16 September 2013 — The short-term costs of climate change mitigation could increase three-fold if the implementation of international climate policies is delayed, a new study has found.
The study, by scientists at the Potsdam Institute for Climate Impact Research, found that if the stalemate on climate negotiations extended until 2030 then global economic growth would be reduced by seven per cent, compared with two per cent if the international community came to a consensus by 2015.
“The transitional economic repercussions that would result if the switch towards a climate-friendly economy is delayed, are comparable to the costs of the financial crisis the world just experienced,” said study lead author Gunnar Luderer.
The more delayed action was, the faster emissions would have to be reduced to stay within the 2°C limit, leading to a higher cost burden, the study authors said.
“For the first time, our study quantifies the short-term costs of tiptoeing when confronted with the climate challenge,” Luderer said.
“Economists tend to look at how things balance out in the long-term, but decision-makers understandably worry about additional burdens for the people and businesses they are responsible for right now. So increased short-term costs due to delaying climate policy might deter decision-makers from starting the transformation. The initial costs of climate policies thus can be more relevant than the total costs.”
A “wait-and-see strategy” would not only be costly, but could also hinder achieving climate targets in the long-term, the study authors said.
The authors also said that delaying emissions reductions would lead to a spike in global energy prices of around 80 per cent in the short-term, which would be felt most strongly by the world’s poor. They warned that this could lead to social unrest, as occurred in Indonesia in 1998 after a cutback of fuel subsidies.
Action now would limit the rise to 25 per cent, the study authors said.