American Policy: Saving Trillions Part 1: Biodiversity Costs
Part one of the American Policy portion of the Climate Change Policy Series: Act America, act now, sooner than later. Climate change inaction stands to cost Americans trillions of dollars due to loss of biodiversity, economic spillovers, national security, and migration. The bottom line, mitigating climate change now and swiftly will save Americans more money than inaction or slow action.
Unfortunately, many of today's American policy makers misuse climate models for short term gain. These models should be taken with a grain of salt; they are educated predictions of the future that leave out some major considerations. One cost overlooked and underestimated by current economic studies is the cost of losing biodiversity in the environment. Studies either report optimistic temperature scenarios of 2-3Â°C and underestimate losses or don't mention them at all.
One estimate values the services of the ecosystem at 1.8 times the world GNP, which at the time equaled $33T (Costanza et al., 1997). To compare, the world GDP in 2008 was $61T. Other studies suggest biodiversity to be worth $389B for the USA and $3.6T for the world, annually (Pimentel, 1997). Ecosystem services include provisioning (production of water and food), regulating (climate and disease), supporting (nutrient cycles and crop pollination), and cultural (recreational and spiritual benefit). An equally important service includes value for pharmaceutical research and anti-cancer and anti-infective drugs, 60% of such drugs are derived from natural sources or modeled after them (Adey, 2000). The Rosy Periwinkle (pictured above from E. Africa used for Leukemia research) and the Himalayan yew tree are sources of three anti-cancer drugs whose habitats are endangered by climate change (Rausser & Small, 2000).
The value of biodiversity is priceless, and we stand to lose most of it. Assuming optimistic climate change 1.5-2.5Â°C, 20-30% of animal and plant species will be lost; if the temperatures rise is 3.5Â°C the range of lost species becomes 40-70% (IPCC FAR, 2007). To compare Nicholas Stern now estimates his economics of climate change using a temperature change of 5Â°C (Stern, 2008). Hsiung and Sunstein (2007) estimate climate caused extinctions will reduce ecosystem services at a cost of $539B - $1322B for the world and $58B - $144B for the U.S. (an annual loss of 0.6-1.4% of US GDP). Costs will also mount when the US will attempt to protect these endangered species; the US will spend $104B to $255B (0.8% - 2.1% US GDP) annually. Combining lost services and costs to attempt protection the US will spend $162B to $399B (1.4% US GDP - 3.5% US GDP) annually, these numbers are either equal to or twice as much as Obama's Health Care Plan, which is estimated to cost $1.6T over the next 10 years (CaliforniaHealthLine, 2009).
The bottom line, mitigating climate change for the value of the environmental ecosystem services alone would save trillions. The sooner, the cheaper; the best defense is a strong offense. Continuing the American Policy portion of the Climate Change Policy Series, the next post will cover American Economic Spillovers (Freeman & Guzman, 2009).
Photo Credit: Flickr