2 percent GDP for net zero - how a little amount goes a long way

It looks like we need to spend 2 percent GDP for net zero or (1.5 degrees) of climate change. Climate Change challenge is a chronic worsening of the climate and 187 countries through Cop26 and the Paris Accord have targeted to hold climate change to net zero or 1.5 degrees of warming. We focus on the result, but the real storey is how much will this cost us to prevent catastrophic climate change and while Nicolas Stern in 2006 , the author of The Econcomics of Climate Change aid that 2% of GDP would need to be spent, the actually amount is hard to find in research and political papers. Targets of net zero are riddled with greenwashing.

How Does 2% GDP for net Zero Compare with Other Global Events

How much GDP is an interesting historical measure and is a reflection of governments willingness to focus a country on a particular outcome. E.g focusing the country on defending itself, such as UK, over 50% of the GDP was focused on Germany. Germany focused 100% of GDP and lost.

The UK Government focused 7% of GDP on Covid-19 Epidemic, and over 500 people died each week. The Australian Govt has said when they joined the AUKKUS accord they would plan to have a fleet of nuclear-powered submarines, for a total of $120 Billion. The Australian economy is $1,370 billion (US), so this is about 8.8% of GDP.

The World Bank estimates the pandemic was 4.7% reduction of GDP in 2020 (along with a forgone 2.5% growth expected) or close to $10trillion.

Read More from the Podcast 139 from Outrage and Optimism with 1.5 with Yuval Noah Harari In this podcast Yuval, a historian, says that the story that is told is more important than the numbers. Listen to get more details. His interview was clear an down-to-the-essence thinking shines a bright light on a dark moment.

Change the Outcomes of the 2% of Fossil Fuel Subsidies

Turns out that we currently spend about 2% of the global GDP on supporting fossil fuels. A very simple strategy would be change those subsidies to support net zero. No additional expenditure. We could even provide those subsidies to the existing recipients, but demand that the money is spent on climate change mitigation.

Australias Financial Response to Covid was 14.7% of GDP

The Govt estimated that the impact of covid was 12.6% of GDP. The direct economic and health support as at 2020‑21 MYEFO was $267 billion. The direct economic support since that budget was $41 billion. (Australia’s successful response to COVID‑19 – Budget Papers 2021

The Govt actually spend 14.7% on support for the covid pandemic, and in comparison 2% GDP for net zero would be adequate
Australia says total direct economic and health was $311 billion.
This chart shows that select OECD countries with better health outcomes during the COVID-19 pandemic also had better economic outcomes. Australia, South Korea and New Zealand had low COVID-19 deaths per million people, compared to the OECD average, and also outperformed the OECD average for GDP growth in 2020.
Australia’s response to COVID‑19 has been world‑leading. Source Govt Paper)

Chronic versus Acute Emergency

The pandemic was acute. A world war is acute, and Governments, who shuffle 2% around all the time get focused and can reallocate up to 50%. Whereas climate change is chronic. The ultimate outcome will be worse than the pandemic with 500 million people displaced, famine and climate refugee. Stories are important

  • Removing a stone wall in Jerusalem with create chaos around the world.
  • A Great Barrier reef will not have the same political impact.
  • Destruction of the Amazon rainforest is somewhere else
  • The koala extinction is bad, but not the destruction of their habitat for housing or agriculture.
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