Read the full transcript of Bjorn Lomborg’s talk titled “The Cost-Benefit Analysis Perspective on Climate Change” at ARC Conference 2023. Dr Lomborg is the founder and President of the Copenhagen Consensus think tank, which researches the best ways to solve the world’s greatest challenges.
Listen to the audio version here:
TRANSCRIPT:
The Importance of Energy for Progress
DR BJORN LOMBORG: Energy really underpins our progress, and progress is dramatically increasing. It’s also very likely that it will keep increasing. And climate change is not going to undercut it. Yes, climate change is a problem, but it’s by no means the end of the world.
This is important. This is the story that we need to get out. Because that means we can start being smart, both on climate and all the other challenges the world has.
So, fundamentally, energy is incredible for our lives. It underpins pretty much everything and lifts us out of poverty. We know this for a fact. The more energy you have, the richer you are. The richer you are, the more energy you have.
This is true for all nations in the world.
Historical Perspective on Energy
But if you think back, it’s not really very surprising. If you think what happened before fossil fuels, what we really saw was that you had virtually nothing. You lived off of the organic energy. You had food, fodder, and firewood.
This is all very hard to scale. And that’s why, for most of our life, we have lived in poverty on this planet. You would like to get more muscle? You don’t. Just eat more. Unfortunately, it doesn’t work that way, right? The problem here is that it’s really hard to get a lot more energy unless you can start switching to other energy forms. And that’s what we did, for instance, for coal that could heat.
If you went to coal instead of using wood, it would actually save forests. Take a look at this graph for England and Wales. What we saw since 1500 was that they used more and more coal. They could keep their homes ever better without cutting down forests. In 1800, they used so much coal that had they used it from wood, they would have had to have all of England and Wales covered in forests.
That’s, of course, already impossible.
But since then, they’ve dramatically, not just coal but all fossil fuels, dramatically increased so that English homes are much better heated but without cutting down so much forest that would take 13 times the area of England and Wales.
Mechanical Energy Servants
Not only that, but also we see mechanical energy servants. Think about it. You have lots of servants doing your bidding in all kinds of different ways. You have your Roomba, you have your washing machine, your car, your dishwasher, all these things that actually perform services for you.
This is what is so amazing. If you think back again, if we look at England and Wales, back in 1800, you basically had your own muscles and then you had a little more. You had about a tenth of a horse on average. And that equates to about one person.
So you had one extra servant to help you with doing all your chores.
But already by 1850, mostly because of fossil fuel, you now had two servants instead of one. And since then, of course, it’s dramatically increased so that today an average person in England and Wales have about 40 servants, 40 mechanical energy servants. Think about it. Why was it cool to be Louis XIV?
I mean, assuming that it was fun to be Louis XIV, you get to be king, right?
But you also have lots and lots of servants doing your bidding. That’s wonderful.
But the problem with that setup is that most people end up being the servants. The point here is that fossil fuel and abundant energy has made it possible for us to all be the king and have all the servants. This is what we get. This is why we have so much more prosperity.
And that’s really why we need to emphasize that energy is crucial for our prosperity.
Prosperity Indicators
But also, in general, that prosperity has just become much, much better. I just want to share with you three graphs that I think we should share with everyone to get the message out. This is the better story because it’s the true story. It’s the right way to think about the world.
So, obviously, we live much longer. For most of our lifetime on this planet, we’ve lived less than 30 years on average. Less than 30 years. In 1900, we still just lived, on average, 32 years of age.
This year, we will end up living 73 years. We have got more than two lifetimes since 1900. Each one of you out here have more than two lives to live rather than just one. How amazing is that?
We need to recognize that and say that’s incredible. Likewise, if you look at extreme poverty, we used to have a situation 200 years ago where almost 90% of everyone were poor. Since then, it’s dramatically declined such that today it’s down below 10%. We’ve gone from 90% poor to less than 10% poor in 200 years.
This is phenomenal. And when you look at the environment, yes, there’s still many environmental problems left. And if you look, for instance, at outdoor air pollution, that’s still a significant problem.
But the main environmental problem, which was indoor air pollution, has come down dramatically. We don’t think about that anymore, but that’s only because we’ve solved it in much of the rich world. Everywhere we used to cook and keep warm, mostly with fire, in 1900. That means that our indoor was incredibly polluted. That means that a lot of us died from that air pollution.
We don’t in the rich world anymore, but it still happens much in Africa.
But the crucial point here is to say we’re both much better off. We live longer, we’re much less poor, and we have much less pollution.
