Here is a good review of Gernot Wagner’s new book. As readers of this blog know, most economists aren’t witty and don’t write well. Dr. Wagner is a counter-example. I’m a big fan of his book. His book emphasizes the power of incentives to change individual and firm behavior. Like almost all economists, he wants to see a global carbon tax adopted as this would trigger the “magic of the market”. But, we all know that we have refused to take our medicine.
Do you have a vision for how the world’s big nations could commit to new rising carbon taxes? Jeffrey Frenkel offers some impressive thoughts here.
When individuals choose not to embrace cost effective collective action, what happens next? Is the society doomed and must anticipate an ugly end? I wrote my Climatopolis to nudge folks to have this discussion. The thought that we can possibly adapt to new challenges is obvious to some and a dangerous thought to many readers of this blog and this blog.
Over the next 30 years, developing countries will enjoy significant economic growth. This growth will simultaneously provide them with the resources to adapt and will give them a stake in pursuing international deals such as the ones that Jeffrey Frenkel discusses to mitigate carbon to lessen the severity of climate change. I believe that the global carbon mitigation effort will pick up steam because of economic development. Non-economists simply view such development as inevitably exacerbating the climate change challenge.
We have chosen to run the climate change experiment. The first chapter of my book is called “Too Much Gas”. Of course, I meant the pun but I also mean the serious point that we have released too much GHG. Given that we are running this nasty experiment, how will individuals and firms and local governments respond to the new challenges they will face? They have every incentive (due to self interest) to re-optimize and find new ways to cope with the challenges. Knowledge is a public good and we will figure out many coping strategies. Such adaptation isn’t costless but there continues to be great wealth which will grow.
My prediction is that we will fumble around with adapting to climate change through the year 2050 by which time major LDC nations will be rich enough and global technological advance will have proceeded enough so that a credible international carbon deal will be signed. I would like to go to www.intrade.com and place a bet on this future event.