Here’s what it costs to do nothing: my neighbours will be in bad shape this year.
They are farmers and their Spring crops have been killed by a climate event called a “Polar Vortex”.
The money they need to repair the damage will have to be covered by Public Funds or their insurance companies. Millions will have to be paid for the impact of unexpected icy weather on the Spring crops. That does not count the cost of two or three years’ worth of lost harvests, as crops like grape vines get re-established. Ultimately those costs will be passed on to the consumer.
It’s a very pressing example of a brutal choice: you can spend the money to prevent a crisis or spend the money to clean up the damage when the disaster hits.
Calculating the benefit of prevention is what the “Opportunity Cost” approach to climate change is all about.
Opportunity Cost can be done with an accountant’s precision. It offers a ledger-clear rationale for climate change action.
Considering climate change as a calculated Opportunity Cost in fact gives a voice to the “silent side” of a ledger; it can calculate the cost of not taking action. What is the loss to us if we miss taking this opportunity? An equally valid approach is to calculate the benefits of the opportunity that is presented for an action, and putting those on the ledger for consideration. What is the benefit to us of taking action?
It recognizes that in a finite world, a choice has to be made, and we can indeed put a price on what we are giving up if we turn our heads away from a definable path.
In the case of our local farmers, the impact of the “Polar Vortex” can be calculated to the decimal point.
The wine industry creates $250 million in revenue for Nova Scotia. Every vineyard in Nova Scotia was hit by the Vortex. In some cases, 100 per cent of certain varieties of grapes as well as other fruit crops like raspberries and cherries were destroyed. This disaster will affect harvests for the next three to five years. “We are only anticipating about a 50 per cent crop on 10 per cent of our vineyard,” says Michael Lightfoot, the owner of Lightfoot and Wolfville vineyards.
Between 95 and 100 per cent of Nova Scotia-grown grapes used for Chardonnays, Pinot noirs and Rieslings were lost because of the extreme cold. Farmers say the level of damage is the worst they have seen in all their years in business.
The polar vortex is a fast flowing stream of air that circles the North Pole during the winter months in the upper atmosphere, known as the stratosphere. If it pulses up and down from the north (rather than flowing steadily from west to east) it allows cold air from the Arctic to spill into the mid-latitudes. Record-breaking frosty temperatures, ice and heavy snowfalls can grip huge areas of the Northern Hemisphere. Regions in Asia shiver in the cold; southern European countries record lows in the -25C range, and snowstorms can blanket California and other portions of the southern U.S.
Freakish weather patterns have brought a January heatwave to Europe, reminding all that the region is warming twice as fast as the rest of the world. South Asia has also experienced unusual warmth, including New Delhi’s third-hottest February day in more than a half century, alongside exceptional cold.
The north-south pulsing is caused by disappearing sea ice. Open ocean allows air masses to have higher temperatures and humidity. When sea ice melts, it exposes darker ocean water to sunlight, which warms the water and the air even more, melting more ice and accelerating the process. This allows more heat and moisture to escape into the atmosphere in the Far North. It also pulls mild and wet air masses from lower latitudes into the Arctic.
In a sense, "what happens in the Arctic doesn't stay in the Arctic."
Jennifer Francis, a senior scientist at the Woods Hole Research Center, says "Evidence is piling up that disruptions of the stratospheric polar vortex are happening more often and global warming is a player."
A polar vortex breakdown has been cited for the abruptly frigid weather that overwhelmed the Texas state power grid in winter 2021, killing hundreds of people and causing billions of dollars in damage.
Our world is built on carbon emissions, since the first fire-pits to today’s coal mines. 80% of our greenhouse gas emissions are carbon dioxide. It is rising fast. A NASA study (2022) asserts that “While Earth’s climate has changed throughout its history, the current warming is happening at a rate not seen in the past 10,000 years.”
Yes, there are climate change deniers. But there are many excellent articles debunking the claims of climate deniers, and that is not the purpose of this article. My point is that climate deniers are motivated not by science but by ideology. Denialists claim that climate change is just a filter for the left to push through a far-left socialist agenda. And it is true that If climate change is as big as 97% of the world’s scientists say it is, then a radical restructuring of the way our global economy works might be needed in order to prevent catastrophe.
