Okay, so we are aiming for “timeless” rather than timely—on April 11th I attended an Earth Institute sponsored panel on “The Economics of Climate Change,” which centered on the document known as the Stern Report. Then I got distracted—things like house-guests, exam-grading, and hay-fever can really break one’s focus on the end of civilization. But let’s get back to it, shall we?
The panel was co-sponsored by the Committee on Global Thought, part of a series of very worthwhile events hosted by Nobel-prizewinner and Columbia economics professor Joseph Stiglitz. The main speaker was Sir Nicholas Stern, former Senior Vice-President of the World Bank and author of The Stern Review of the Economics of Climate Change. I’m sure I’m not the first to suggest that it should be known as the Not Nearly Stern Enough Review of the Economics of Climate Change. Joseph Stiglitz and Jeffrey Sachs, director of the the Earth Institute, served as respondents.
Stern endorsed Sachs’ prescription (or was it the other way around?) that we could solve our environmental problems if all countries contributed 1% of GDP toward The Big Chill. (No, that was not the way he put it.) He argued that the sooner we devote resources to making a transition, the lower the long-term costs will be, and big savings in energy costs will help offset the costs of the transition.
Desirable policy goals include:
• Carbon pricing, setting a global price on carbon emissions.
• Government-funded research on development of alternative energy technologies
• Growth of a green economy (Hmmm, blue-green algae are achieving unprecedented annual growth rates. Does that count?)
• Increasing energy security by decreasing dependence on you-know-what
Let’s go over these in a bit more detail.CARBON PRICING favors setting a good price on bad global manners and letting the market take care of it. Stiglitz later pointed out that market regulation of a per capita price on carbon emissions would result in massive redistribution of the burden of reduction toward poorer countries. Buying the right to emit, richer countries would perpetuate their economic advantage. They would be able to maintain a high growth rate and shift the burden of retrofitting and consumption-limits to the less advantaged. Stern admitted that some regulations would be needed and economists might even be faced with the necessity of factoring in messy immeasurables like behavior, ethics, and psychology. (My very favorite Committee on Global Thought speaker this year was Prabhat Patnaik, author of The Retreat to Unfreedom, who actually called on economists to be ethicists.)
It’s been my impression that the philosophical branch of economics was dominated until recently by a frustrating quandary: actors who are supposed to be predictably governed by rational self-interest resort to irrational economic behavior with irritating frequency. This quandary generated a complex discourse on game-theory, frequently illustrated by variations on the “prisoner’s dilemma.” Analysis of choice-making strategies shows that most people will choose a lose-lose situation rather than risk gambling on a win-win cooperation strategy if they think there is a possibility they will be taken advantage of. This human aptitude for Grinchishness applies to the challenge of reaching international cooperation in carbon-pricing and emissions control. Stern called for a global policy-maker climate in which world leaders acknowledge what others are doing well, refrain from finger-pointing, and accept the responsibility to model better environm ental behavior. In other words, something like the behaviors that educators try to instill in six-year-olds. Oh well, better late than never. . . .
GOVERNMENT FUNDING will wisely deploy the magical 1% of GDP that is going to solve all our problems. Stern argues that public support is needed to create incentives to develop new green technologies. Corporations cannot be expected to develop technologies for which they cannot hold patents. Competitive pricing, otherwise so healthy and invigorating, sadly hinders widespread low-cost distribution of effective technological innovation.
Of course, corporations will be doing their share, getting to work on the stuff that can be made profitable and generating the GROWTH OF A GREEN ECONOMY. Nobody, as I recall, mentioned the word “taxpayers,” but Stern did seem to have a touching faith in the power of pressure from electorates to get legislators to move forward on emissions control. As the drama of “adaptation” unfolds, it seems that the average global privileged person will be called on to play several key roles at once—taxpayers generating that 1% of GDP, voters getting that green legislation going, and consumers keeping that green economy growing.
This is the heart of the conundrum for your Green Tara reporter, who possesses, admittedly, neither a degree in economics nor the all-penetrating Dharma-eye. Due no doubt to these inadequacies, I find myself unable to square accounts between the 1% of GDP that is going to solve our problems and all the environmentally destructive behavior that currently generates our GDP. An era of cheap energy has allowed us to live at a far remove from the realities of depleted soils, diseased forests, tainted water, and dying oceans. For several decades we have been able to construct our lives, indeed our consciousnesses, on the premise of rapid mobility and limitless consumption. It is noteworthy that while the panelists frequently alluded to development of energy-efficient technologies, reduction of consumptive behavior (hectic driving, flying, buying) was never mentioned. The nearest approach was Stern’s cautious endorsement of a gas-tax. Does a carbon emission have Buddha-Nature?
Then the bouncy and ever-boyish Sachs took the floor with a series of perky announcements: In 2008, we will have a new administration!!! (As we all know, everything is the Republicans’ fault, including the tea I had for breakfast that was flown in across nine time-zones to get to a store near me.) The business community is way out in front of the administration!!! Corporations are optimistic that this is a problem of economically manageable proportions!!!
Stern had mentioned development of safe carbon-sequestration techniques as a key area that required government-funded experimentation. Sachs now jokingly acknowledged puzzlement that carbon-sequestration technology was not yet considered safe, since someone from the Earth Institute had pioneered it. He called for government funding for testing in a wide range of environments. What he didn’t mention was that a failed experiment could mean the rapid release of large quantities of pure CO2 into the atmosphere, killing everything in the immediate and maybe not-so-immediate vicinity. Stern sternly stressed that curbing deforestation is key—forests provide the safest and most cost-effective carbon-sequestration, and emissions from deforestation are huge—Indonesia was frequently mentioned in this connection.
So, fellow eco-upayakas, instead of “it’s the economy, stupid,” our new mantra is “it’s the trees, stupid.” Got that?