Investors – it’s time to put your mouth where your money is

The collective wisdom of capital markets is probably still ‘in some doubt’ in many peoples’ minds at the moment. Interestingly though, from a green perspective, capital markets appear to have been estimating the likely costs of climate change to be higher than those predicted by cost-benefit analyses (such as the Stern Report) that have been much maligned by some industry lobby groups. And, of course, this implies that – even from a purely economic point of view – there is a case for stronger climate change mitigation policies than have been suggested by the cost-benefit analyses.

Ecological macroeconomics: resolving the three dilemmas of transformation

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.

Economics for a Crowded Planet

The global challenges of poverty, environmental degradation, and climate change, can seem overwhelming – even downright depressing – when faced squarely. The problems are big, and achieving international cooperation to do anything about them can seem a forlorn hope faced with a global political culture of distrust and myopic self-interest.

So it is encouraging to read a book that faces most of the big issues head-on and retains a persuasive optimism about the possibilities for a positive future. In Commonwealth: Economics for a Crowded Planet, economist  Jeffrey Sachs  does just that – and goes on to suggest a programme to deal with some of our pressing global problems.

The end of the golden weather: political choices in economic hard-times

There’s not a lot of economic good news out there at the moment, and even after the current credit-crisis passes us by, the storm-fronts of peak-oil and climate change look set to keep the economic weather looking bleak. In economic bad-times the essential nature of capitalism, the political choices that buttress it, the social costs it imposes on the most vulnerable, are much harder to gloss over and ignore – even in the societies of the rich-world.

Ironically, that is the good news, because it means a time of new choices – for compassion, fairness, for a sustainable future, for an end to poverty and oppression – is perhaps nearer than it has been for a long time. When we understand that we have a choice, we can make a choice.

Climate change – uncertainty abounds, but this is a risk management decision – not a quest for truth

Investing in the Economics of Climate Security, Nick Mabey, November 2007

The economics of climate change is lagging behind the science. We need to improve on this quickly if we are to take the right investment decisions, argues Nick Mabey.

One of the critical policy questions we face is ‘how far and fast should we cut global greenhouse emissions to effectively ensure climate security? Mabey acknowledges that ‘Uncertainty abounds over any choice.’ (p.5) But, he says ‘this is a risk management decision – not a quest for truth.’ (p.5)

post autistic economics review No.44, 9 December 2007

Issue No.44 of the post autistic economics review (available free at http://www.paecon.net) has a lot to offer. With six interesting articles, plus opinion pieces, I’m tempted to call it a ‘Bumper Christmas Edition’ 🙂 Here’s a taste:

In ‘Economics for a warming world’, Frank Ackerman critiques conventional economic theory, and looks at the features of climate change as a public policy problem, in order to argue that ‘new assumptions and analyses are needed in economics in order to comprehend and respond to the problem of climate change’ (Ackerman, p.2). He concludes with recommendations for a revised approach to public policy:

The economics of climate change – the case of Florida

The Global Development & Environment Institute at Tufts University has released a report on the consequences of unchecked greenhouse gas emissons for Florida. You can find it here.

They estimate that the costs of unchecked climate change – on just three sectors: tourism, electric utilities, and real estate – together with effects of hurricanes would shrink Florida’s Gross State Product by 5% by the end of this century. Obviously, as the authors point out, if costs for other sectors (e.g. agriculture, fisheries, insurances, transportation, and water systems) were included, the costs would be much higher. And, of course, there would be huge non-monetary costs of environmental destruction and human lives lost. It is grim reading.

Consider this, too: Florida won’t be the only place facing major economic, social, and no doubt political disruption. This will be happening all over the world, in differing degrees and forms. It seems a reasonable bet that there will be large multiplier (or ‘knock-on’) economic costs.

Then there are the ‘tipping point’ risks: scientists are now telling us that Earth’s climate could change quite rapidly (and there is evidence of it having done so in the past). We don’t know what that tipping point is, exactly, and in pumping out greenhouse gases, we are conducting a gigantic, dangerous, global climate experiment.

If we add these three things: first round costs, knock-on costs, and risks, plus a reasonable consideration of the non-monetary costs, it is obvious that we ought to be putting large-scale resources and efforts into efforts to reduce emissions.