I’ve written before that I think massive investment in R&D is the single most important thing we can do to address climate change. And I’ll write about it again! There are various reasons that I believe this—which I will review at great length in the near future—but since “How are you going to pay for that?” is such a hot button among Democrats right now, it’s worth mentioning one big benefit of an R&D program: It all but pays for itself.
Climate R&D is a mix of basic science and applied research, and estimates of the return on this kind of thing hover in the range of 20-30 percent annually. Think tanks can provide detailed models of how this pencils out over the long term, but a back-of-the-envelope calculation¹ suggests that government spending of, say, $200 billion per year would cost about $5 trillion over 25 years but increase GDP by enough to produce more than $3 trillion in additional tax revenue. The remaining balance is pretty small: perhaps around 2-3 percent of the current federal budget annually. This is easily fundable. Hell, we increased the military budget by nearly that much a couple of years ago without even bothering to pretend that we were funding it.
This is something that Democratic candidates and think tanks should pick up on. A massive research program might cost a fair penny at first, but over time it would mostly pay itself back. The net cost would be surprisingly small—and that’s not even counting the benefit of not incinerating our planet.
¹That is, no accounting for inflation or NPV, and no sophisticated input/output model of the economy. Just some rough numbers.