Published on 28 January 2020
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Misleading measures fan the flames

Australians are on track to suffer 12-24 times more of the damages from climate change than the global average. Matthew Agarwala writes on the Australia bushfires and the global carbon accounting that matters.

It is rare for Heads of Government to portray their countries as irrelevant. But this is how Prime Minister Scott Morrison described Australia’s role in global action to combat climate change amidst its worst fire season on record. His argument is that because Australia accounts for just 1.3% of global CO2 emissions, any action it takes would be too small to influence global outcomes.

This is selective accounting. For Australians are on track to suffer 12-24 times more of the damages from climate change than the global average. That is the measure that matters.

Juxtaposed against a death toll of at least 28 people and an estimated 1 billion wild animals, Morrison’s ‘Australia doesn’t matter’ excuse deserves to be debunked. A simple thought experiment exposes the failure of logic. Imagine we distributed US emissions (14% of the global total) evenly across all 50 states, and made each an independent country. Each new US-nation-state would account for just 0.28% of global emissions. Morrison’s argument is that despite no change in actual emissions we would have divided responsibility to the point of absolute absolution.

Others explain that in per capita terms, Australians emit 3.37 times more CO2 than the global average citizen, a number that jumps to 4.15 when we include more potent non-CO2 greenhouse gasses. Or that as the world’s largest exporter of coal and second largest exporter of liquid natural gas, Australia’s fossil fuel exports introduce a further 565.72 Mt CO2 into the global supply chain. That’s all before we mention that in burning an area the size of Iceland, this year’s fires have released additional 400 Mt of CO2– an amount roughly equivalent to an entire year of Australia’s output.

But the big story – the one that Australia’s leaders and citizens need to understand – is that the location of emissions is utterly irrelevant to the impacts of climate change, and the outcome is bad for Australia. The geographic distribution of emissions is driven by specialization, trade relationships and comparative advantages. Some countries produce carbon-intensive heavy manufacturing goods, others produce lower-carbon services. But the geographic distribution of climate damages – storms, floods, and fires – is determined by the global climate system. This fact cannot be undone with acrobatic accounting.

Research at the Bennett Institute for Public Policy and the London School of Economics is starting to account for country-level impacts of climate change. A new working paper in preparation by Matthew Agarwala, Giles Atkinson, and Pablo Munoz develops a novel accounting method to measure how much individual countries are expected to lose due to global temperature rise. Building on work by a team of Stanford climate economists which combines climate models with 50 years of observed environmental-economic data, the new results (which have yet to be peer-reviewed) indicate that Australia is expected to incur between 4% and 8% of all climate damages. With just one-third of one percent of the global population, this means that Australia’s per capita economic losses due to climate change may be 12 to 24 times that of the average global citizen.

That is a startling figure and its significance is completely ignored by simplistic statistics like Morrison’s 1.3%. Examining the data from this perspective shows that Australia has more to gain from global climate action, and more to lose from inaction than most. It has a direct and immediate incentive to push for a just transition to a low carbon future.

The reality is that climate change is a multi-dimensional challenge which cannot be understood through unidimensional statistics. Focussing exclusively on the location of emissions while ignoring consumption patterns and climate impacts creates self-imposed blind spots. Effective, evidence-led policy making requires relevant, reliable accounts. Measures of domestic emissions are important, but in isolation can be deeply misleading. Policy makers need a dashboard of climate accounts. Domestic emissions should be included, but so too should the implicit imports of foreign emissions (i.e. the carbon footprint), and perhaps most importantly, an account of what each country stands to lose from continued inaction. It is this final measure of the massive and disproportionate losses Australia will face that conveys the urgent incentives.  Australia should invest in adaptation and resilience at home, and lobby hard for the global community to reduce emissions.

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The views and opinions expressed in this post are those of the author(s) and not necessarily those of the Bennett Institute for Public Policy.


Matthew Agarwala

Dr Matthew Agarwala

Project Leader: The Wealth Economy

Dr Matthew Agarwala is an economist interested in wealth-based approaches to measuring and delivering sustainability, wellbeing, and productivity. His research is motivated by the belief that 21st century progress cannot...

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