Blog 2 the cost of inaction

At first glance, the title “the cost of inaction” in terms of sustainability and the environment sounds like an inevitable doomsday 2012 end of the world scenario. However, after reading the Stern Report, well not all 700 pages, just the executive summary, I am happy to report the world will not end on December 21, 2012.

The economic and social impacts of the cost of inaction will be the focus of my blog entry.

As discussed in our lecture, the gap between the rich and poor will increase. It goes back to the catchphrase “The rich get richer the poor get poorer”. Data obtained from the UNU-Wider World Distribution of Household Wealth Report (http://www.wider.unu.edu/events/past-events/2006-events/en_GB/05-12-2006/) reveals that North America, which contains 5% of the worlds population, accounts for 33% of the world GDP. A similar trend can be seen within the United States. In 2004, the wealthiest 25% of US households owned 87% ($43.6 trillion) of the country’s wealth, while the bottom quartile held no net wealth at all. The middle 50% of the country held 13% or $6.5 trillion of the total household net wealth (Growing Wealth, Inequality, and Housing in the United States. Zhu Xiao Di. Feb. 2007. Joint Center for Housing Studies).

Countries with the highest GDP should use a small percentage of it and put it towards fighting climate change and GHG emissions; however, developing countries cannot afford to provide such funding. According to the Stern Report “The incremental costs of low-carbon investments in developing countries are likely to be at least $20-30 billion per year”.

A slide shown during the class lecture showed the spending on various products throughout in the world, in billions of 1998 dollars. Leading the spending was of course military, followed by narcotics, and alcohol in Europe. I always knew my Polish ancestors loved their Vodka, now I have the proof.

Basic elements of life, such as clean water, food, education, cost up to thirteen billion dollars to provide. To put that into context, that’s how much Americans (damn them and their ways) spend on cosmetics every year.

Due to the increasing gap between the rich and the poor, things will only get worse. The rich are the ones who can afford private health insurance, have food and water every day, and receive the benefits of an education. This will lead to more poverty and more desperation. Crime could be a result of the desperation, furthering the gap between rich and poor.

The Stern Report deals with the economics of climate change. I am not an economist by any means, but I do have a somewhat basic understanding of it. One of the points I took out of the Stern report is that a little money initially spent (relatively speaking) will save a lot of money in the end. That is when the cost of inaction will become very evident.