But it is not true that our entire economic system needs to be uprooted. There are ways to obtain social and scientific ends without abandoning market capitalism.
We do however have to recognize the degree to which some players have pushed back against the climate change reality.
ExxonMobile did a study in 1977 that showed the way the world would change if nothing was done:
The company nevertheless promoted climate misinformation in a tactic like that used by the tobacco industry regarding the health risks of smoking. In the words of Scientific American: “Both industries were conscious that their products wouldn’t stay profitable once the world understood the risks, so much so that they used the same consultants to develop strategies on how to communicate with the public.”
Enter the notion of Opportunity Cost.
Instead of denial – which has become impossible today anyway – let’s admit the damage that is being done, put a figure on it, and start adding that cost into the purchase of the commodity that is doing the polluting.
This would focus everyone on a picture of a more productive and faster-growing world with another course of action. One which recognizes the entrepreneurial energy that driven individuals can bring to a problem once everyone knows the cost of the burden.
This switches the focus from a discussion about denying that bad things will happen, to focusing on the costs and opportunities that are facing us right now.
An important factor in opportunity cost as it applies to climate change, is that the timing of action on an ecosystem can greatly influence cost and in fact viability. The longer we delay, the harder the task becomes and the greater the possibility that the chances of success approach zero.
In calculating the cost of carbon emissions, ExxonMobile’s own senior scientist James Black delivered a sobering message on its damage to management decades ago: “In the first place, there is general scientific agreement that the most likely manner in which mankind is influencing the global climate is through carbon dioxide release from the burning of fossil fuels.” He warned that doubling CO2 gases in the atmosphere would increase average global temperatures by two or three degrees—a number that is consistent with science today. He added that “present thinking holds that man has a time window of five to 10 years before the need for hard decisions regarding changes in energy strategies might become critical."
This has been confirmed many times since. In that NASA study, it is stated that “the influence of human activity on the warming of the climate system has evolved from theory to established fact.”
Lest it be said that we are pointing a finger only at the oil companies, we must add that burning wood, coal, and natural gas will all discharge carbon dioxide into the atmosphere.
And yes, there are other contributors to greenhouse gas emissions, but according to the U.S .Environmental Protection Agency (EPA), some 80% of the emissions in 2020 were carbon dioxide. Transportation, electrical generation and industrial operations share the consumption in almost equal measures.
The rising temperatures are warming the oceans, shrinking the ice sheets, melting the glaciers, destroying the snow cover, raising the sea level, adding to air pollution and health problems, increasing the number of extreme weather events, and increasing the acidity of the surface ocean water.
One other cost should be added: the cost of fighting the disinformation campaigns run by the carbon industry. The “Heartland Institute”, for example, promotes the idea that carbon consumption is good for the economy. It receives funds from almost all major oil companies including ExxonMobil, Valero, Shell, BP, Chevron, and most of all, Koch Brothers.
A graphic by Brown University scientist Bob Brulle showing the $8.2 BILLION in anonymous money going into climate denial and obstruction.
Dark money is going into capturing courts, climate obstruction, and voter suppression for climate denial.
Republicans are trying to reverse the growing trend of companies accounting for and acting on climate change as part of their business, according to Yevgeny Shrago, policy director for Public Citizen’s Climate Program. Yevgeny writes: “Republican state officers are using regulatory tools and the public pulpit to pressure banks and large investors into ignoring climate change’s impacts on their finances, the economy, and the planet.”
Instead, Republican state officers are using regulatory tools and the public pulpit to pressure banks and large investors into ignoring climate change’s impacts on their finances, the economy, and the planet.
You wonder why they bother. They will lose. Just like Big Tobacco lost.
Cancer rates are dropping, thanks mostly to huge declines in smoking, according to the American Cancer Society. More than 2.3 million people have not died of cancer since 1991 who otherwise would have if cancer rates had remained unchanged. In two years alone, anti-smoking efforts saved $31 billion in smoking-related costs for youth, their families and society overall. If one takes the statistic of 500,000 lives destroyed every year from the use of tobacco, and valuing each life at $10-million, then $5-trillion is saved each year if we eliminate tobacco deaths. The tobacco industry makes $940-billion per year in revenue.
