Another Treasury Secretary Warns About Costs of Climate Change

Last week Henry Paulson, the Bush Secretary of Treasury who had his hands on the wheel during the near Titanic sinking of the US/World economy, and whom most would credit with averting a catastrophe, while suffering gaping holes in the side of the ship (in the steerage decks, natch), came out as the spokesman for “Risky Business,” a call to action on climate change.

Now another Secretary of the Treasury, who arguably set the table for the near catastrophe, Robert Rubin, joins Paulson in an urgent warning — and along with it, a long-called for change in how national well being is measured.

The U.S. economy faces enormous risks from unmitigated climate change. But the metrics we currently use to measure economic growth, fiscal prospects and business earnings do not incorporate these risks. If we are going to have a well-informed and accurate debate about the economic costs of action vs. inaction, the public and private sectors need metrics that honestly reflect climate-related risk.

We do not face a choice between protecting our environment or protecting our economy. We face a choice between protecting our economy by protecting our environment — or allowing environmental havoc to create economic havoc. And a major step toward changing the debate is to change the way we measure the health of our economy, our fiscal conditions, and the health of individual companies and businesses to better reflect the world as it will be.

 … gross domestic product — the current standard measure of national economic health — is inadequate and misleading, because it fails to account for significant externalities, beginning with climate change. Others might think we should incorporate additional externalities beyond climate impacts, and that’s a good discussion to have. But we should start with a parallel GDP that incorporates the impact of greenhouse gas emissions. Without that, we are using an incomplete measure of economic output to inform policy decisions. Currently, GDP simply reflects the goods and services produced by our economy. However, it does not account for the present and future damage resulting from the emissions involved in producing those goods and services. And bad data leads to bad policy.


As Climate Progress points out, this pointing to the GDP as a misleading indicator of the nation’s health, was a point made decades ago by Robert Kennedy as he campaigned for president, though Kennedy, of course, made an even bolder argument:

the Gross National Product includes air pollution, and ambulances to clear our highways from carnage. It counts special locks for our doors and jails for the people who break them. The Gross National Product includes the destruction of the redwoods and the death of Lake Superior. It grows with the production of napalm and missiles and nuclear warheads….

But I’m OK with Rubin’s more incremental call.  If we could get the bottom-liners to factor so-called externalizes into the P&Ls and Balance Sheets, we would be a long way towards seeing the world as it is, and therefore, except for the usual right wing renegades, seeing where the real bottom line could be brought back from the extreme red into something that approaches black.


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