The economics of global warming

Last year, Al Gore made a rather spirited effort to inform the public about global warming, which he called 'An Inconvenient Truth'. In my opinion, those who deny global warming are not unlike the people who the deny that the Holocaust ever took place. Only now the stakes are much higher - this time it's the whole planet.

For a change, Tony Blair had a good idea. He had Nicolas Stern prepare a report on global warming and its economic consequences. Like any good bureaucrat Stern came up with a 700-page report.

From the Economist:
"The purpose of Sir Nicholas’s report—commissioned by Tony Blair—is to deal with the argument of people who accept that climate change is happening, but who say that trying to do anything about it would be a waste of money. This argument is heard occasionally in Europe and frequently in America, where, for added potency, it is combined with the notion that European attempts to tax carbon are part of a conspiracy by socialists determined to undermine the American way of life.

Sir Nicholas’s argument is that, far from undermining the American way of life, attempts to mitigate climate change may help preserve it. He argues this by setting the costs of allowing climate change to happen against the costs of mitigating climate change."

"Previous estimates of the costs of climate change—as a result of more hurricanes, more floods and rising sea levels, for instance—have been somewhere between nothing and 2% of global GDP... As a result, Sir Nicholas maintains that if greenhouse gas emissions go on increasing at their present rate, global output is likely to be between 5% and 20% lower over the next two centuries than it otherwise would have been."

Appealing to people's consciences about the consequences of their actions is not effective. Also, a holier-than-thou attitude turns many people off and you are left preaching to the choir. What is more effective is showing how it affects your wallet, not only tomorrow, but today.

1 comment:

Ashutosh said...

True. Americans who don't care (and others) will know when they land on their ass. Then they will realise that even listening to the preachers was probably a good idea. But yes, nobody is going to do anything without incentives.
Maybe now Blair is free to speak his mind because he is going to step down next year?