Asked by the Pew Center for the People and the Press to rank 21 issues in terms of their significance, global warming was #21. Similarly pessimistic about climate change initiatives, one researcher asked, “How can one seriously suggest that the village kid in India should give up her hopes of prosperity, education, and health care today, in order to prevent rising ocean levels many years down the road?”
What can an environmentalist do?
Maybe… connect current economic benefit to future climate results. Then, the iron law of climate policy is no longer an obstacle.
Described in the NY Times, a recent Science article suggests 14 policies that would have a beneficial economic impact now and also diminish the future global warming that the paper’s authors predict. One proposal would involve farmers in developing nations draining rice paddies more frequently to increase their yield while simultaneously reducing methane emissions.
Described in “Climate Pragmatism,” climate and health care concerns converged in a 2009 Congressional proposal for reducing black carbon soot. Two of the bill’s sponsors were environmentalists while a third sponsor questioned climate change but wanted the health benefits of cleaner air.
The Economic Lesson
Edwin Mansfield, a University of Pennsylvania economist (1930-1967) who studied the impact of innovation concluded that smaller innovations such as new industrial thread had a much greater social rate of return than products and processes that sound more dramatic. Recent suggestions to mitigate global warming also imply that “less is more.”
An Economic Question: How might rice paddy drainage be comparable to the smaller innovations that Dr. Manfield said were so effective?
Asked if they want lower gasoline taxes that make more driving affordable, people typically say, “Yes.” Told that the only electricity for a village in India is from coal-fired plants, most people will say it’s okay.
When making decisions about driving and electricity, we tend to observe the iron law of climate policy. Choosing between economic growth and reducing emissions, we take growth. Or, as a Chinese climate negotiator said during a Peking University speech, “I cannot accept someone from a developed nation having more right than me to consume energy…We do not want to pollute as they [the Americans] did, but we have the right to pursue a better life.” Correspondingly, The Economist asked people in the U.S. how much they would be willing to spend, per household, per year, on a climate bill. While $80 got majority support, $170 did not, and, at $770, opposition was overwhelming.
As The Climate Fix author, University of Colorado professor Roger A. Pielke said, “The iron law of climate policy says that even if people are willing to bear some costs to reduce emissions, they are willing to go only so far.”
How then to break the “iron law?” We will look at proposals tomorrow.
The Economic Lesson
Entering the realm of behavioral economics, science writer Jonah Lehrer suggests that we are less willing to select alternatives that provide short term loss and long term gratification. His example, in How We Decide, was people’s credit card excesses and how “…our emotions…tend to overvalue immediate gains (like a new pair of shoes) at the cost of future expenses (high interest rates).
An Economic Question: How does Jonah Lehrer’s credit card example relate to climate change policy?