Robert Whaples of Wake Forest University has the answer. He polled American economists and found:
The results show that most economists are not alarmed by the likelihood of continued carbon dioxide emissions. The Great Depression of 1929 to 1933 caused inflation-adjusted GDP to fall a numbing 27%. Few economists think that rising GHGs will have anywhere near this impact - only one in eight predict that GDP will fall by more than 10 percent. Almost twice as many believe that rising greenhouse gas levels will cause the economy to grow. The most popular response is that rising greenhouse gas levels will have virtually no impact on income per person (less than 1 percent lower or higher). The vast majority (73.2%) predict that the impact will be less than 5 percent one way or the other. (Here are the complete responses: a) more than 10 percent lower = 12.5%; b) about 5 to 10 percent lower = 7.1%; c) about 1 to 5 percent lower = 21.4%; d) less than 1 percent lower or higher = 35.7%; e) about 1 to 5 percent higher = 16.1%; f) more than 5 percent higher = 7.1%.)
Assuming that "more than 10" = 15, "more than 5" = 10, and taking the midpoint of the other intervals, this averages to -1.86%. Since the end of World War II, inflation-adjusted GDP has risen by about 2 percent per year on average. Thus, the collective wisdom of these economists is that greenhouse gas emissions will shave about one year of economic growth off the economy over the next century.
Huh? How does this square with the tales of catastrophe we hear every day?
The growing literature on this topic suggests that most parts of the economy are not very vulnerable to climate change. Just as importantly, parts of the economy that might be negatively impacted are pretty flexible and adaptable to change. If climate does change, crops can be modified, different crops can be planted and crops can be planted in different places, for example. If sea levels rise, we have the ability and resources to build protective structures or, in a worse case scenario, simply move to higher ground.
In other words, if we adapt, we won't be hurt. If we sit and cower, however, we will be. Reducing greenhouse gas emissions by caps and taxes actually lowers our ability to adapt because it makes adaptation more expensive. Some adaptation, of course, will reduce greenhouse gas emissions anyway, so that's a win-win. And all of this presupposes that the impacts of a warming world will be as severe as the models suggest when, as we saw yesterday, that's a big if.