Australia’s economy will be among the worst affected by the Paris climate change agreement, enduring slower growth, fewer jobs and a “notable” 6 per cent slump in the exchange rate, according to a new analysis of the global accord.
This is not surprising. Even the dodgy Treasury modelling from 2011 showed a huge impact on the Australian economy. Although IIRC there was no unemployment effect because the modelling assumed full employment – it was the real wage that collapsed.
Warwick McKibbin, an ANU economics professor and one of the report’s authors, said Australia could not avoid economic pain by pulling out of the agreement.
“If we stay in, we’re better off because if we pull out, we’ll still be getting most of the economic damage — other countries won’t be buying our resources so much — but miss out on the benefits of curbing carbon emissions such as less pollution,” Professor McKibbin told The Australian.
“You don’t have to believe in climate change at all to support staying in Paris. That said, if you just cared about jobs or real wages but didn’t care about climate or pollution, you’d stay out.”
The Paris Agreement then imposes very high costs not so much on the Australian economy per se, but on the people whose jobs and wages are dependent on coal and gas exports.
The exceptions to this are the fossil fuel exporting regions of Australia, which suffer a loss of around 2 to 2.5 per cent of GDP, the OPEC club of oil exporting nations, which suffer a loss of 3.25 to 3.5 per cent, and Russia which experiences a loss of 4 per cent to 4.5 per cent of GDP.
So what’s in it for us?
The environmental benefits of Australia cutting its own use of fossil fuel accrue almost entirely at home.
Much less domestic pollution – as if this is a problem in Australia. All those unemployed coal and gas workers will have plenty of time to enjoy the great outdoors.