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Drought and the Climate Change Freeloaders
By now our news media has probably made you aware of the historic drought that is gripping the country. Almost 80 percent of the nation’s agricultural land is experiencing drought conditions not seen since the 1950’s. In mid-July, the U.S. Department of Agriculture (USDA) estimated this year’s corn harvest will drop by 12% and food prices for all of us will start to rise. But hardly anyone is connecting the dots to the fossil fuel producers who pollute our atmosphere, bank record profits, and pay none of the costs of climate change.
The drought is the latest manifestation of the extreme weather that is gripping the U.S. and placing a striking economic toll on our country. And as pre-eminent NASA climate scientist James Hansen has recently stated (and backed up with peer review science):
Our analysis shows that it is no longer enough to say that global warming will increase the likelihood of extreme weather and to repeat the caveat that no individual weather event can be directly linked to climate change. To the contrary, our analysis shows that, for the extreme hot weather of the recent past, there is virtually no explanation other than climate change (watch Dr. Hansen explain here).
Rising Costs to All of Us
The costs to all of us resulting from the drought and other extreme weather (watch extreme weather video) continue to mount. Consider some of these numbers:
- The USDA says that by 2013, consumers will see a 2.5 to 5 percent spike in prices for beef, pork, eggs and dairy products because of the crop failures from the drought.
- Munich Re, the reinsurance giant, says that 85% of the $12B in the world’s insured losses from extreme weather during the first half of 2012 occurred in the U.S.
- The House of Representative just voted to slash conservation programs in order to pay out $383 million in emergency payments to U.S. cattle and sheep ranchers who lost livestock in the drought.
And yes, these are mere bullets in the growing price tag. Whether it is the direct human toll caused by recent heat waves, property damage from the wildfires that have raged in Colorado, New Mexico or Oklahoma (to note a few), or losses to the outdoor economy as sportsmen see fish dying by the thousands because of warming streams, the year’s full cost of climate change fueled extreme weather is staggering.
Climate Change Free Loaders
What should strike all of us is how these rapidly escalating costs are shining a spotlighting on our country’s major free rider problem. In economics, a free rider is someone who enjoys the benefits of an activity without paying for it. When it comes to the extreme weather costs of climate change, fossil fuel producers are the poster children for the free ride.
In the fiscal year of 2011, major energy companies extracted the following fossil fuels from federal lands—those are lands that are the property of all of us taxpayers:
- 627 million barrels of oil;
- 448 million short tons of coal; and
- 4609 billion cubic feet of natural gas
What is more, these fossil fuels are extracted at below market prices. A recent report highlights that below market leases for coal extraction from public lands has cost the U.S. Treasury approximately $28.9 billion in lost revenue over the last 30 years. And of course this doesn’t include the non-market cost to our government for dealing with the impacts of climate change when it hits home.
So let’s be clear when we look at the costs and consequences of extreme weather. Right now, families at the dinner table, farmers, insurance companies, and the fiscal solvency of the country are all paying for the costs of climate change and extreme weather. Those who produce and sell the fossil fuels that result in carbon pollution being dumped into our atmosphere like an open sewer, cause the extreme weather, and drain our wallets are shouldering zero, zip, nada responsibility for the costs they are creating.
It is time to end the carbon polluter freeloading. The current situation should make the case for putting a price on carbon clear and out in the open. Look at the simple math. A one-time, $1 climate change impacts surcharge for each barrel of oil or ton of coal extracted from our public lands in 2011 (just one fiscal year!) would yielded over $1B in revenue. That certainly isn’t chicken feed and beats slashing agriculture conservation programs by $383M to help drought stricken ranchers.