the coronavirus pandemic, and the economic losses from the climate crisis by 2050 would be roughly on the scale of suffering a similar crisis twice every year, according to the research. The UK’s economy would lose 6.5% a year by 2050 on current policies and projections, compared with 2.4% if the goals of the Paris climate agreement are met.
And that’s not what it says either.
The actual statement is:
The world stands to lose close to 10% of total economic value by mid-century if
climate change stays on the currently-anticipated trajectory, and the Paris
Agreement and 2050 net-zero emissions targets are not met.
That’s what is and even that’s wrong.
What they actually mean is that the economy in 2050 will be of some size. And if climate change runs riot then that some size will be smaller than if climate change doesn’t run riot.
They do not say, because it would be toss to do so, that the economy will get to some level and then be 10% smaller because climate change. Rather, climate change will lead to slower growth so that the end point is 10% below where it could be without climate change.
Which is a fair point to make. Except that it’s only a waystation to the information we’d like to have.
What will the size of the 2050 economy be? How rich are the kiddies going to be? Well, that depends upon how quickly the economy grows between now and 2050.
Just roughly, if the global economy grows at 2% – this is a recession by global standards because the poor countries should be growing fast – then, given how compounding works, the global GDP in 2050 will be 170% of today’s. Hey, 29 years makes a difference. If growth is more like the 3.5% 20th century standard then perhaps 270%.
OK, hack 10% of either of those for climate change and we get to 153% of today or 243%. So, is climate change going to be the major determinant of the size of the global economy in 2050?
Hell no, the major determinant is going to be what’s the growth rate for the next 29 years. And can bad economic policy make the difference between 2% and 3.5%? Sure it can, observe East and West Germany, North and South Korea, we’ve done this experiment.
So, we start from the idea – this must be true otherwise economic losses in 2050 wouldn’t even be a subject for discussion – that a richer world in 2050 is a better idea than a not so rich world. Cool. So, clearly, we must adopt those policies, now, which grow the economy between now and then. Because we want to optimise the outturn, right? That means not adopting idiot antigrowth policies of course. Sticking with this neoliberal globalisation of capitalism and free markets – because yes, that analysis has been done for the IPCC, it’s in the SRES. We do not want to move to planned economies, not even social democratically done, and reversing globalisation is entirely contraindicated.
OK, cool. Once we’ve dealt with those major influences we can move to the more minor one of climate change. Which is, as we can see, about 10%, not 100%, of GDP.
So, how do we know that Oxfam are being lying toads here? Because they never – not once – give us the numbers for the size of the global economy in 2050. They only give us the relative sizes with and without their described level of climate change. They entirely fail to point out that 2050 is going to be perhaps 2x richer than today but tell is that it might be 10% less rich than it could be.
Lying toads they are.