President Donald Trump frequently argues that addressing climate change would lead to economic ruin. After withdrawing from the Paris climate agreement, he claimed it was costing the U.S. “trillions of dollars that other countries were not paying.” He also criticized President Joe Biden’s electric vehicle initiative, warning it could cause “economic destruction,” a stance he later reversed, claiming to have “saved” the auto industry. Trump has warned international leaders, “If you don’t get away from this green scam, your country is going to fail.”
The Trump administration often justifies its rollback of environmental regulations by focusing on economic concerns. Officials frequently use estimates that minimize the costs of unchecked climate change, despite the increased visibility of extreme weather risks. For instance, a record-breaking spring heat wave hit the Western U.S. in late March, worsening wildfire predictions and threatening essential water supplies. The financial impacts are tangible: a September analysis by the Brookings Institution found that climate change effects, ranging from rising insurance rates to health risks from wildfire smoke, cost the average U.S. household between $219 and $571 annually, with some households facing costs over $1,000.
According to Gernot Wagner, a climate economist from Columbia Business School, preventing such disasters does not harm the overall economy, though it does affect certain sectors, especially oil companies. The fossil fuel industry has long claimed that climate action is prohibitively expensive. Wagner notes that this narrative is intentional. In the early 1990s, the American Petroleum Institute commissioned economists to produce studies suggesting that efforts to reduce greenhouse gases would be too costly. A 1991 industry-funded study projected that a $200 per ton carbon tax would shrink the U.S. economy by 1.7% by 2020, neglecting the costs of inaction.
This approach continued with the Trump administration’s cost-benefit analyses for repealing environmental regulations. Traditionally, the Environmental Protection Agency (EPA) considered the health benefits of reducing air pollution—such as fewer asthma attacks and premature deaths—in its clean air rule analyses. Recently, however, the Trump administration’s EPA revised this practice, now effectively valuing human life at $0. They also discarded the “social cost of carbon,” a metric assessing economic damage from global warming effects, previously set by the Biden administration at $190 a ton. Last June, an Associated Press investigation revealed that Trump’s EPA consistently emphasized pollution rule costs while ignoring their benefits—even though in 17 of the 20 rules examined, benefits exceeded costs significantly.
In February, the agency revoked fuel efficiency standards for vehicles, also relinquishing its climate change regulation authority. It claimed the new standards would save Americans $1.3 trillion in car payments by 2055. However, an EPA regulatory impact analysis chart indicated that fuel purchases, vehicle repairs, insurance, and other expenses would total $1.5 trillion over the same period, negating any savings. Additionally, the U.S. and Israel’s conflict with Iran led to gas prices rising above $4 a gallon, a stark contrast to the administration’s assumption of $3 per gallon over 30 years.
Despite Trump administration predictions, environmental protection can stimulate economic growth. The Clean Air Act of 1970 not only reduced pollution but also enhanced economic productivity. Studies show that, by 2010, the U.S. GDP was 1.5% higher than it would have been without the act, thanks to reduced air pollution exposure during childhood resulting in more productive workers.
Investing in clean technology, although initially costly, ultimately benefits the economy. Wagner explains, “If the government forced you to cut your gas line and install an induction stove and a heat pump, OK, you might hate it because you are forced to pay money for it, but somebody is going to benefit,” adding, “The economy benefits.” Wagner invested $100,000 to renovate his 200-year-old, 750-square-foot loft in Manhattan with energy-efficient appliances, LED lighting, and better insulation. This contributed $100,000 to the economy. Although it may take decades to recover the initial expenditure, his family’s utility bill has dropped from $450 to about $100 a month.
While countries with ample resources, like the U.S., can afford to invest in emissions-reducing technologies and climate change preparation, cash-strapped nations facing high debt levels struggle. However, recent research examining decades of data from 172 countries indicates no inherent conflict between climate adaptation and fiscal stability. “There are ways to invest in better preparation for climate change that not only do not endanger fiscal stability, but over the long term can actually contribute towards it,” said Jorge M. Uribe, a study author and professor of economics and business at the Universitat Oberta de Catalunya in Spain. The European Journal of Political Economy published the study, which shows that improving shelter, protection, and comfort can enhance public finances.
Uribe aims to challenge the entrenched belief that protecting people from climate change and the economy are mutually exclusive goals. This notion often goes unchallenged. For years, Pew Research has asked individuals to choose between two statements: “Stricter environmental laws and regulations cost too many jobs and hurt the economy,” or “Stricter environmental laws and regulations are worth the cost.”
Anthony Leiserowitz, director of the Yale Program on Climate Change Communication, criticizes the question for creating a false dichotomy. “It’s a forced trade-off, when we know that environmental protection often has positive economic benefits, yet the framing of that question forces people to choose one or the other,” he said. Surveys by the Yale program reveal that most U.S. voters believe environmental protection benefits the economy, with 59% saying it boosts economic growth and creates jobs. Only 18% think it harms growth and employment.
“Look, there are some hard choices that we need to make, right? There are,” Wagner said. “At the same time, I think it’s pretty darn clear that when most people say that there are trade-offs — when most people say it’s the climate versus the economy — they’re wrong.”
