EUGENE, Ore. -- (Feb. 17, 2009) -- If nothing is done to reduce greenhouse gas emissions, Oregon will face some $3.3 billion in annual costs, which could translate to an individual tab of about 4 percent of annual household income by 2020, according to a report produced for the University of Oregon's Climate Leadership Initiative's Program on Climate Economics by ECONorthwest.
The UO's Program on Climate Economics is guided by a steering committee of 19 academic and private economists from Oregon and other western states. Committee members also produce some of the program's research. Ernie Niemi, lead author of the report, is a principal with ECONorthwest, a fellow with the UO's Climate Leadership Initiative (CLI) and a member of the steering committee. ECONorthwest was contracted to produce the assessment.
"Our research found that a failure to reduce greenhouse gas emissions would produce significant and continually rising costs for Oregon households and businesses," said Bob Doppelt, director of the Climate Leadership Initiative, who managed the report. "There will be no business-as-usual economy in Oregon under a business-as-usual approach to climate change."
"The $3.3 billion price tag for 2020 is a purposeful understatement," Niemi said. "The amount is based on 17 potential costs for which we had sufficient data to draw conclusions."
Total annual costs would more than triple by 2080 if insufficient action is taken to reduce emissions. Per-household costs are based on projected population growth and were computed to spell out the cost of inaction on a personal level, not as a recommendation of cost-sharing.
Based on the conclusions of three recent international reports, researchers project increased seasonal droughts and floods, higher air-conditioning costs to cope with higher temperatures, higher incidence of climate-associated health problems and deaths, more frequent wildfires and loss of habitat for species vital to the state's economic well being.
The report assumes that Oregon, like many other states and countries, will not pursue "effective actions to rein in emissions of greenhouse gases, logging of native forests, and other factors that drive climate change." It also assumes that "Oregon's households, businesses and communities will continue to engage in behaviors and adopt technologies similar to those of today."
"Our program has completed assessments of the likely consequences of climate in the Rogue and Upper Willamette River Basins," Doppelt said. "We found that the impacts on local water resources, forests and the natural environment, buildings, roads and other infrastructure, public health and human services will be extensive. This state-level economic analysis further confirms that the costs of climate change for the state will be high and those costs will grow over time."
"It's sobering that these significant costs reflect just ‘average' conditions projected under business-as-usual carbon emissions," said Dave Ervin, a member of the steering committee for CLI's Program on Economics and professor of economics at Portland State University. "Given the evidence of earlier-than-expected melting in the Arctic and Antarctic regions and other issues, the risks of larger costs are real. That's why the insurance industry and a number of financial institutions are so concerned."
"From an economic perspective one of the key questions that must be asked is: How much would the public be willing to pay to avoid these costs?" said Don Negri, another program steering committee member and economics professor at Willamette University.
"The costs of inaction on climate change appear to be very high," said steering committee member Bill Barnes, a professor of economics and environmental studies at the University of Portland. "It would seem prudent to act now to prevent these impacts from occurring in the future."
The 2020 total of $1,930 per household includes about $830 in combined energy-related expenses, $370 to adverse effects of climate change on salmon populations and $460 in combined health-related consequences. Costs per household would increase to 7 percent in 2040 ($2,435) and 10 percent in 2080 ($3,529), researchers said. The numbers reflect mean household income.
While projected costs to the state overall and to individual households likely include some overlapping expenditures, a plethora of financial in-state and out-of-state consequences not yet considered because of lack of data will more than cover any repetition and result in yet more economic consequences to inaction, the report concludes.
Projected total annual costs of business as usual in Oregon for 2020 ($3.3 billion), 2040 ($5.1 billion) and 2080 ($9.8 billion) are based on:
• Increased energy-related costs: $119 million (2020); $328 million (2040); and $815 million (2080)
• Reduced salmon populations: $632 million; $1 billion; and $1.9 billion
• Reduced food production: $13 million; $35 million; and $153 million
• Increased health-related costs: $764 million; $1.3 billion; and $2.6 billion
• Lost recreation opportunities: $167 million; $390 million; and $1.1 billion
• Increased wild-land fire costs: $206 million; $423 million; and $941 million
• Increased flood and storm damages: $64 million; $132 million; and $309 million
• Inefficient consumption of energy: $1.3 billion; $1.5 billion; and $2 billion
• Increased health costs from coal-fired emissions: $33 million; $38 million; and $52 million
Complete sources for data collection and analyses are detailed in the report, which is available directly from the UO's Media Relations Web site (click here) and at CLI's Program on Economics Web site.
In addition to Oregon, separate reports projection business-as-usual costs were prepared for Washington state and New Mexico. The reports were prepared by Niemi, Mark Buckley, Cleo Neculae and Sarah Reich, all of ECONorthwest, with assistance from members of the Advisory Committee on Climate Economics.