Wednesday, December 1, 2010

The Political Economy of Climate Change

. Wednesday, December 1, 2010

Or, why hoping for an international agreement in Cancun or elsewhere is senseless:

In one paper Professor Kevin Anderson, Director of the Tyndall Centre for Climate Change Research, said the only way to reduce global emissions enough, while allowing the poor nations to continue to grow, is to halt economic growth in the rich world over the next twenty years.

This would mean a drastic change in lifestyles for many people in countries like Britain as everyone will have to buy less ‘carbon intensive’ goods and services such as long haul flights and fuel hungry cars. ...

He said politicians should consider a rationing system similar to the one introduced during the last “time of crisis” in the 1930s and 40s. ...

“The Second World War and the concept of rationing is something we need to seriously consider if we are to address the scale of the problem we face,” he said.

There is no country that is willing to do this. Not one. Not if doing it would prevent climate change from occurring. Not if every other country was doing it too. We have had no economic growth in the past two years, more or less, and the political fallout has been enormous. Imagine the reward given to the politician that advocated forfeiting the next two decades of growth?

In two old posts I did some back-of-the-envelope calculations of how much economic well-being we'd be giving up in order to follow scientists' recommendations to combat climate change. Under one scenario, in which we sacrifice 1% of GDP growth (not total GDP) from now until 2100, our 2100 standard of living would be more than halved. Of course, that's just the medium run. As I wrote in one of those posts:

In other words, the cost of stopping climate change is infinitely high if your time horizon is long enough, but is extraordinarily large even in the short run.

The point is that sacrificing 20 years of economic growth is a very high price to pay. Economic growth is not just dollars and cents, but also technological progress that those dollars and cents make possible. Think back to 1990: no laptops, PCs were prohibitively expensive, the internet was slow, no smart phones, no HDTV, no iTunes, no sushi restaurants (except in NY and LA), etc. Fill in the blanks.

It will be impossible to convince people that it is worth it. One reason for that, as I mentioned in the posts above, is that economically it probably isn't worth it. In other words, the economic costs of dealing with climate change when it occurs is likely less than the economic costs of trying to prevent it. But even if that weren't the case, the international dimension of this is daunting. British (or American or French or German) voters will be even less willing to sacrifice two decades of growth so that other countries (China and India and Brazil) can continue to grow. Developing countries are already accused of "stealing our jobs" and other such; imagine the fate of the politician who began a stump speech with "You thought China was taking your jobs before, well I say we amplify that process as much as we can. Back to WWII-style austerity!" It's impossible to imagine a political equilibrium which limits MDC growth for the benefit of LDC growth.

The politics of climate change are as abysmal as the economics.

(Link via KPC)


The Political Economy of Climate Change
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