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Some Like It Hot?

Oct 23, 2010 • Demand, Supply, and Markets, Economic History, Economic Thinkers, Environment, Innovation • 169 Views    No Comments

A warmer Detroit? A wetter New York? In the future world that UCLA professor Matthew Kahn describes, cities will adapt to climate change.

Assuming that warming is gradual, populations will migrate and innovate. If San Diego becomes less habitable, people will leave for a more appealing climate in Detroit. Facing different weather conditions and a changing sea level, NYC would build new sewer and transport systems. Now in New Orleans, Brad Pitt’s “floatable homes” might spread to other water threatened communities. Worsened drought conditions in the Southwest could lead to water efficient technology. Market opportunities could abound for entrepreneurs.

The Economic Lesson

When Simon Kuznets developed national income accounting during the 1930s, for the first time the U.S. could more accurately determine its productive capacity. Consequently, during the Second World War, we were better able to determine how many tanks, for example, our land, labor, and capital could produce.

With a global warming trend, economists again could play a crucial role, assessing newly created incentives, investigating resource allocation, and identifying new markets and mobility.

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