These are great stories. We need to get those great stories out. Those are the stories that we need to tell everyone.
Climate Change Perspective
But, of course, we’re being told this is no longer going to happen. This is going to end because of climate change. And, yes, there is a problem, but we’re being told climate is the end of the world. A new survey from the OCD tells us that 60% of all people in the rich world now believe that unmitigated climate change will likely, or very likely, lead to the end of mankind.
That’s just simply ridiculous. That’s not what the UN Climate Panel is telling us. Yes, it’s a problem, but it’s not the end of the world. Let me show you why that is true. If you look, for instance, on deaths from climate change, that could be climate-related deaths like floods, droughts, storms, and wildfires, they’re not killing us ever more.
Actually, a hundred years ago, in the 1920s, they killed about 500,000 people, so half a million people each and every year. If you listen to most of the stories in the media, you would imagine that it exploded much, much worse. No such thing. Since then, it’s dramatically declined so that in the 2020s, it’s down below 10,000 people per year, a reduction of more than 98%.
This has nothing to do with climate. It has everything to do with the fact that when we lift people out of poverty, when we get richer, we become more resilient, and hence we die much less from all these natural disasters. What we do is much, much more important than anything that climate throws at us, and that’s why we’re better off. This is the story that we need to get out.
Climate does not mean that we’re somehow all being terrified. It doesn’t mean the end of the world. What it does mean is that the world will continue to get much better, but slightly slower. That sounds like a much, much different argument, and of course, it would also lead to much different policies. We need to get that story out.
Impact on Specific Issues
Let me just share with you a few ways that you can see this. For instance, malaria. We’ve been told that because of climate change, you’ll see much more malaria because the mosquito can live many more places.
But remember, malaria is mostly an outcome of poverty. Malaria used to be endemic in most parts of the world, and it’s since declined dramatically, and the World Health Organization estimated out to 2060, it will decline another 64%.
But they also make the calculation what will happen with climate change. It will decline almost as much. It will only decline 58%.
Yes, you almost can’t tell the difference up there, but that’s the point, right? We’re seeing a dramatic decline. Things are getting better, but with climate change, they get better slightly slower. It’s the same thing with hunger.
We’ve been told that with climate change, we can no longer feed everyone.
But actually, what we see when we look at how many people die from hunger, we’ve seen a dramatic decline, and it’s likely to continue out to 2050, according to the World Health Organization.
But with climate, it will still decline dramatically, but it’s slightly slower. Again, this is the story we need to get out, to get people to realize it is not a world that is suddenly under threat that means we will all, you know, die, we’ll go extinct. This is the world that will be ever better, but possibly slightly slower.
And that, of course, means we also can look at what will happen in the future.
So the UN actually estimates in 2100, the average person on this planet will be 450% as rich as he or she is today. This is a fantastic achievement, and climate change is not going to undercut that. The only climate economist to win the Nobel Prize in climate economics, William Nordhaus, estimates that if we do nothing about climate, which is not what I’m arguing, if we do nothing about climate, it will mean that instead, by 2100, to be 450% as rich, it will feel like we will only be 434% as rich.
Yes, that’s slightly less bad, slightly less good, but it’s still a fantastic achievement, just slightly slower progress on our achievement here on the planet Earth. Things are getting better, they used to get better and they are getting better, and climate change is not underpinning that.
The Cost of Climate Policies
And what we then need to start thinking about is, yes, climate has costs, but so do climate policies. We rarely talk about the fact that as we are making more and more climate policies, that also impacts us negatively, that actually pulls away resources from us. Just to take a look at energy prices here in the UK, energy prices have been coming down for the last two centuries, but now they are starting to go up because of climate policy.
So if you look at the gas price, it went down for almost two centuries, and then the last two decades it’s been going up, not just because of climate policies, you can certainly also see Ukraine in there, but also because of climate policy. The same thing we see with electricity prices, dramatic drop in prices, and now the last two decades, an increase. Climate policies have real costs, and we need to be honest about that.
And since we have to pay that as well, we actually have to start talking about what are the costs, what are the benefits. Almost all politicians love to tell you we should go net zero by 2050, but no politicians have ever asked how much will this cost. I think I know why.
But we should ask that, and it actually turns out there’s been no good economic estimates of what the total cost is, until now.
So a couple of months ago, the journal Climate Change Economics actually made a special issue where they asked a lot of economists to try and find out how much will this cost. They both made one estimate of what’s the benefit, and three estimates of what’s the cost. I’m just going to show you the average over the century. How much good will this do?
