How much will it cost to deal with climate change?

Have you noticed $10,000 missing from your savings? Back in 1996, that was the predicted cost to the average family of a government commitment to hold emissions to 1990 levels by 2020. The prediction was made by what was then the Australian Bureau of Agricultural and Resource Economics, or ABARE, using a model developed with funding from the coal industry. On current projections, we will be very close to 1990 levels next year, and yet climate policies have so far had no detectable impact on economic activity or living standards.

The Coalition is relying on modelling that has already been shown to be misleading.

Tony Abbott famously described the Labor government’s carbon “tax” (a price, in reality) as a “wrecking ball” through the Australian economy. But neither its introduction under Julia Gillard nor its removal by Abbott had any measurable effect on economic growth. Indeed, the economic outlook presented in the budget statements in those years didn’t mention carbon pricing as a factor in our overall performance.

Why did these apocalyptic predictions go so badly wrong? In the case of the ABARE modelling, it was the result of three main factors: exaggerated assumptions about the cost of reducing emissions, inappropriate choices in the modelling process, and misleading presentation of results.

Read the story from Inside Story by John Quiggan -“How much will it cost to deal with climate change?”