(Bloomberg) –The “question of our age” is how much societies are willing to sacrifice in economic growth to reverse climate change, according to a new report published by Deutsche Bank AG.
In a presentation prepared for next week’s meeting of the World Economic Forum in Davos, Switzerland, strategists led by Jim Reid noted that economic growth has been a “wonderful asset” for humankind yet had come at some cost.
While global poverty has fallen and life expectancy soared in recent decades, carbon emissions have increased and 21 of the hottest years on record occurred in the last 23, according to the report.
The challenge for policy makers will be squaring the public’s growing appetite for tackling climate change with the fallout from trying to fix it by shaking up transportation, power generation and industry.
The downsides could include unemployment, increased inequality and a possible debt-centred financial crisis, meaning assertive action would need to be managed carefully.
“While the awareness of human’s impact on the environment has reached a tipping point, we feel that there is limited appreciation of the economic and personal trade-offs and sacrifices that will be needed if we want to seriously limit global warming,” Reid said. “Will humans sacrifice economic growth and even human development to halt environmental damage? That will probably be the question of our age.”
Answering the question will require central banks likely creating money to finance green projects, and governments working across borders, he said.