Cost of Inaction

1. Cost of Inaction June Reyes and Erika Kociolek

2. Inaction • “All too infrequently, inaction is motivated by the perceived high cost of reducing greenhouse gas emissions” • CIER, University of Maryland

3. Likely Impacts of Climate Change Frank Ackerman and Elizabeth Stanton, Global Development and Environment Institute, Tufts University

4. Likely Impacts of Climate Change Frank Ackerman and Elizabeth Stanton, Global Development and Environment Institute, Tufts University

5. Climate Risks

6. Issue Areas Insurance Claims Energy Ecosystems & extinctions Water Areas Impacted Agriculture Coastal Impacts Human Health Forest Fires

7. Costs - Energy • Under extreme heat events, the increase in net energy expenses in California is expected to rise by $2 to $18.7 billion by 2100

8. Costs - Insurance Claims • Overall risk exposure of insurers’ has grown considerably • For example: National Flood Insurance Program’s exposure increased four since 1980 to $ 1 trillion in 2005 and FCIC exposure grew to $44 billion

9. Costs - Ecosystems and extinctions • Pharmacological value • “Forests are an integral part of biodiversity and store a large fraction of the planet’s released carbon, a service for which there is now a market price on the European carbon markets - tens of billions of dollars” • Geoffrey Heal

10. Costs - Agriculture • Loss to Central Valley $278.5 to $829 million, depending on the dryness of year • Decreased supplies of water are expected to diminish the value of farmland by around 36%

11. Costs - Water • Meeting increased urban demand for water in California is estimated to cost the state $316 million to $5 billion per year by 2085 • Groundwater withdrawals increased 52% in California in recent years

12. Costs - Coastal Impacts • To protect SF Bay Area and stretch of coast south of Santa Barbara from a 3 feet rise in sea level, initial investment $1.52 billion and $152 million in annual maintenance costs

13. Costs - Forests and Forest Fires • Timber yields are expected to decrease by 18% for mixed conifers and 30% for pine plantations in California • More frequent and severe forest fires are expected

14. Costs - Human Health • Tropical diseases will spread northward, and heat waves and other extreme events will become more common • Increased incidence of asthma, heat-related diseases, and other respiratory ailments may result from climate change

15. Costs - Miscellaneous • Recreation industry: skiing, is $1 billion for the entire region • Wine production: $3.2 billion, may be compromised as grape quality will diminish with higher temperatures

16. Total Cost of Inaction? • IPCC III estimated marginal damage of CO2 emissions $5 - $125 per tonne of CO2 emitted • Multiply by 5,956.98 million metric tonnes of carbon emitted by the US in 2005, 28,192.74 world-wide • Total estimated cost: $29,784,900,000 - $744,622,500,000 International Energy Annual 2005

17. Stern Report • “Our actions over the coming few decades could create risks of major disruption to economic and social activity, later in this century and in the next, on a scale similar to those associated with the great wars and economic depression of the first half alf of the 20th century” • Sir Nicholas Stern

18. IPCC Mitigation Strategies • Energy conservation and efficiency improvements • Renewable energy (solar, hydroelectric, wind, traditional and modern biomass, and ocean thermal energy conversion) • Nuclear energy • CO2 capture and disposal

19. Given the high cost of inaction, is there motivation for governments to implement aggressive mitigation strategies and implement practical solutions ? What is realistic prediction of future returns on capital? (how do you predict welfare of future generations) How does this represent all countries? Climate change damages will not be distributed evenly- how do we take this cost into account when calculating “damages vs. mitigation” costs? In addition to inequity between developing vs. developed countries how do we address future generation inequity? Can one really do a cost-benefit analysis of climate change? What is UCSD doing? Discussion Questions • Do the questions about global warming policy- how much, how fast and what cost still remain open? • Will earlier mitigation increase flexibility? • How do you take into account the real cost on the environment in the GDP? • If reductions are not done on a global scale are we really able to calculate the true cost? • How should equity be applied to developing countries? • How do we convince all countries that international cooperation could significantly reduce cost of emission reduction?