If someone offered you $100 today or an inflation-adjusted $100 in 10 years, it’s unlikely you’d choose the latter. But if taking the money now cost your child’s generation billions of dollars, that option would seem pretty miserly.
The debate over the economics of climate change boils down to that very calculation: how much are we willing to pay today to avoid climate risks in the future? The simple fact is that as we continue to use fuels that contribute to global warming today, we place major economic burdens on our kids and grandkids tomorrow.
In effect, we are forcing future generations to retroactively subsidize our decision not to increase energy efficiency and move to cleaner fuels. They will be the ones who will have to contend with the most severe effects of climate change — increased insurance rates for larger flood areas, higher prices for food as farming becomes more difficult, and oceans becoming more acidic.
For $2.50 per gallon, we can fill up our tanks, but when we do, we charge at least 19 cents per gallon to future generations. Americans use 380 million gallons of gas annually, running up a $26.9 billion tab on our children’s credit card every year. After 30 years, that will add up to $807 billion if we go along with business as usual.
Gasoline consumption represents a tiny fraction of world emissions, all of which will generate damages. The total tab for emissions world wide is almost a trillion dollars a year. Every year that we don’t reduce emissions, we keep on piling onto the tab.
This figure assumes that we make a relatively normal transition to higher temperatures. It doesn’t take into consideration catastrophic risks of flooding, droughts, and storms that scientists predict may kick into high gear near the turn of the century. When you measure up all of the costs we’re pushing onto future generations, there is a serious transfer of wealth from the cohort of global citizens who have yet to be born.
Reducing our greenhouse gas emissions will not be free — the Congressional Budget Office estimates it will cost about $10 per month per household. But major dividends will accrue with this investment — some to us, but most in the form of benefits to our children and grandchildren’s generations.
By putting a little bit of money aside today, like refusing the $100 in the opening example, we spare future generations from having to make major sacrifices on our behalf. But for the time being at least, we are still holding on to that $100 today even though it will impose huge costs in the future.