Essay by Eric Worrall

Professor Dennis Wesselbaum thinks we should act on climate change – but economic harm is not a good justification for doing so.

Calculating the economic cost of climate change is tricky, even futile – it’s also a distraction

Published: February 25, 2025 1.25pm AEDT
Dennis Wesselbaum
Associate Professor, Department of Economics, University of Otago

Climate change is no longer a distant threat. It’s here, it’s real and it increasingly affects us all. 

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The panel’s latest assessment report avoids quantifying the economic costs of climate change. So, to understand the economic costs of climate change, we can use the best estimate based on the previous report and the insights from meta studies. These analyses posit a temperature rise of 3.7°C will reduce global gross domestic product (GDP) by about 2.6% (ranging from 0.5 to 8.2%) by 2100.

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However, this comparison is extremely misleading. The value of 2.6% today will differ substantially from 2.6% in 75 years.

The New Zealand economy grew at a compound annual rate of 1.4% between 1960 and 2000. Using this same average growth rate, New Zealanders will have a 184% higher standard of living in 2100. If nothing is done to address climate change, and given the best cost estimate, our standard of living would still be 176% higher than it is now.

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Even if we accept our best estimates, economic costs are not the issue, but saving the environment is. 

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Read more: https://theconversation.com/calculating-the-economic-cost-of-climate-change-is-tricky-even-futile-its-also-a-distraction-248862

The professor also admits elsewhere in the article that evidence for more severe weather is inconclusive.

I found this article quite refreshing. Significant global warming would cause changes if it occurs, though the extent and significance of those changes is open to debate.

I do disagree with some of what Professor Wesselbaum wrote, I suspect the professor has the view nature is fragile. You lose that view very quickly if you spend any time living in the tropics.

I spend most of my “nature” time wondering what to do with all those blessed palm fronds which keep piling up and are difficult to burn. And where did that giant succulent which is crowding my lime tree come from? I’m pretty sure it wasn’t there last time I looked.

If I had a flame thrower I could take down some of those fast growing tropical weeds which are infesting my driveway.

In the tropics (or near tropics in my case) the problem isn’t preserving nature, the problem is smacking nature hard enough to keep it from invading your house.

The professor also kind of overlooks other issues, such as the fact that some climate action such as carbon pricing functions as a potent regressive tax which slams poor people. So there are more considerations when deciding what climate action if any to take, than whether the local beach suffers increased erosion.