What are the economic costs of combating climate change? Governments as well as academics are heavily divided over the issue. The recent Stern Review concluded that fighting global warming would cost 1% of global GDP, and that non-action could lead to a 20% loss of GDP in the long term.
If the world wants to tackle global warming, it will have to review the economic costs and benefits of the essential policy measures. This cost/benefit analysis of climate- change policies is very controversial because, in the end, it comes down to the question of whether we are willing to accept some restraints on economic growth now in order to leave a less dangerous future for our grandchildren.
Issues:
The first real controversy on the costs of climate change began when US President George W. Bush announced in 2001 that his country would withdraw from the Kyoto Protocol with the argument that it "would cause serious harm to the US economy". Although there was no economic impact analysis underpinning Bush's U-turn on Kyoto, there had been cost studies which pointed to high economic costs for the American economy, eg the study "Impacts of the Kyoto Protocol on US Energy Markets and Economic ActivityPdf external " undertaken by the US Energy Information Administration in 1998.
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