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Climate Change and the U.S. Economy

July 06, 2021
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The fourth National Climate Assessment was released by the U.S. government on November 23, 2018. The Atlantic magazine, and other media, summarized the report by suggesting economic doom is inevitable.

Dr. Steven Koonin wrote a rebuttal to these media summaries for the Wall Street Journal on November 27, 2018. Dr. Koonin earned his PhD in theoretical physics from MIT in 1975 and is currently the Director of New York University’s Center for Urban Science and Progress. He also served as the Under Secretary for Science at the U.S. Department of Energy during President Obama’s first term.

Dr. Koonin acknowledges “many reasons to be concerned about a changing climate, including disparate impact across industries and regions.” However, he objects to the media exaggerating the conclusions of the report in an attempt to sway public opinion on the climate change debate.

“The report’s numbers, uncertain as they are, turn out not to be all that alarming. The final figure of the final chapter shows that an increase in global average temperature of 9 degrees Fahrenheit (beyond the 1.4 degree rise already recorded since 1880) would directly reduce the U.S. gross domestic product in 2090 by 4%, …that is, the GDP would be about 4% less than it would have been absent human influences on the climate”.

Assuming a 2% real annual GDP growth rate in the coming decades (though it has averaged 3.2% since 1935 and is currently 3%), the U.S. economy would grow to roughly four times its current size by 2090. A 4% climate impact would reduce the multiple to 3.8 times the current size of our economy over the next 72 years. Dr. Koonin says “the projected reduction in the average annual growth rate is a mere .05% ...(and) experts know that worst-case climate projections show minimal impact on the overall economy.”

He concludes, “if we take the new report’s estimates at face value, human-induced climate change isn’t an existential threat to the overall U.S. economy through the end of this century—or even a significant one. Changes in tax policy, regulation, trade and technology will have far greater consequences for America’s economic well-being.”

Again, there are many reasons we should be concerned about a changing climate. But media reports suggesting impending national economic catastrophe is not one of them. Finally, Koonin says, “It should concern anyone who supports well-informed public and policy discussions that the report’s authors, reviewers and media coverage obscure such an important point.”