Well, of course dealing with climate change makes us poorer

What confuses is why this is a surprise for anyone:

Britain’s net zero drive has made families poorer, according to new research that contradicts Rachel Reeves’s claim that there is no trade-off between economic growth and decarbonisation.

This is obvious. As Brett Christophers says:

It is entirely within the power and purview of governments to change this situation for the better; either by making fossil fuels less profitable, or by making renewables more profitable, or both. For example, robust carbon taxes would hobble fossil fuels, or more generous electricity tariffs would inflate returns on renewables.

It’s inherent in the very problem itself.

Let us remind ourselves of the basic claim and not worry very much about whether it’s all true or not. We do things which are beneficial to us now - use fossil fuels. This use of fossil fuels also has costs to those in our future - even our future selves. Our problem is that we are not charging ourselves for those damages to come in the prices we use to decide upon fossil fuels today. Therefore we’re enjoying too much of the comfort and benefit now and not taking account of the future costs to come.

As we say, don’t worry about whether that’s actually true or not and just grasp that that is the basis of the argument. There are externalities to the use of fossil fuels currently unpriced into the numbers we use to do sums today.

OK - the answer is to put those costs into today’s sums. We are now going to acknowledge those future costs in a way we did not before. Of course we are poorer. How could we not be poorer?

Now, it’s entirely possible to then go on and say that acshully, we’re richer, denier! Nick Stern spent 1200 pages insisting so. He might even be right (we’re perfectly happy with much of the logic even as we cavil at some of his sums). Over time human utility will be maximised by having a little less climate change than would happen without such adjustments to our current prices for fossil fuels that is. It’s a viable argument - and again, we’re leaving aside whether it’s a true one.

But inherent in that very problem itself - one of externalities - is that by the way we currently count dealing with climate change will make us poorer - by the way that we currently count.

After all, if absent those externalities, those future effects, it really was cheaper to go all Green then we’d not have a climate change problem in the first place. We’d all be Green and richer anyway, driven just by becoming richer clearly and obviously by doing so.

Because the thing’s a problem of externalities then while it might be true that dealing with it makes us richer in a very real and holistic sense, because it’s a problem of externalities it doesn’t make us richer to deal with it precisely because it’s all a problem of externalities and, by definition, we don’t count them, do we?

Tim Worstall