Monday, December 20, 2010

Environment and Economics: a hot topic.

It may be that economists and ecologists speak very different languages. The gap of understanding seems as big as that between Vulcan and Klingon. Nowhere does this seem more apparent than in the exchanges between Dr. Joseph Romm (Physicist, owner of the Climate Progress blog) and Dr. Matthew E. Kahn (Economics, Professor at UCLA and owner of the Environmental and Urban Economics blog.

At issue is the question of whether the capitalist system of markets will enable us all to adapt to the realities of climate change. Kahn's main thesis seems to be that, "cities and regions will adapt to rising temperatures over time, slowly transforming our everyday lives as we change our behaviors and our surroundings". Maybe Miami will be under water, but spring in Fargo might be nice. He has described this at some length in a recent book: Climatopolis.

This is beginning to look like a pissing contest between two academics intent on preserving their reputations. It would be a mistake to leave you with that impression. This is very serious and we had better get it right the first time. There might not be a second chance.

T split the rest of this comparison as well as some comments on what it means for Green Politics off the main page and you can read it here:

Romm has reviewed Kahn's book twice. After the first scathingly negative review
(Climatopolis: How Our Cities Will Thrive in the Hotter Future [Not!}), Kahn accused Romm of the sin of reviewing a book that he had not yet fully read. So, Romm read it cover to cover, and then wrote another review that was sharper than the first.(Review: Climatopolis: How our cities will thrive in the hotter future by Matthew Kahn is not a good book)

Kahn could hardly be expected to refrain from a reply.
Joe Romm is a smart angry man. He throws some new punches at my Climatopolis. Under the scenario that greenhouse gas concentrations reach 1000 ppm (which sounds high and if we reach that number this would take place in the year 2200?), some of the scenarios he sketches may play out. He makes some reasonable points about tightening some of the raw calculations but he ignores two key facts about my book. In the next edition of the book, I will address his points but in no way do his points detract from the book's core thesis. Capitalism will help us to adapt to climate change. Out of self interest, we will rebuild our future cities in places that are less at risk from climate change and we will be pro-active in embracing strategies to protect ourselves from different dimensions of climate change . (Bold emphasis is mine.)

In particular, Greens need to sort this out clearly and to put forward candidates who understand not only the science that is telling us why our climate is changing, but also the long range economic issues at play. I am not convinced that we have found or developed more than a couple of candidates who might qualify on both counts. That will have to be the subject of later posts.

I will admit that I too have not read Climatopolis. I do follow both Romm and Kahn's blogs on a regular basis, especially since Kahn did some of the best initial economic analysis of the effect of California's AB 32 (p.55 of the PDF linked.)
While I support the Governor’s broad AB32 goals, I am troubled by the economic modeling analysis that I have been asked to read. AB32 is presented as a riskless “free lunch” for Californians. These economic models predict that this regulation will offer us a “win-win” of much lower greenhouse gas emissions and increased economic growth.

Kahn describes himself as a rational expectations economist. That is where my gut tells me that he is wrong. His expectations are that people and companies will have the economic ability to adapt, making rational choices for long range gains rather than taking. The trouble with climate change is that it does not respond to quarterly report. If capitalism and it's response to market signals is going to determine how we adapt, we had better have a longer range view than that of a hedge fund supercomputer tweaking seeking advantage in a fraction of a point.

Kahn talks about how we make decisions when "we know that we do not know." It is my experience that most of us do not do that very well, especially when the goal is for some general greater good rather than being specific as to our selves, our families, our work. People tend to delay those decisions until the threat is imminent. By the, with climate change, it may be too late.

I don't have statistics to back up my conclusions, only some observation of human behavior through much of my 70 years. If we can not count on governments having the financial ability to provide for adaptation, and we also can not count on corporate long term decision making, we had better be building resilient local communities that can whether the storms to come.

No comments: