POINT OF VIEW

Climate change will affect our economy, like it or not

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While most people acknowledge that climate change is indeed a problem, only recently has the dialogue regarding the issue taken center stage in world politics.

However, with all the discussion, firm policy actions have yet to be undertaken.

I want to focus on an alternative way to bring climate change to the forefront of policymaking by incorporating it into the way we measure our economic standard of living by continuing it as economic depreciation. Such an approach demands that sustainability and welfare be considered together.

Net domestic productivity, NDP, is gross domestic product minus depreciation. GDP is the market value of all final goods and services produced in a country during a period of time, and depreciation is the reduction in the value of an asset with the passage of time.

NDP is helpful because it creates a quantitative measure of the general standard of living and success within a country. NDP is unhelpful, however, when it comes to measuring other important factors that contribute to standard of living.

For example, NDP measures production, but not all production is good. Production that enhances welfare, such as spending on health care, is weighted equally with production resulting from natural disasters, like rebuilding after a hurricane.

NDP fails to account for sustainability as it does not track the environmental degradation upon which economic activity depends. Including sustainability as depreciation in NDP is critical because welfare and sustainability are intertwined.

A lack of sustainability, such as the mowing down of forests, hurts future generations’ ability to flourish as holistic humans who can enjoy nature if they so please.

Unsustainable practices also affect our current well-being. In the case of cutting down trees in the forest, a loss of forest life can lead to loosened soil and landslides, less fertile ground — because trees provide nutrients and shade to soil — and more carbon dioxide in the atmosphere. While it may add to economic growth of logging companies and beneficiaries in the short term, it hurts the overall standard of living for present and future generations.

This type of economic growth is unsustainable, and should not be additive to a country’s NDP. Rather, national accounts should more clearly reflect the costs of environmental degradation.

Many countries now have reports on their environmental degradation, but few have taken steps to actually adjust their current method of measuring NDP and count climate change as depreciation. In 2004, China was the first and only major country to count their environmental footprint as depreciation by adopting a green GDP.

Green GDP counts resource depletion as economic depreciation. With climate change considered, however, China’s NDP dropped more than 3 percent in 2007. They stopped using green GDP because of the drastic ways it hurt their economy.

Although China adopted a green GDP, they did nothing politically to promote sustainability, and that is why its economy suffered.

According to new studies published by the United Nations and the National Bureau of Economic Research, climate change could cost the United States up to 10.5 percent of its GDP by 2100. I propose that the United States adopt a green NDP and weigh it more heavily than traditional NDP. Such a decision will force policy that will protect future generations from more harmful effects of climate change, and help avoid large economic downturns in the future.

We should be comfortable losing 3 percent of NDP to avoid losing 10 percent in 89 years. By switching to a green GDP, the effects of climate change are highlighted now, and we avoid discounting future climate change. In other words, adopting a green GDP better prepares policymakers to address our climate crisis.

A 10 percent loss of NDP in the future should be alarming. Distributed nationally, the rich will lose relatively little compared to those hurt in the middle and lower income brackets. A lack of sustainable practices will lead to social unrest.

We need to consider the fact that future generations will pay for our economic recklessness. And what is irreversible now regarding climate change will only grow worse in 89 years.

Further, in that we relay heavily on the environment, it is our responsibility to ensure its continued growth and biodiversity. Letting the issue fester for future populations to deal with is immoral.

As Greta Thunberg, teenaged environmental activist, stated in her U.N. address, global leadership is telling “fairy tales of eternal economic growth” in order to justify the degradation of our natural resources. Counting environmental degradation as economic depreciation will force policymakers to align their interests with sustainable practices.

We must change how we view our standard of living, because it is our moral responsibility to address climate change.

The author is a New York City resident, and a student at Georgetown University. This Point of View was part of her ethics of climate change class.

 

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