False Alarm: How Climate Change Panic Costs Us Trillions, Hurts the Poor, and Fails to Fix the Planet

by Bjørn Lomborg

IN A COST-BENEFIT STUDY undertaken for Copenhagen Consensus, researchers estimated the benefit of research on geoengineering. They found that every dollar spent on research in this area could lead to a total benefit worth $2,000. Yet astonishingly, given the potential, very little government money has been put into researching the technology.

If geoengineering could avoid a significant fraction of expected climate change damages with few or no side effects, it would be a phenomenally useful intervention for humanity. Indeed, given that today we’re contemplating carbon-cut policies that will cost hundreds of trillions of dollars yet do little to help, paying instead $0.009 trillion ($9 billion), as Copenhagen Consensus research suggests, to fix a significant part of climate change would leave an enormous amount of money available to do good in other ways.

In countries most affected by spikes in temperature, it is very clear that getting poor people out of poverty means they will not be nearly as affected by heat waves.

Back in 1992 when climate negotiations were just beginning, Nobel Prize–winning economist Thomas Schelling (with whom I collaborated for decades) first posed the question, are poor people really best helped through cutting CO2 and adaptation, or could we achieve more if we focused on making them more prosperous? The so-called Schelling conjecture suggests that getting richer is likely to be the better way to help people, even those faced with climate problems.

Indeed, a 2012 study investigating the impact of climate and prosperity policies for all regions of the world shows that even when the goal is just to help with climate impacts, for the poorest regions the best policies focus on development, not climate. Even if our singular goal is to reduce the impacts of climate change, one of the best ways to assist the world’s poorest is to help them escape poverty. Prosperity can be a highly effective climate policy.

But the warnings were completely wrong. Ehrlich predicted that one to two billion people would die from starvation in the 1970s. He was off by much more than 99 percent. He claimed that by 1980, the life expectancy of the average American could be forty-two years. In 1980, it reached seventy-four years. Los Angelinos didn’t need gas masks for air pollution but instead breathed easier in the 1980s because of technological breakthroughs like the catalytic converter and stricter environmental regulations. The world did not end.

Some researchers started considering adding chemicals to water supplies or staple foods to make the world’s poor temporarily sterile. It gave urgency and legitimacy to end horrific abuses committed by governments, including forced sterilization campaigns and coerced abortions. In just one year, in 1976, the Indian government force-sterilized 6.2 million men.

Believing that continued food aid would allow the births of more children, who would inevitably die in later hunger catastrophes, Ehrlich advocated that humanity’s most hopeful scenario was to cut off food aid to Vietnam, Thailand, Egypt, and India—and sit back and watch while famine and food riots killed half a billion people. It is horrific to consider the human suffering that would have resulted, had we not instead followed the advice of Norman Borlaug and the green revolution and pursued a pathway of innovation and improving agricultural productivity. Ehrlich’s approach is possibly the most heinous example in modern history of bad policy advice emerging from unfounded, apocalyptic worries.

The resulting nationwide fear led to a large federal focus on reducing toxin risks. The total cost of regulating toxins ran to more than $200 billion per year by the mid-1990s. But these policies had a very poor return on investment. A research team from Harvard University evaluated the regulations and found that the majority of them were very inefficient.

Benzene emission controls at rubber tire manufacturing plants, for instance, cost $100 million per year, but would save a life only once every four thousand years.

Put bluntly, the outsized toxin fear of the 1960s and 1970s ended up committing at least sixty thousand annual statistical murders; that is, lives lost that could have been saved had public policy been focused on implementing the most effective regulations first.

The costs of the panic were immense, not just in actual resources spent, but also in the amount of forgone opportunity to invest elsewhere. What if the money poured into America’s massive military had gone instead to cancer research? To education? To prenatal care for poor mothers? To rebuilding infrastructure? What would America, indeed the world, look like now had it not been for this false alarm?

So in practice, European governments gave most of the certificates to the companies free of charge, but the companies continued to charge their consumers as if they had paid for them. In just the first eight years of EU emissions trading, this made companies, including many coal-fired power plants, about $80 billion in additional profits.

