Mark Hertsgaard’s Hot is reviewedÂ Â in the New York Times today.Â I am jealous.Â In fall 2010, IÂ published a book on climate change adaptation but from the perspective of a “free market” economist.Â Â Â We are both optimists about the globe’s ability to adapt to the scary challenge of climate change but we differ on why we have the capacity to adapt.Â Â I emphasize the power of capitalism’s price signals to help stimulate migration, investment and innovation.
In contrast, the author of Hot embraces a multi-factor approach.Â “But most important, what Hertsgaard finds is that the ability to adapt to climate change depends as much on â€œsocial contextâ€ â€” defined as â€œthe mix of public attitudes, cultural habits, political tendencies, economic interests and civic proceduresâ€ â€” as on wealth and technological sophistication.”Â Â This looks like mush to me.Â He has listed so many factors that I see no way to disentangle their relative importance. Â
Here is what his Amazon review says;Â “Contrasting the Netherland’s 200-year flood plans to the New Orleans Katrina disaster, Hertsgaard points out that social structures, even more than technology, will determine success, and persuasively argues that human survival depends on bottom-up, citizen-driven government action.”Â Â So, government will save us from climate change?Â I’d like to see the formal proof of this conjecture.
My book highlights cases in which government action increases adaptation challenges (by crowding out self-protection actions or by not allowing water prices to rise — “price gouging”).Â I am a “two handed” economist!Â I also discuss ways (such as land use zoning) in which government can be a “friend” of adaptation.Â Â Â Â The interaction of individuals, firms and governments will determine our adaptation path but government will only be incentivized to step up if there is competition between jurisdictions for embracing adaptation friendly policies. If the tax base will get up and migrate away from risky areas, then local politicians have strong incentives to step up and deliver such policies!Â HereÂ are the first 30 pages ofÂ his book.