European nightmare burns up the lie behind ‘the cost of climate action’

For decades, a primary weapon used by climate denialists, fossil fuel companies and their media allies has been the argument that the costs of climate action, compared to “business as usual”, are prohibitive in terms of taxpayer money, or lost economic growth, or jobs — even if the cost was only a notional one, in slower future growth or fewer future additional jobs.

It was a tool favoured particularly by the Howard government, which would justify climate inaction by calculating the purported cost of any initiative, dramatically inflating the expense by extrapolating it many years, or even decades, into the future, and misleadingly suggesting the resulting total was some sort of immediate impact awaiting anyone who tried to take action.

And the “business as usual” scenario against which the costs of action were compared never included the costs of preventable global heating.

This lie continues even now — the shrill demand from journalists (usually Murdoch journalists) at election campaign media conferences in 2019 and 2022 for the cost of Labor’s (hopelessly unambitious) climate policies purposefully ignored the costs of climate inaction.

Now we have the opportunity to see how damaging that “business as usual” scenario really is.

While the heatwave breaking heat records across southern Europe and northern Africa has garnered attention for its impact on tourism, that’s only a subset of the economic impacts being generated by the climate crisis in Europe, which is warming at a faster rate than any other continent.

Take one salient example. A severe long-running drought in the western Mediterranean has dramatically cut olive oil production in Spain — by far the world’s biggest producer, responsible for around 40% of global production — and in Italy and Portugal, the number two and four producers respectively. Only Greece, the number-three producer, has maintained production, and it’s currently being battered by a heat wave as well. The result: global olive oil prices have soared, first to levels not seen since the 2000s, and now to all-time record levels, with recent spot prices topping $7000 a metric tonne.

The economic costs already, and likely to be, incurred due to global heating are the subject of growing analysis. In April, the International Monetary Fund published a working paper examining inflation induced by climate change-related events since 1970 and concluded heat events lead to sustained price rises in advanced economies, “drought shocks” lead to price rises in both advanced and developing economies, and the rises are long-term in the latter, but that “storm shocks” don’t lead to long-run price effects.

“Storm shocks”, however, are more likely to have private and public infrastructure impacts: spring floods in the US Midwest were estimated to have caused US$3 billion in damage; winter floods in California (until recently in the grip of a shocking drought) were estimated to have caused US$5-7 billion in losses. US government data shows “billion-dollar disasters” are becoming more frequent in the US (partly as a result of population and economic changes, but also climate change).

Australians know the rising cost of climate-related events themselves — the Black Summer bushfires inflicted $5 billion in costs on farmers alone; $2 billion in healthcare costs; billions in reconstruction costs, and tens of billions in wildlife and ecosystem loss, as part of a total that may approach $100 billion in the long run.

In May, the European Central Bank published research suggesting “future warming will cause global increases in annual food and headline inflation of 0.92-3.23 and 0.32-1.18 percentage points per year by 2035 respectively”, adding that “the impacts of the 2022 summer extreme heat in Europe, finding that it cumulatively increased food inflation by 0.67 (0.43-0.93) percentage points. The impacts from an equivalent extreme would be amplified by 50% under 2035 projected warming.”

A July 2022 study suggested that CO2-equivalent emissions from the US, China, Russia, Brazil and India alone had together caused US$6 trillion in global economic losses since 1990.

All of this is separate from the death tolls associated with floods and heat events. While the pandemic demonstrated that many business lobbyists and their media supporters aren’t fussed by excess deaths if they get in the way of commerce, each death represents an economic loss as well as grieving and pain for loved ones. The 2022 European heatwave is estimated to have killed more than 60,000 people. Heatwaves in the US have increased in duration, frequency, intensity and seasonal spread, with each extra day killing more Americans.

The higher inflation, greater property damage, greater need for infrastructure spending and tens of thousands of additional deaths are the real “business as usual” scenario of climate inaction, in contrast to the rosy world of climate denialists arguing that the economy couldn’t afford climate action.

They’ve engineered a world that is not merely hotter, but more expensive, more volatile, more lethal and more demanding of taxpayers. The lie of “business as usual” will eventually cost trillions globally, along with millions of lives. And with El Niño returning to Australia this summer, the costs will only increase for us too.

Are you concerned about the cost of climate inaction? Let us know by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.