Going green with an economy in the red

October 18, 2008 at 11:41 pm | Posted in Climate and economy | 2 Comments
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With the markets in the midst of a crisis that many are comparing to the Great Depression, some environmentalists are starting to worry that the go-green wave may lose its momentum in the face of more pressing economic concerns.

From bloggers to scientists, a new speculative trend has now begun, with thinkers placing their bets on just what the economic downturn will mean for the environment.  And in the truly free market of ideas, there are always a lot of answers to choose from:

It will be bad: how will we ever find the capital to invest in green technology after handing out $700 billion to the financial industry?

It will be good: people will start wasting less, recycling more, and using less energy.

It will be bad: commodity prices are plummeting and, without a pinch at the gas station, interest in alternative energy sources will flag. 

It will be good: green jobs and the green industry will lead the rebirth of our economy. 

It’s about as much of a yo-yo as the Dow Jones Industrial Average has been in the last few weeks.  To get some perspective on the issue of how economic policies and the environment – specifically climate change – are related, I recently sat down with the University of Chicago geophysicist Raymond Pierrehumbert.

Geophysicist Raymond Pierrehumbert.

Geophysicist Raymond Pierrehumbert.

A geophysicist, you ask?  It’s true, Pierrehumbert is not an economic expert, but he is a climatologist who is involved in a new effort to bring scientists and economists together to talk about climate, energy and economics at the University of Chicago. 

In particular, they are looking at the question of what information economic models can provide about the costs or benefits of different strategies for reducing CO2 emissions. 

So, how does Pierrehumbert weigh in on how the economy and the environment intermix?

“There’s some obvious cases in which just making things expensive puts the right signals in the market,” he said.  “So the way that high gas prices and lower salaries or lower investment income has damped down the demand for SUVs.  That’s a case where the market price signals work, but making people poorer is not the right way.”

Instead of looking to a sputtering economy to spur lifestyle changes, Pierrehumbert thinks the economic downturn should be used as an opportunity to make structural adjustments that would both raise income levels and help the climate.  

“It’s a matter of reorienting the economy into things that build prosperity without emitting carbon and for that the sort of things that one should be looking at are efforts to restructure the economy.”  Subsidies to help people make their homes more energy efficient, support for developing alternative energy sources, urban planning that takes into account climate-change concerns – these are all simple things that could be done that would be good for both the environment and employment numbers, Pierrehumbert said. 

Both presidential candidates have said that green technologies and green jobs will be an important part of America’s economy.  Democratic nominee Barack Obama has proposed investing $150 billion in green technologies over the next ten years, which his campaign has said could create five million new jobs.  And, on the Republican side, John McCain’s energy platform contends the green economy will be “vital to our economic future.”

Besides redirecting resources to green industries, though, Pierrehumbert thinks the philosophical framework that underpins our economic system needs to be reformulated.  In particular, he points to risk-assessment methodologies that do a poor job of looking forward, and not just when it comes to mortgage repayment.   

“Economists tend to discount the future in a sense that a harm one year from now is 5 percent less expensive than a harm right now,” he said. 

“If you use standard economic discounting rates then something that wipes out the entire human population 1000 years from now is not even worth a cent to pay today.”


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  1. I found your blog on google and read a few of your other posts. I just added you to my Google News Reader. Keep up the good work. Look forward to reading more from you in the future.

  2. Nice writing. You are on my RSS reader now so I can read more from you down the road.

    Allen Taylor

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