Thomas Schelling: The Economics of Global Warming

The real global challenge facing us will be organizing to reduce carbon emissions and provide help to poor countries coping with climate change. The worst, but not the most likely, consequences of climate change could be rising sea levels: there is grounded ice in Antarctica that, if loosed from its moorings, is worth five or six meters of sea level, enough to sink Stockholm, Manhattan, or London, or to oblige them to build levees to escape inundation, and to oblige millions of Bangladeshis and others to abandon their homes and workplaces and to migrate. (Levees cannot save Bangladesh; they leave no escape for the freshwater floods that need to reach the ocean.)

Estimates of lost world product due to climate change are moderate because the poor have so little to lose. More than a billion people, maybe 2 billion, are estimated to live on less than the equivalent of $2 per day. If a billion of those poorest people lost half their income, it would be an overwhelming tragedy, a true catastrophe, worse than all the earthquakes, floods, tsunamis, landslides, and fires of the past decade happening every year. But those billion people together would lose only $365 billion per year. That is less than 1 percent of world income! They have so little to begin with that what they can lose doesn’t amount to much of a statistic. But they can lose tragically.

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