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Climate Change and National Security

by Stephen DeCanio • July 23, 2010 @ 10:00 am

The Gulf oil spill, volatility in credit and stock markets, and the prospects of continued worldwide recession have dominated the economic news recently, while concerns about long-run problems such as climate change have receded. But while market turmoil and business cycles are transient phenomena, climate change will need to be addressed long after the credit crunch and bear market are history.

Two things make climate policy particularly challenging. First, the costs and benefits accrue to different generations. Investments to reduce greenhouse gas emissions have to be made by the present generation, while the benefits of avoiding “dangerous anthropogenic interference with the climate system” (in the words of the United Nations Framework Convention on Climate Change) will be enjoyed mainly by future generations. This dilemma is real; the climate problem will never be solved unless the governments of the great powers accept that they have a responsibility for the well-being of citizens who do not yet exist. Claims that all we need to do to solve the climate problem is to make “win-win” investments in alternative energy or conservation technologies that will pay for themselves by lowering our energy bills are specious. The transformation of the world’s economy to a low-carbon configuration will offer some economic benefits (new jobs, growth of advanced technologies), but it will require large commitments of funds that could otherwise go to satisfy our personal needs and desires. Some win-win energy investment opportunities undoubtedly exist, but to argue that they are sufficient by themselves to solve the climate problem is disingenuous.  (more…)

The New Economics of Climate Change

by Stephen DeCanio • July 8, 2010 @ 11:50 am

Almost unnoticed inside the Beltway, where attention is focused as usual on politics and the ins and outs of legislation, economic thinking about climate policy has undergone a fundamental shift.  In the past, economists who worked on climate usually were interested in balancing the costs against the benefits of reducing greenhouse gas emissions.  The economic debate centered on issues such as how to measure the macroeconomic impact of cap-and-trade or carbon taxes, how large is the potential for energy savings that would be profitable even without accounting for their environmental benefits, and measuring the effects of climate change on agriculture, recreational opportunities, land values, health care expenditures, electricity demand, and other specific sectors of the economy.  (more…)

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