I do believe that companies, the media, and politicians benefit from those stories. This confluence of interests goes a long way to explaining why the conversation surrounding climate change has become so detached from scientific reality.

But today’s popular climate change policies of rolling out solar panels and wind turbines have insidious effects: they push up energy costs, hurt the poor, cut emissions ineffectively, and put us on an unsustainable pathway where taxpayers are eventually likely to revolt. Instead, we need to invest in innovation, smart carbon taxes, R&D into geoengineering, and adaptation.

To make the world richer, we must invest in health care, in education, and in technology. But we can’t do it all. Current climate policy is so expensive, and will drain so much of potential future gains in GDP, that it will leave less money for policies that will enhance prosperity.

Top among these is freer trade. Free trade has recently been criticized by left- and right-wing politicians because it hurts vulnerable communities like manufacturing workers in “rust belts.” This misses the bigger picture. Governments could spend billions more supporting the most vulnerable communities that would be hurt by free trade deals, and benefits would still vastly outweigh costs. Globally, freer trade could unleash an amazing $2,000 of social benefits for every dollar spent. Much of these benefits would go to the world’s poorest, who would have far more opportunities if they could become part of the global market.

Unfortunately, the world has almost given up on the latest round of trade negotiations, called the Doha Development Round, but if we were to successfully conclude such a global treaty on freer trade, economists estimate that it could by 2030 make the average person in the poor world a thousand dollars richer per person per year.

Avoiding malnutrition in the first two years of a child’s life costs about $100. Because good nutrition helps develop the child’s brain, it leads to better educational outcomes and phenomenally higher productivity in adulthood. Indeed, this $100 spent will on average increase each child’s lifetime income to the equivalent of a onetime amount of $4,500, in today’s dollars.

There is a compelling case, too, to spend more resources to fight the world’s leading infectious disease killer, tuberculosis. This disease is hugely overlooked by philanthropists and governments. It mostly kills adults in their prime, leaving children without parents. For about $6 billion annually, we could save nearly 1.6 million people from dying each and every year.

Remember that approximately one-fourth of aid today is diverted to climate aid projects. Indeed, the amount spent on climate aid today could fund all these interventions in contraception, tuberculosis, malaria, immunization, and nutrition—with money to spare.

Many people deeply committed to addressing climate change also believe in expanding women’s access to contraception, in reducing poverty, and in eliminating disease in the poorest parts of the world. But too often, they forget that there are trade-offs.

Overspending on bad climate policies doesn’t just waste money. It means underspending on effective climate policies and underspending on the opportunities we have to improve life for billions of people, now and into the future. That’s not just inefficient. It’s morally wrong.

Over the past century, the world has become a better place, thanks to human ingenuity and innovation. Our choice now is whether we want to allow fear to drive our choices, or if we want to use our ingenuity and innovation to make sure that we leave future generations the best world possible.

In many ways, this was exactly what climate activists had long exhorted people in the wealthy West do to cut carbon emissions. For a short while, we all curtailed our travel and consumption. Thanks to those lockdowns, the world managed to make an unprecedented 6 percent drop in emissions—by far the biggest year-to-year reduction since World War II.

By 2021, to be on track to achieve our promises, we should have generated cuts that were more than twice as extensive as what COVID-19 achieved in 2020—and by 2024, we should have cut more than five times the reduction achieved by all the lockdowns of 2020.

Lockdowns can be seen, in retrospect, as an unexpected, painful experiment briefly testing environmentalists’ dream of radical emission cuts. What this experiment proved was that it’s unrealistic to suggest that we can drastically change our patterns of consumption to have a meaningful effect on climate change. Contrary to the lectures from celebrities in Davos, we’re not going to fix climate change if we all just drive our cars less, fly less, and do our part.

At the signing of the act in August 2022, President Biden declared that “the Inflation Reduction Act invests $369 billion to take the most aggressive action ever—ever, ever, ever—in confronting the climate crisis.” But it already looks like the figure of $369 billion was a significant underestimate. The law gives corporations tax credits for making electric vehicles, along with solar, wind, storage, as well as bioenergy, clean hydrogen, and carbon capture. Those tax credits were not capped, and corporations predictably lined up with their hands out. According to Goldman Sachs research, the full cost will likely be $1.2 trillion—triple the government’s estimate.