Here is the Opportunity Cost model for tobacco:
In order to balance the loss against the revenue, we would charge the tobacco companies $5.00 for each $1.00 of revenue they made. I understand that a pack of cigarettes costs $6.00+ in the U.S. these days. After adjustment for Opportunity Cost, each pack would have to sell for $11.00+. That would be more than $1,000/month. There may be people who could afford that, but I’m thinking it would be a big disincentive.
That is a benefit that happens every year. In the U.S. alone. Globally the benefit would be huge.
That also does not count the cost of medical treatment for those in lung cancer care.
Or the human grief. Especially among the young. In our community, I just heard about the five-year old girl whose mother has passed away (cancer). She asked her father: “What are we going to do with mother’s toothbrush?” It’s the little questions that cause the pain in your eyes.
Or take the case of the Hole In The Ozone Layer. Ozone depletion could cause skin cancers around the world. People can make environment-size changes if they are organised and they have a target. To halt the depletion of the ozone layer, countries around the world agreed to stop using ozone-depleting substances. This agreement was formalized in the Vienna Convention for the Protection of the Ozone Layer in 1985 and the Montreal Protocol on Substances that Deplete the Ozone Layer in 1987. Earth's protective ozone layer is slowly but noticeably healing and will be fully mended over Antarctica in about 43 years (UN report from 2023).
This kind of coordination can be applied to fight climate change.
If one were to open the Opportunity Cost ledger on climate change, the left hand page could have line-items for each of the mentioned cost items.
The right hand page would itemize the business opportunities open to companies seeking to solve those problems. India alone, for example, still has 300-million people who do not have access to electricity. If innovative renewable energy sources were provided to these people, there would be revenue streams that would justify the projects. In Canada, to get to Net-Zero carbon emissions, it has been estimated that the deployment of green technologies needs to rise four to eight times above current levels, from about $20-billion/year to about $80-billion/year.
We could start with the basics:
To bring this back to the beginning of the article, what does that investment cost against the loss and re-building of an agricultural industry?
Or what investment will be lost in the agricultural land if the sea level keeps rising?
To some, the benefits are life-and-death. There are entire island nations that will disappear if the sea levels rise much more.
I would wager that if you looked at the benefits as well as the one-time cost, you would be well ahead of the game – even without looking at non-economic factors.
I, for example, was not a big fan of the Polar Vortex when it hit our house. The power went off, it was too cold for the generator to kick in, and we had to huddle at a neighbour’s place.
Back to Opportunity Cost…
Where Opportunity Cost comes in, is in the placement of dollar values to the act of not changing – and then assigning those costs back to the polluters.
Put sand under the tires, as we say in winter-land.
There are many ways the list could be generated. Perhaps a university could align with a respected public agency and create an initial list for feed-back. Sectors and countries that would benefit from a realignment would back the project and push it in the UN and elsewhere. Companies with a vested interest in profiting from the engines of change would contribute.
And at the end of the process, we would not only have a climate-adjusted world, but a new mechanism for calculating the impact of “decisions made without consequences” – e.g. the decisions of oil companies to produce X amount of product without a tie-in to the fall-out. Responsible decision-making would be a huge by-product of this process.
It would also enable the oil companies to get on with their world without wearing a cloak of villainy. I am sure there are many corporate officers in those companies who would love to get into the renewable energy field.
In the long run, we have to have a world better than this – better than one where the rich don’t care because they can afford to shield themselves from the consequences. Some day, even the rich will suffer; you can’t beat Mother Nature.
In the meantime, it will be profitable and enduring if we can reward the better actions of our natures. It will be a wonderful legacy. I’m sure kids will soon be going around thanking us for plugging up the Ozone Hole, for example…. OK, maybe we won’t be remembered specifically, but we can go to the hereafter with a smile.
Because we will have launched that “most happy age”, as the Romans used to say in their golden time, when all was peace and the oars flashed in Mediterranean waters.
If we can get back to their level of pollution, we will be rich indeed.
This article was written by Barry Gander, who is solely responsible for all its content.
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