The Economist Magazine’s Feature on Climate Adaptation
After a two year delay, I’m excited that reasonable people in the mainstream media (including this week’s The Economist Magazine and the Huffington Post ) are willing to talk in a calm intellectual spirit about the ideas presented in my 2010 Climatopolis book. When the book was published, many environmentalists dismissed it as nutty free market stuff that would unintentionally sentence the world’s poor to more suffering. You might be surprised to learn that this wasn’t my intent in writing the book. Joe Romm and friends were worried that any optimistic discussion about adaptation might lull political moderates into opposing costly mitigation actions such as a carbon tax and higher fossil fuel prices. Hurricane Sandy has been good for Climatopolis. Post-Sandy, more people are now thinking about how our cities can be made more robust and resilient in the face of anticipated future shocks. As I wrote in this Harvard Business Review post, I believe in “tough love” and no coastal city bailouts. We need to create the right incentives to nudge self interested households, firms and governments to make investments that increase our resilience while recognizing that there are fundamental uncertainties and “fat tail” risk due to climate change.
Many environmentalists are implicitly behavioral economists who reject neo-classical economics logic. Are we Homer Simpson? Are we all Homer? This is an important debate to have. Climatopolis represents the neo-classical economist’s world view for how self interested households, firms and governments will adapt to the “new normal”. I encourage the behavioral economists to enter the arena of ideas and explain where our logic fails. If you anticipate future suffering, doesn’t that create new opportunities for firms and governments who can fill that void? Are you the only one in a planet of 7 billion who can see our future? Why won’t the next Mark Zuckerberg be focused on adaptation challenges rather than social networking?
Matthew E. Kahn is a Professor at the UCLA Institute of the Environment, the Department of Economics, and the Department of Public Policy. He is a research associate at t…READ more