With all the buzz and anti-buzz about the climate change talks in Copenhagen, it’s easy to get caught up in the dis-empowering idea that a global Emission Trading Scheme (ETS), agreed upon top-down, at Copenhagen (or maybe at the next conference…) is the only hope for meaningful action on climate change. After all, climate change is a global problem, with huge free-rider risks, so it must require a global solution, right?
Nobel prize-winning economist Elinor Ostrom makes the case, in her working paper “A Polycentric Approach for Coping with Climate Change” that a better response to the problems of climate change is ‘polycentric’ with a diversity of responses occurring simultaneously in different geographical locations and at different levels of government and society.
Jonathan Harris, “Ecological macroeconomics: consumption, investment, and climate change”, real-world economics review, issue no. 50, 1 September 2009, pp. 34-48,
Harris (Tufts University) begins his discussion by using the charmingly mild phrase “cognitive disconnect” to decribe the yawning great chasm between “scientists’ warnings of potential catastrophe if carbon emissions continue unchecked on the one hand and the political and economic realities of steadily increasing emissions on the other” (p.34)
It is, as he says, “the outstanding economic problem of the twenty-first century. Can economic growth continue while carbon emissions are drastically reduced?” (p.34) And asking that question makes us look more closely at what, in fact, economic growth is and how we might make a successful economic and social transition to sustainability.
The National Government has shown a disdain for environmental concerns and sustainability initiatives (even when those initiatives save money and make good fiscal sense). In fact, they seem to be gleefully heading in the opposite direction – favouring road-building and allowing the construction of a new gas-fired power-plant, while dithering and delaying about the ETS (admittedly deeply flawed, but so far New Zealand’s centrepiece policy aimed at reducing greenhouse gas emissions).
John Key & Bill English are obviously not going to listen to an obscure greenish blogger. Perhaps they might listen to a relatively conservative Professor of Economics?
Prof. James Hamilton’s latest research paper “Causes and Consequences of the Oil Shock of 2007-08” (summary available at his blog here) has this conclusion about what drove the spectacular rise in oil prices through 07-08 and the subsequent and equally dramatic fall:
But while the question of the possible contribution of speculators and the Fed is a very interesting one, it should not distract us from the broader fact: some degree of significant oil price appreciation during 2007-08 was an inevitable consequence of booming demand and stagnant production. It is worth emphasizing that this is fundamentally a long-run problem, which has been resolved rather spectacularly for the time being by a collapse in the world economy. However, the economic collapse will hopefully prove to be a short-run cure for the problem of excess energy demand. If growth in the newly industrialized countries resumes at its former pace, it would not be too many more years before we find ourselves back in the kind of calculus that was the driving factor behind the problem in the first place. Policy-makers would be wise to focus on real options for addressing those long-run challenges, rather than blame what happened last year entirely on a market aberration. (empahsis added)
We have a window of opportunity – let’s use it.