Wednesday, June 25, 2014

Fighting Climate Change is Good For The Economy

The World Bank has found that fighting climate change would boost the world's economy by 2.6 trillion dollars.  A carbon tax to reduce carbon emissions would increase employment, increase income, make us healthier, as well as help avoid the dire consequences of global warming.

The planet made a similar transition around 100 years ago as automobiles were introduced to replace horses. There was a huge investment in horses and associated support at that time.  But the increase in population of cities was beginning to make horses impractical.  If we had kept on with horses our cities would be knee deep in horse's excrement.  The transition to cars destroyed a huge part of our economy but in the end we prospered from it.

A transition to green energy would produce a similar economic benefit in addition to our avoiding rising oceans and the desertification of large parts of our planet.  The main reason the Koch brothers and the oil and coal companies are working so hard in opposition to a green economy then is that they essentially have made a bad bet on oil and coal.  While a green economy would be great for most of us, it would be bad for oil and coal companies because nearly all of their assets would have to stay under the ground.

If the oil and coal companies succeed in prevailing, as the horse industry failed to do a hundred years ago,
the rest of the world can look forward to all of the consequences of global warming, massive starvation, massive environmental migration from uninhabitable parts of the world to the North, rising sea levels engulfing coastal cities and many islands.

UPDATE:  Paul Krugman also makes the case in critiquing Ross Douthat's economics.  Douthat argued that it might be too expensive to confront climate change right now and that we should wait for cheaper methods.  Krugman deflates that argument:

"Douthat’s essential point, as I understand it, is that economic troubles make this a bad time to take on the burden of climate adjustment, that they strengthen the case for waiting to see if we can get by doing less and using cheaper approaches.
But that’s exactly backwards. Yes, we’re having tough times — but the toughness stems from insufficient demand, which has led to an oversupply of both labor and capital. Here’s the real cost of government borrowing:
Climate action would mainly involve investment — especially investment in new or retrofitted power plants, replacing coal-fired plants with lower-emission sources. In good times such investment would mean diverting labor and capital from other useful activities. But in the post-2008 economy we’ve been awash in unemployed labor and capital with no place to go. This is an ideal time to be doing a lot about climate!"