The carbon taxes we're already paying

June, a decades-long open secret hit the media like a typhoon: Clim
ate change is the fundamental economic challenge of our time.
The bipartisan troika of former New York ayor ichael !loomberg,
hedge fund mogul Tom "teyer and former Treasury "ecretary #enry $
aulson funded the report, titled %&isky !usiness,% which estimated tha
t on its current tra'ectory, climate change could cost the (.". economy
hundreds of billions of dollars by )*+*. $resident ,bama cautioned en
-ironmental leaders at a .eague of Conser-ation /oters dinner to prep
are the 0merican public for the costs ahead from re-engineering the e
nergy grid away from fossil fuels.
These assertions, as welcome as they are, lea-e out a fundamental 1u
estion: 2hen energy gets more e3pensi-e, who pays4
The fact is that 0merican ta3payers are paying for the costs of climat
e change now. These costs don5t hit us all at once but sporadically, in d
i6erent places and at di6erent times. They don5t feel like a carbon ta3,
though they amount to one. 7-ery time we use fossil fuels, we increas
e our ta3 burden, a burden that unfolds like a se1uence of trap doors,
'ust like climate change itself.
The costs of reco-ering from climate-change signposts like "uperstor
m "andy, #urricane 8atrina and ma'or drought are well documented.
2hat5s less known are the costs 9 the trap doors 9 that ha-e normall
y been accounted for in some ledger other than atmospheric chaos.
"tart with food: :armers ha-e always faced good years and bad years,
but as bad years get more fre1uent, ta3payers pick up more and more
of the tab. 2hen the ;o-ernment 0ccountability ,6ice issued its bian
nual audit of the go-ernment5s highest <nancial risks last year, for the
<rst time since the list was launched in =>>* climate change was iden
ti<ed as a ma'or <nancial threat, speci<cally because of the go-ernme
nt5s ?ood and crop insurance programs.
l&elated #ow California can best <ght climate change
7@AT,&A0.
#ow California can best <ght climate change
"77 0.. &7.0T7@
B
Crop insurance is now one of the nation5s biggest and riskiest <nancia
l bulwarks against the e6ect of climate change on farmers, who are st
ruggling to adapt as growing conditions shift beneath their feet. :eder
ally subsidiCed payouts ha-e skyrocketed from DE.F billion in )*=* to
D=*.B billion in )*== and to D=G.F billion in )*=), the year of the id
west drought.
@emand is way up for protection against lack of water and ?ooding, t
wo counterintuiti-e cousins from the disrupted climate. These phenom
ena ha-e direct costs too: The ("@0 estimates that the )*=) drought l
ed to a )*H 'ump in meat prices. ;lobally, the price of cereals has dou
bled since )***, according to the (.N. :ood and 0griculture ,rganiCat
ion, due signi<cantly to stresses on global water supplies
Then there5s the acidi<cation of the oceans Iwhich absorb an estimat
ed ).+ billion tons of C,) e-ery yearJ and rising sea le-els Ifrom melti
ng ice packs and glaciersJ, which lead to conse1uences as di-erse as d
eclining yields of shell<sh to massi-e e3penditures to shore up the dua
l coasts of the (nited "tates. eanwhile, warmer seawater contribute
s to the -olatility of weather systems 9 on and on go the trap doors.
0 team of scientists tells us in the peer-re-iewed 'ournal #ealth 06air
s that o-er the <rst nine years of this century, si3 %climate-related% e-e
nts I?oods, hurricanes, infectious disease outbreaksJ led to GK*,*** e
ncounters with the healthcare system amounting to as much as D=E bi
llion in health costs. This year, the Centers for @isease Control and $r
e-ention re1uested DB million for its Climate and #ealth $rogram, whi
ch helps educate state and local o6icials on the coming health threats
from the warming climate
That <gure is dwarfed by millions more spent by the C@C and other
research institutions to study the e3panding uni-erse of bacteria and
diseases a6ecting humans, plants and animals and mo-ing with the he
at 9 for e3ample, mos1uito-borne 2est Nile -irus or -alley fe-er, caus
ed by a fungus carried in dry winds that are one feature of drought, w
hich is showing up in places like 2ashington state, far from the arid <
elds of the 0merican "outhwest and northern e3ico where it once w
as limited.
The 7n-ironmental $rotection 0gency has an estimated price for the e
6ects of greenhouse gases: At5s called the %social cost of carbon,% and i
s put at DFB per ton of emissions. This <gure, de-ised to enable the 7$
0 to economically 'ustify its regulation of greenhouse gases, is based o
n a more limited list of factors than other nations. !ritain and :rance
calculate higher costs and include such factors as climate-forced migr
ation and public health conse1uences for animals and people.
#owe-er inade1uate, the 7$05s social cost of carbon is re-ealing. @o t
he math: The (nited "tates emitted K.+ billion tons of greenhouse gas
es last yearL at DFB a ton, the amount of money gets large -ery 1uickly
0ll of these are known as e3ternaliCed costs 9 costs borne by anyon
e other than those who created them. That means us, the public. An th
e prices and ta3es we pay, we ha-e been shouldering costs that fossil f
uel companies are not e-en compelled to recogniCe on their balance s
heets. Climate risks are barely a <gment on most companies5 reports t
o in-estors, because companies are under no obligation to report the
m.
The costs are hidden, but they5re hiding in plain sight. The world5s F,*
** biggest companies, according to a (.N. 7n-ironment $rogram repo
rt, cause D).=+ trillion in annual en-ironmental costs, most of which a
re not accounted for in their pro<tMloss statements.
"o in many ways the argument o-er a carbon ta3 is already settled. Th
e public is paying a high price for the en-ironmental conse1uences of
fossil fuel use. Now that the go-ernment is <nally starting to recogniC
e those costs, the ne3t 1uestion is: 2ho should share the burden with
the 0merican ta3payer4 Af the price of energy goes up, should ta3paye
rs continue in?ating or at minimum sustaining the pro<t margins of th
e fossil-fuel-reliant companies4 ,r should the businesses that ha-e co
ntributed to the problem in the <rst place be held accountable4
This 1uestion looms o-er the climate debate, and it will be on the tabl
e when negotiators gather in $aris in )*=+ to hammer out a new clima
te treaty and in preliminary sessions in .ima, $eru, in No-ember.
"ome in the en-ironmental community argue that there is a danger of
acknowledging how much climate change is already costing us. They f
ear it could dampen people5s willingness to pay more to slow it. !ut to
unmask these costs is to re-eal a <nancial tempest foretold. The conse
1uences of climate change will only get more e3treme and more e3pen
si-e the longer we wait. &educe emissions now and we can cushion, if
not a-oid altogether, the fall through that se1uence of trap doors.
"o the 1uestion remains: 2ho will bear the burden of all those years o
f discounted energy when the real costs of all those discounts are brea
king out all o-er4
ark "chapiro is the author of %Carbon "hock: 0 Tale of &isk and Calc
ulus on the :ront .ines of a @isrupted ;lobal 7conomy,% to be publish
ed ne3t monthI https:MMtwitter.comMYNC.!,,8 J F4plurkIhttp:MMw
ww.plurk.comMsearchkeywords J linkedincn.linkedin.comMpubM-
MGEM=*aMb>*M7dit J/k Ihttp:MM-k.comMchinateach JredditIhttp:MMwww.
reddit.comMuserMe3tensions)=M Jweibo Ihttp:MMweibo.comMsearchkeyw
ords JtwitterOy3clbook