{"id":396142,"date":"2025-08-19T09:41:51","date_gmt":"2025-08-19T07:41:51","guid":{"rendered":"https:\/\/climatescience.press\/?p=396142"},"modified":"2025-08-19T09:41:59","modified_gmt":"2025-08-19T07:41:59","slug":"claim-emissions-reduction-should-be-included-in-productivity-growth-calculations","status":"publish","type":"post","link":"https:\/\/climatescience.press\/?p=396142","title":{"rendered":"Claim: Emissions Reduction Should be Included in Productivity Growth Calculations"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" width=\"723\" height=\"723\" data-attachment-id=\"396149\" data-permalink=\"https:\/\/climatescience.press\/?attachment_id=396149\" 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https:\/\/i0.wp.com\/climatescience.press\/wp-content\/uploads\/2025\/08\/AQOB1Vs_nuOXtrNnKg2x19jyLjpvTVseIb9G9mbSUX5-p2dXdXY6TE4fnhQw0fRlFBtzYdZ1E-MZ35X2XPTGgyb5CHfjKdLEoAJEwqBVn37QuDyaGjAfMLkjxZ9D2A53Qp1DqJ44doCsoQu3ww2O6gJ3CFlp.jpeg?w=1280&amp;ssl=1 1280w\" sizes=\"auto, (max-width: 723px) 100vw, 723px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">From <a href=\"https:\/\/wattsupwiththat.com\/2025\/08\/17\/claim-emissions-reduction-should-be-included-in-productivity-growth-calculations\/\">Watts Up With That?<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Essay by<\/strong> <a href=\"https:\/\/wattsupwiththat.com\/author\/eworrall1\/\">Eric Worrall<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201c\u2026 standard productivity measures ignore the progress that some economies have made in terms of lowering carbon dioxide emissions \u2026\u201d<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>Adjusting productivity for carbon emissions: A new perspective on the growth slowdown<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/cepr.org\/about\/people\/maarten-de-ridder\">Maarten De Ridder<\/a>\u00a0<\/li>\n\n\n\n<li><a href=\"https:\/\/cepr.org\/about\/people\/lukasz-rachel\">\u0141ukasz Rachel<\/a>\u00a0<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">17 Aug 2025<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Productivity growth has been lacklustre over the past 20 years in most advanced economies. But standard productivity measures ignore the progress that some economies have made in terms of lowering carbon dioxide emissions. This column proposes a method to embed those efficiency gains into existing productivity measures. For traditional (small) estimates of the cost of climate change, the adjustment to productivity for emissions is small. When quantified using recent (high) estimates of the economic costs of climate change, emissions-adjusted productivity growth has accelerated \u2013 rather than slowed down \u2013 in recent years.<\/p>\n<\/blockquote>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\">\u2026<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Standard productivity statistics do not, however, take into account that economies have become less reliant on carbon dioxide emissions. Although carbon emissions remain too high to meet climate goals in many places, emissions have declined significantly since the mid-2000s in many advanced economies, and especially so in the US. Absolute US carbon emissions fell by 23% between 2005 and 2024 (Figure 1b), while the ratio of carbon emissions over GDP declined by 40%. The decline is similar in magnitude when measured based on territorial emissions \u2013 those arising from domestic production, and consumption-based emissions \u2013 which account for rising international trade and imported emissions from countries such as China (Andrew and Peters 2024).<br><br>\u2026<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In a new paper, we propose a method to adjust productivity growth for changes in carbon dioxide emissions (De Ridder and Rachel 2025). Emissions-adjusted total factor productivity (TFPE) measures how efficiently the economy transforms inputs into the present value of consumption, accounting for the negative impact of carbon emissions on future output and factor accumulation. Standard total factor productivity (TFP), by contrast, measures how efficiently inputs are converted into current output.