For most types of weather—including hurricanes, all types of drought, and coastal floods—the climate panel simply finds “evidence is lacking or the signal is not present,” now and even by the end of the century. Reading this long list really should be compulsory for media outlets—but also for campaigners and political decision-makers who incessantly suggest that all of these climate events are intimately connected to climate change.

Since the book’s original publication, researchers in the medical journal Lancet have made the first truly global estimates of all cold and heat deaths. Their work reconfirms that the vast majority indeed die from cold. They show that of the 5 million people who die from cold and heat each year, half a million die from heat, and 4.5 million die from cold.

This phenomenon is rarely noted, but of course it is in fact a considerable upside. In total, because of rising temperatures, more heat deaths and fewer cold deaths, the world is now seeing 166,000 fewer deaths per year.

Depressingly, social media giants like Facebook have now leaned into climate change activism, and will label as “misinformation” any discussion that doesn’t just talk about more heat deaths (which is entirely allowed) but that also mentions the reduction in cold deaths, even though this is based on peer-reviewed research.

Overall, it has become less acceptable than ever to highlight inconvenient scientific findings like fewer cold deaths, or inconvenient economic fac...

The last full year of data now published—from 2022—was the lowest ever, with a decline from 3.2 percent of Earth’s land surface burning each year to 2.2 percent, or a decline of 28 percent. While 2023 will likely end slightly higher than the absolute low, the overall decline is still dramatic.

As I outline in this book, his research shows that we should absolutely do something about climate change: the first cuts in fossil fuel emissions are cheap and will reduce the most dangerous temperature rises. But his work also shows we should not cut too much because these last cuts will be phenomenally costly and deliver few additional benefits.

Using the latest cost estimates of emission reductions from the UN climate panel, Tol finds that fully delivering on the Paris Agreement promise of keeping the global temperature rise below 1.5°C will cost 4.5 percent of GDP by midcentury, and 5.5 percent in 2100.

Moreover, Tol’s cost estimate unrealistically assumes that governments will implement policies that meet the targets at the lowest possible cost, such as through a globally uniform, increasing carbon price rather than picking technological favorites like electric cars to subsidize. In real life, as this book has shown, climate policy has been needlessly expensive, with a plethora of disconnected measures. Less-efficient policies will mean that the real cost will more than double.

In other words, each dollar spent on climate policy will avoid less than 17¢ of climate damage. The total, undiscounted loss over the century is beyond $1,800 trillion. For comparison, global GDP in 2022 was just over $100 trillion.

PERHAPS THE BEST way to summarize the impact of climate change is to acknowledge that it is a problem but not a ruinous one. It is also a problem that will occur against the background of a much-improving world. Ultimately, climate change simply means the world will continue to get better, but slightly slower than it otherwise would have.

A 2018 study in the science journal Nature Climate Change revealed that strong global action to reduce climate change would cause far more hunger and food insecurity than climate change itself, because what is most important in reducing hunger is making people better off—and aggressive climate policy achieves less prosperity.

But, as I argued in the final chapter, an important way to help people deal with climate change is to ensure more people become prosperous. Not only will this make them more resilient toward climate change, but it will also be good in so many other ways—making lives better, saving children from dying from easily curable diseases, and ensuring more and better food and education.

This is obvious if we look at the new cost-benefit studies of achieving net-zero carbon emissions that deliver just 17¢ back on the dollar, and at the findings of Nobel Laureate William Nordhaus. But it is even clear when we look at the best investments like green R&D, which delivers $11 back on the dollar,

Investigating well over a hundred potential policies, our new, peer-reviewed research identifies twelve policies that each deliver returns worth more than $15 of social benefits for each dollar spent. These investments would supercharge progress toward meeting the world’s goals: for about $35 billion per year, we calculate that we could save 4.2 million lives annually and make the poorer half of the world more than $1 trillion better off every year. That means that each dollar invested would deliver an astounding $52 of social benefits—much better than we can do even with the smartest climate policies.