The Full Cost of Global Environmental Damage

A recent study out of the Stockholm Environmental Institute has tried to affix the dollar amount of loss that continued ocean degradation will do to the global economy.  The study finds that by 2050, the yearly loss to the world economy will be $428 billion and nearly $2 trillion by 2100.  I couldn’t find an overall account of all the global harms being done, so figured I’d do some rough calculations and ask how much will global environmental degradation cost the world economy in 2050 (all in U.S. dollars 2010 or thereabouts)?

  • $428 billion loss for oceans by 2050 (includes fishery collapse)
  • $18.25 trillion loss for biodiversity degradation by 2050 (includes deforestation)
  • $20 trillion loss for climate change by 2100
  • $42 billion loss for land degradation and desertification right now

Now some of the economic losses are absolute, there is no replacement, and some of the costs are the amount it takes to adapt to the degraded environment.  Also, uncertainty is high in all of the models and discussion: they should be taken as a heuristic to guide future decisions, not as a firm projection.  However, the bill is adding up.

To understand the impact, let’s do some quick math.  First assumption, I assume that climate change number accounts for 1/3 of all the other numbers already.  So they should be reduced.  Second, I assume that the land degradation number will stay constant, even though most estimates see the impact increasing.  Finally, to account for the temporal differences, I lower climate impacts to 1/3 of its level for a 2050 score (I looked for a good 2050 calculation, but couldn’t find it).  So, how much will ecological destruction cost us in 2050:

18,982,000,000,000 by 2050.  That’s $18.98 trillion for those that like brevity.

To put this in comparison, this amount is:

  • Bigger than the largest economy in the world in 2011.  EU economy is totaled at just under $18 trillion.  U.S. is totaled at just over $15 trillion.  It is double the size of the Chinese economy.
  • Bigger than the total U.S. debt.  Comes in at $15 trillion.
  • 9 times as large as the total revenues of the top 10 companies in the world.  Similarly is about 9 times as large as the total revenue of the top 10 oil companies in the world.
  • 450 times as large as the $42 billion BP will spend to clean up the gulf oil spill.
  • 375 times as much as the total worldwide spending in 2011 on renewable energy sources.

Once again these are rough numbers and the future is not clearly determined, of course.  However, the picture should be seen as one where the major drag on the economy in the next 50 years is environmental degradation.  If the world has to spend $18 trillion (in $2010) in 2050 to adapt to and account for losses due to environmental degradation, it can prevent progress on development, economic growth, and even basic living standards.

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