The Blind Side of Climate Change Economics

by Rachel Ashton Lim

How accurate are the Intergovernmental Panel on Climate Change’s (IPCC) economic estimates of Climate Change-induced damage? A post-Paris agreement review of its Fifth Assessment Report (Stern, 2016) calls for an imperative revision to its economic model. The review’s main suggestion is for the social science to become better integrated with the natural sciences in order to accurately evaluate the economic consequences of Climate Change, which are direr than is currently estimated. However, the review also suggests that the benefits of transitioning to low-carbon growth are underestimated in the report and must be evaluated more holistically. Combined, these two factors will enable the public, private and non-profit sectors to make decisions that will drive the world into the net-zero carbon economy it must achieve within this century. Continue reading

The Blind Side of Climate Change Economics

by Rachel Ashton Lim

How accurate are the Intergovernmental Panel on Climate Change’s (IPCC) economic estimates of Climate Change-induced damage? A post-Paris agreement review of its Fifth Assessment Report (Stern, 2016) calls for an imperative revision to its economic model. The review’s main suggestion is for the social science to become better integrated with the natural sciences in order to accurately evaluate the economic consequences of Climate Change, which are drier than is currently estimated. However, the review also suggests that the benefits of transitioning to low-carbon growth are underestimated in the report and must be evaluated more holistically. Combined, these two factors will enable the public, private and non-profit sectors to make decisions that will drive the world into the net-zero carbon economy it must achieve within this century. Continue reading

The Climate Change Challenge and Barriers to the Exercise of Foresight Intelligence

by Ellen Broaddus

In Ross et al. (2016), experts from various academic fields assess some of the barriers that aid today’s denial and inaction combating climate change, even with overwhelming evidence from the scientific community. This hesitancy is traced back to a combination of cognitive shortcomings and the difficulty to work collectively on an issue so complex and seemingly indirect. However, the authors provide examples of strategies used to combat said inaction and their efficacy.    Continue reading

The Economy of Climate Change

by Alejandro Sandell-Gandara

In “Economists: Climate Change is Going to Cost a Lot More than Previously Thought”, Chelsea Harvey analyses a survey published by New York University School of Law’s Institute for Policy Integrity. The survey report shows answers from more than 300 experts on how climate change is impacting the world economy.

The survey asked economists a series of questions including when and how the economy will be influenced by climate change and how Unites States policy can influence international action. The report also compared the results to those from a survey conducted on the American public by MIT. Continue reading

Is a Carbon Tax the Right Fit for Australia?

 

by Blaine Williams

Australia has relatively low overall levels of greenhouse gas emissions. However, due in part to its small population and large amounts of readily-available cheap energy, the country has the highest emissions per capita in the world. In a controversial move to combat these high levels of carbon emissions, the Australian government announced that it would be introducing a carbon emissions tax. Proponents of the tax cite lower emissions as a selling point, but those against the policy claim that economic contractions, spikes in unemployment, and higher fuel prices would make the policy less than worthwhile. Economists Xianming Meng, Mahinda Siriwardana, and Judith McNeill of the University of New England in Australia decided to measure what outcomes should be expected from said carbon tax, using a model other than those that had been presented by the government to support the policy. Continue reading

Are Major U.S. Cities Doomed by Rising Sea Levels?

by Pushan Hinduja

As climate change becomes more and more of a threat, people around the world worry about the fate of US coastal cities that might one day be entirely submerged. Matthew E. Kahn, a visiting professor of economics and spatial science at the University of Southern California argues that these cities shouldn’t worry, as they will adapt and rise above the effects of climate change. Khan begins by citing a Rolling Stone article published in 2013 that predicted Miami, “the nation’s urban fantasy land” turning into an “American Atlantis.” Interestingly enough, this threat is not unique to Miami: the majority of Americans live within 50 miles of an ocean, whether that be in New York, Seattle, San Francisco, or Los Angeles, among many more. An economist by training, Khan argues that based on his understanding of how people invest their money during times of crisis and uncertainty, US coastal cities will successfully adapt to climate change and thus be “just fine.”

To be more specific, coastal city residents and firms are currently all aware that the dangers of rising sea levels are imminent. As a result, there is a huge market incentive for adaptation and the development of innovative solutions to these problems. Additionally, thanks to the “invisible hand,” homeowners will feel the pressure to take self-interest and protect their properties as best as they can to try to maintain value. Khan compares this to the increase in research in the pharmaceutical industry when there is expected demand for a certain drug.

In terms of actual adaptation to the rising sea levels, cities around the US will employ a variety of different tactics, ranging from the upgrading of existing structures to construction of new climate change-resilient structures using modular materials. Khan argues that the rising demand for these new developments will recruit young and new talent into the field, which will lower overhead costs for adaptation, ultimately making the whole system even more sustainable. Another key component of adaptation to climate change is the ability to move to “higher ground.” Khan argues that loss of land due to rising sea levels will not reduce the population in an urban area, because of the ability to retreat and develop on lower risk high ground.

Coastal cities as America’s economic hubs won’t be affected either, as the “physical place” is not what defines an economic hub; instead it is the human capital that clusters in any specific location that makes that place an economic hub. Thus rising sea levels may cause the economic hubs to change locations, perhaps only slightly, but will not negatively harm the U.S. economy.

Ultimately, Khan argues that although rising sea levels due to climate change will play an important role in defining coastal cities in the future, it will not render them underwater wastelands. In fact, US coastal cities will undergo a renaissance of “market-driven adaptation” that will cause both the economy and the population that currently resides in these ‘high threat’ areas to thrive.

Kahn, Matthew E., 2016. Rising Sea Levels Won’t Doom U.S. Coastal Cities. Harvard Business Review.

https://hbr.org/2016/01/rising-sea-levels-wont-doom-u-s-coastal-cities

 

Determinants of Technology Innovation in the Transportation Sector: Oil Endowments

by Russell Salazar

The development of energy-efficient technologies is becoming increasingly necessary in a warming world. How can countries encourage firms and individuals to innovate more eco-friendly technologies in an effective manner? Kim (2014) takes a closer look at the socio-economic motivators for the development of energy-efficient technologies, with a primary focus on the transportation sector. The study presents empirical evidence to support the claim that smaller oil endowments result in a greater incentive for the development of more eco-friendly vehicles and energy-efficient designs. These findings, combined with explanations from related economic theory, provide insight into potential sustainability schemes for policy makers around the world. Continue reading