If we go net zero, it will have real benefits. We actually estimate the annual benefit will be in the order of $4.2 trillion each and every year. That’s avoided damages. This is definitely worth thinking about and making sure that we have.
But the stuff that they don’t tell you is that the cost will be about $25 trillion each and every year. This means it’s an incredibly bad deal. Every dollar spent will deliver 16 cents back on the dollar. That’s a terrible idea.
Also, it’s entirely unaffordable. Right now, or last year, all governments in the world raised about taxes of $15 trillion. We’re talking about spending almost twice as much as that. There’s no way we can do all of that. It gives us a sense both of what we know and what we should be doing. I would argue there’s a better way forward, and this is part of that better story we need to come out with.
A Smarter Approach
We should fix climate change, yes, but we should fix it smartly, through innovation like we’ve solved most other problems. Make sure we invest a lot more in green energy R&D so we innovate prices of future green energy down below fossil fuels so everyone eventually switches. Not just rich, well-meaning Westerners, but also the Chinese, the Indians, and the Africans. This is an order of magnitude cheaper and much, much more effective.
But people say we need net zero for the world’s poor. No, we don’t. The world’s poor is actually very clearly, both leaders, people, and opinion makers very clearly tell us that climate change has come pretty far down their list of priorities because they quite frankly have other issues like hunger, education, disease, jobs, and the economy.
And so we need to start talking about, as we realize things are getting better, what are the things we should be prioritizing. I have actually been working with hundreds of world’s top economists, several Nobel laureates, in trying to find out where can you spend a dollar and do the very most good. This is the book I wrote about it and I’m going to just share with you a few of those really, really great things that we can do.
So one thing is maternal and newborn health. We can actually help a lot of the world’s people here. About 2.6 million moms and kids die around childbirth each and every year. This is not rocket science how we fix it.
It’s simply about getting more moms into institutional birth and make sure that there’s obstetric care for them when they get there. This will cost about $5 billion but it will save 1.4 million moms and kids each and every year. Every dollar spent will deliver $87 of good. That’s a fantastic achievement.
Likewise, if we focus on tuberculosis, remember tuberculosis was enormously deadly for most of the rich world in the 1800s. About every fourth person that died in the 1800s died from tuberculosis.
But we fixed it with antibiotics. We don’t think about it anymore but 1.4 million people still die from tuberculosis. We could do something about that for about $6.5 billion a year. We could screen people better and make sure they get better treatment so that we could save about a million people each and every year. That would deliver for every dollar spent $46 worth of good.
Education, huge issue. And we know how to fix it. One way of fixing it is to make sure that schools get better. One way to do that is to get tablets, to get kids in front of tablets with educational software just for one hour a day.
So we’ll actually share the tablets with many other kids. That’ll drive down the price.
But that one hour, the tablet would teach the kid at his or her own level exactly what they need. We know from lots of studies that that will actually make them much more productive. It means that for about $31 per kid per year, that will enable them to do as much good as they normally would have done in three years of schooling. It makes them, when they come out, makes them much more productive. It makes them richer, their families richer, their countries richer.
We estimate this would cost about $10 billion a year.
But it’d generate more than $600 billion of social good, sorry, of economic benefit for these countries. There are lots of different things, agriculture, R&D, land tenure, skilled migration, e-procurement, trade, malaria, chronic disease, nutrition, childhood immunization. All of these things are enormously cheap and incredibly effective. We estimate for the total cost about $35 billion a year.
We could achieve something that is almost unheard of. We could make, we could save about 4.2 million lives each and every year and make everyone in the poor world about $1.1 trillion better off. The point here is simply to say, once we stop being scared witless, we can actually be incredibly smart.
Conclusion
And I would argue this is the message that we want to take with us. We want to tell everyone in the world that, look, abundant energy makes us much better off. We live longer, richer, cleaner, smarter and happier lives for a lot of different reasons.
And it’s likely that that’s going to continue into the future. It is not such that climate change will disrupt all of this. Yes, it is a problem.
But it’s a problem that we need to tackle smartly. We need to tell it’s a problem that slightly slows progress. Then we can stop wasting trillions of dollars and instead do the smart stuff, which is basically investing in green energy R&D.
And then, of course, we can actually take time off to do some of the really good stuff for the world. The kind of tuberculosis, education, trade, malaria, et cetera. Those are the things we should do. And that’s why I call this talk.
If we’re less scared, if we have less panic, we can be more smart. How about we do that?