<br><br>\u2026Read more:\u00a0<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/cepr.org\/voxeu\/columns\/adjusting-productivity-carbon-emissions-new-perspective-growth-slowdown\" target=\"_blank\" rel=\"noreferrer noopener\">https:\/\/cepr.org\/voxeu\/columns\/adjusting-productivity-carbon-emissions-new-perspective-growth-slowdown<\/a><\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">The researchers appear to be proposing mixing current productivity measures with a Nordhaus style discount factor adjusted future harm measure, to try to pimp carbon reduction measures as a worthwhile current goal.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-wp-embed is-provider-watts-up-with-that wp-block-embed-watts-up-with-that\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"wp-embedded-content\" data-secret=\"r8hACsdrad\"><a href=\"https:\/\/wattsupwiththat.com\/2019\/01\/04\/is-nordhaus-discount-rate-really-too-low\/\">IS NORDHAUS&rsquo; DISCOUNT RATE REALLY TOO LOW?<\/a><\/blockquote><iframe loading=\"lazy\" class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; visibility: hidden;\" title=\"&#8220;IS NORDHAUS&rsquo; DISCOUNT RATE REALLY TOO LOW?&#8221; &#8212; Watts Up With That?\" src=\"https:\/\/wattsupwiththat.com\/2019\/01\/04\/is-nordhaus-discount-rate-really-too-low\/embed\/#?secret=AgEbwmQIXO#?secret=r8hACsdrad\" data-secret=\"r8hACsdrad\" width=\"600\" height=\"338\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe>\n<\/div><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cDiscount factor\u201d is a fancy economist measure of interest rates.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The kind of measure the authors are proposing works like a savings account in reverse.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">With a regular savings account, if you invest $10,000 at a tax free 5% interest today, in 20 years your money would have grown to $26,532.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The researchers are proposing we reverse this principle to pimp sluggish Western productivity growth figures. if you take measures today like reducing CO2 emissions, and assume those measures will prevent $26,532 of losses 20 years from now, the researchers propose this is like pocketing an extra $10,000 today.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The problem is you can\u2019t spend that imaginary $10,000 of inferred future benefit. Nobody will lend you $10,000 on the basis that you will be $26,532 better off in 20 years. That $10,000 only exists in the models which predict your actions today are averting $26,532 of future harm.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As has been repeatedly demonstrated, we have no idea what the future holds when it comes to climate change. Sure, some things in life are predictable, like if you smoke two packs a day and drink a bottle of bourbon every night, you have a heightened risk of future health problems. But climate change isn\u2019t like that \u2013 history is littered with predicted climate catastrophes which never happened.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-wp-embed is-provider-watts-up-with-that wp-block-embed-watts-up-with-that\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"wp-embedded-content\" data-secret=\"vWFjxq0f2Y\"><a href=\"https:\/\/wattsupwiththat.com\/2025\/05\/19\/four-strange-things-humans-used-to-be-afraid-of\/\">From Manure Mountains to Train Terrors: 4 Bizarre Fears Humans Left Behind<\/a><\/blockquote><iframe loading=\"lazy\" class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; visibility: hidden;\" title=\"&#8220;From Manure Mountains to Train Terrors: 4 Bizarre Fears Humans Left Behind&#8221; &#8212; Watts Up With That?\" src=\"https:\/\/wattsupwiththat.com\/2025\/05\/19\/four-strange-things-humans-used-to-be-afraid-of\/embed\/#?secret=HJvfM5wgVB#?secret=vWFjxq0f2Y\" data-secret=\"vWFjxq0f2Y\" width=\"600\" height=\"338\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe>\n<\/div><\/figure>\n\n\n\n<figure class=\"wp-block-embed is-type-wp-embed is-provider-watts-up-with-that wp-block-embed-watts-up-with-that\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"wp-embedded-content\" data-secret=\"gjoeq4Ggux\"><a href=\"https:\/\/wattsupwiththat.com\/2019\/06\/30\/30-year-anniversary-of-the-un-1989-10-years-to-save-the-world-climate-warning\/\">30 Year Anniversary of the UN 1989 &#8220;10 years to save the world&#8221; Climate Warning<\/a><\/blockquote><iframe loading=\"lazy\" class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; visibility: hidden;\" title=\"&#8220;30 Year Anniversary of the UN 1989 &#8220;10 years to save the world&#8221; Climate Warning&#8221; &#8212; Watts Up With That?