As the climate crisis worsens, too many people are swinging from denial straight to despair. But we should not lose hope. Humanity has enormous resources under its command, and by applying them wisely, we can still prevent ecological cataclysm.
Let's talk numbers. What would it cost to prevent catastrophic climate change? Would we have to commit 50 percent of our total budget? Thirty percent? Ten percent? Naturally enough, no one knows for sure. My team and I have spent weeks poring over various reports and academic papers living in a cloud of numbers. But while the models behind the numbers are dizzyingly complex, the bottom line should cheer us up. Most experts converge on the number two percent.
If humanity increases our annual investment in clean technologies and infrastructure by around two percent of global GDP, that should be enough to prevent catastrophic climate change.
If you want to see how experts got to that number, you're welcome to visit the Sapienship website.
We can, of course, argue endlessly about the exact number, tweaking the models this way and that way. But we should look at the big picture. The crucial news is that the price tag of preventing the apocalypse is in the low single digits of annual global GDP. Even the more pessimistic models generally estimate it at below five percent. And most models say it requires investing only an additional two percent of global GDP in the right places.
And note the word investing. We are not talking about burning piles of banknotes in some huge sacrifice to the spirits of the Earth. We are talking about making investments in new technologies and infrastructure, such as advanced batteries or other technologies to store solar energy and updated power grids to distribute it. These investments will create lots of new jobs and economic opportunities and are likely to be economically profitable in the long run, in part by reducing health care expenditures and saving millions of people from sickness caused by air pollution. In addition, since oil and gas often prop up autocratic and militaristic regimes, reducing our dependence on fossil fuels will be a huge boon to democracy and to peace. All this can be translated into a concrete political plan of action.
We have learned in recent years to define our goal in terms of one number: 1.5 degrees Celsius. We can define the means to do this with another number: two percent. Increased investment in clean technologies and infrastructure by two percentage points of global GDP, above 2020 levels. Of course, unlike the 1.5 Celsius figure, which is a scientifically robust threshold, the two-percent figure represents only a rough guesstimate. It should be understood as a ballpark figure that can help to frame the kind of political project humanity requires. It tells us that preventing catastrophic climate change is a totally feasible project, even though it would obviously cost a lot of money.
Since global GDP in 2020 was about 85 trillion US dollars, we are talking about a number around 1.7 trillion US dollars. But that's still just two percent. This means that to save the environment, we don't need to completely derail the economy or to abandon the achievements of modern civilization. We just need to get our priorities right.
Committing two percent of annual global GDP is far from the whole story, of course. It won't solve all our ecological problems, such as oceans brimming with plastic or the continued loss of biodiversity. And even to prevent catastrophic climate change we'll need to make sure that the funds are invested in the right places and that the new investments don't cause their own negative ecological or social fallout. We will also need to change some of our behaviors and ways of thinking from what we eat to how we travel.
None of that will be easy. But that's exactly why we have politicians. Their job is to deal with the hard stuff. And politicians are actually very skilled at shifting two percent of resources from here to there. It's what they do all the time. The difference between the policies of right wing and left wing parties often amounts to a few percentage points of GDP. When faced by a major crisis, politicians swiftly shift far more resources to fight it.
For example, in 1945, the US spent about 36 percent of its GDP on winning the Second World War. During the 2008-2009 financial crisis, the US government spent about 3.5 percent of GDP to save financial institutions that were deemed "too big to fail." Maybe humankind should also treat the Amazon rainforest as too big to fail.
Let's try a thought experiment. Given the current price of cleared rainforest land in South America and the size of the Amazon rainforest, buying the [whole] of it in order to protect local forests, biodiversity and human communities from destructive business interests would cost about 800 billion dollars, or a one-off payment of less than one percent of global GDP.
In just the first nine months of 2020, governments around the world announced stimulus measures worth nearly 14 percent of global GDP to deal with the COVID-19 pandemic. If citizens pressed them hard enough, politicians can do the same to deal with the ecological crisis. So can investment banks and pension funds. Pension funds hold over 56 trillion US dollars. What's the point of having a pension if you don't have a future? At present,
most businesses and governments are unwilling to make the additional two-percent investment necessary to prevent catastrophic climate change. Where does that money go instead? Well, every two years, approximately 2.4 percent of global GDP is spent on food that goes to waste. Governments also spend about 500 billion US dollars annually on -- wait for it -- direct subsidies for fossil fuels. That means that every 3.5 years governments write a nice fat check for an amount equivalent to two percent of annual global GDP and gift it to the fossil fuel industry. And it gets worse when you factor in the social and environmental costs that the fossil fuel industry causes but isn't asked to pay for, the value of these subsidies actually reaches a staggering seven percent of annual global GDP.
Now consider tax evasion. It's estimated that the money hidden by the wealthy in tax havens is worth around 10 percent of global GDP. Every year, another 1.4 trillion dollars in profits is stashed offshore by corporations, which is equal to 1.6 percent of global GDP. To prevent the apocalypse, we'll probably need to impose some new taxes. But why not start with collecting the old ones?
Such examples can be multiplied. But you get the picture. The money is there. Of course, collecting taxes, stopping food wastage and slashing subsidies is easier said than done, especially when faced by some of the most powerful lobbies in the world. But it doesn't require a miracle. It just requires determined organization.
So we shouldn't succumb to defeatism. Whenever someone says, "It's too late, the apocalypse is here," reply, "Nah, we can stop it with just two percent." And when COP 27 convenes in Egypt in November 2022, we should tell the attending leaders that it's not enough to make vague future pledges about 1.5 degrees Celsius. We want them to take out their pens and sign a check for two percent of annual global GDP.
Thank you.