\" src=\"https:\/\/wattsupwiththat.com\/2019\/06\/30\/30-year-anniversary-of-the-un-1989-10-years-to-save-the-world-climate-warning\/embed\/#?secret=uEtNsp89wo#?secret=gjoeq4Ggux\" data-secret=\"gjoeq4Ggux\" width=\"600\" height=\"338\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe>\n<\/div><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">There is substantial evidence CO2 emissions are helping not harming \u2013 elevated CO2 is causing a massive boost in agricultural productivity.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-wp-embed is-provider-watts-up-with-that wp-block-embed-watts-up-with-that\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"wp-embedded-content\" data-secret=\"N8RUuHt4qP\"><a href=\"https:\/\/wattsupwiththat.com\/2025\/06\/06\/global-greening-from-higher-co2-hits-striking-new-heights-but-the-mainstream-media-wont-tell-you-about-it\/\">Global Greening From Higher CO2 Hits \u201cStriking\u201d New Heights \u2013 but the Mainstream Media Won\u2019t Tell You About It<\/a><\/blockquote><iframe loading=\"lazy\" class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; visibility: hidden;\" title=\"&#8220;Global Greening From Higher CO2 Hits \u201cStriking\u201d New Heights \u2013 but the Mainstream Media Won\u2019t Tell You About It&#8221; &#8212; Watts Up With That?\" src=\"https:\/\/wattsupwiththat.com\/2025\/06\/06\/global-greening-from-higher-co2-hits-striking-new-heights-but-the-mainstream-media-wont-tell-you-about-it\/embed\/#?secret=DqM1teGAHW#?secret=N8RUuHt4qP\" data-secret=\"N8RUuHt4qP\" width=\"600\" height=\"338\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe>\n<\/div><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>There are multiple other problems with this approach to measuring productivity<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">There is a tremendous opportunity cost to booking unrealised productivity growth as if it was real \u2013 if a genuine national emergency were to occur, you can\u2019t spend all that hypothetical future benefit fixing real problems.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The emissions reduction calculation also appears to ignore outsourcing of emissions \u2013 arguably all nations which are embracing green energy are cooking the books on their emissions reduction achievements, by not including emissions from manufacturing which has been outsourced to Asia in their calculations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The claimed future benefit does not contribute to economic growth in the same way as real productivity gains would \u2013 next year\u2019s productivity growth will be based on real productivity, not hypothetical long term future benefits. And god help anyone who tries to use this dubious calculation to set interest rates \u2013 today\u2019s inflation will not be curtailed by hypothetical distant future events. If emissions adjusted TFPE is used to justify lower central bank interest rates than TFP would have delivered, inflation will explode.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">I\u2019m sure we\u2019ll see more about this emissions adjusted productivity growth measure, because it would make basket case green obsessed economies like Britain and the European Union look good. But the amounts booked to the emissions reduction side of the modified productivity calculation cannot be used to pay the bills. All the hypothetical future benefit in the world is no use if your uncompetitive national industries are collapsing and you can\u2019t feed your kids.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u201c\u2026 standard productivity measures ignore the progress that some economies have made in terms of lowering carbon dioxide emissions \u2026\u201d<\/p>\n","protected":false},"author":121246920,"featured_media":396149,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","_crdt_document":"","advanced_seo_description":"Explore how adjusting productivity measures for carbon emissions reveals new insights into economic growth and environmental impact.","jetpack_seo_html_title":"Boosting Productivity: Adjusting for Carbon Emissions 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