What Economists Don’t Get About Our Relationship With Nature

No, climate change isn’t less of a problem if people get used to a devastated world.

People often adjust to problems that seem terrible upfront.  Some studies show, for instance, that people who who lose limbs are very unhappy for awhile but then start to adjust to their positions.  Some economists argue that something similar may happen with climate change — we might find that we don’t miss extinct animals or disappearing habitats nearly as much as we think we would.  If so, they suggest, we should adjust our predictions of the cost of climate change downward.

For instance, two economists at RFF recently suggested:

“If we become accustomed to climate changes and adapt (mentally and physically), perhaps the costs of climate change are much less than one would predict using today’s desires as the basis for such estimation. If so, less climate abatement may be needed; tomorrow’s climate may make us just as happy as today’s climate. – See more at: http://www.rff.org/blog/2015/evaluating-long-lived-policies-when-our-desires-change.”

Before I’m about to criticize this view, I’d like to say two things in favor of these economists.  First, they are people whose work I respect and who strike me as reasonable people.  Second, they also say that a shift of tastes in the opposite direction could make it even more important to avoid climate change.  In other words, this isn’t just an anti-environmental argument. And readers of this blog know that I’m not anti-economics either.

Nevertheless, I think this view is wrong.  Let’s take an extreme example.  Suppose climate change gets so that it’s dangerous for people to go outside, so no one does. Super-hardy plant varieties are still grown and tended by machines.  No large mammals or birds have survived, and no forests.  But the economy is in great shape, people are horrified by the idea of going outside, and nobody really misses elephants or eagles or redwoods.  What I would argue is that the fact that nobody cares about going outside or about the enormous destruction of biodiversity is not a plus factor which should make us feel better.  Instead, I would view the fact that people no longer care about those things as being another very serious harm from climate change.  I would think there’s something missing in their lives if they no longer care about those things. In fact, if you’re wondering about whether this is “just philosophy” or a legitimate thing to include economic analysis, I’d add that I’d be willing to pay something to keep people from losing the desire to go outdoors or their love of nature.  Though I don’t think that’s the point. I’m not sure that I quite buy 100% into Amartya Sen’s capabilities approach but I think it’s closer to the truth than the standard economic take on human welfare.

This is rather contrary to the tradition in economics, which takes “tastes” as being merely a matter of preferences, about which we should be entirely neutral.  If people like the existence of rainforests, that’s great; if they take pleasure from cutting them down, that’s great too.  Of course, economists don’t necessarily believe that in their personal lives, but that’s their professional stance.  However, it’s an unduly blinkered way of thinking about policy.

The title of this post is “What Economists Don’t Get.” Sen is not only an economist but a Nobel prize winner.  And he’s not alone.  So obviously some economists do get the idea.  But it’s not the mainstream approach.



Reader Comments

3 Replies to “What Economists Don’t Get About Our Relationship With Nature”

  1. I think there a huge missing piece here: the well-being of the people that will not be able to adapt to the conditions of climate change. We don’t even have to envision the extreme in this article to see that suffering, loss of property, livelihood and life, will be among the costs of climate change. We could argue climate change has already totted up costs in this realm. This is not an issue of “taste.” Economists often figure loss of life in their models, but they don’t tend to publicize that much, for obvious reasons. And they don’t publish the inherent selection process that goes into that: certain people cost X to lose, and others cost X+. I would like to see an economist’s report that shows the cost of loss of human life in the abstract, and then compares that with the loss of the life of the economist, his/her children, loved ones, etc.

  2. Getting used to a devastated world has already happened. We live in a devastated world. There is a large body of scholarly work that suggests that everyone puts the environmental bar where it was when they were a child. Concern over environmental destruction tends to appear when that bar is passed. So, i have no trouble envisioning a world where humans are just fine with staying indoors all the time. Humans were capable of finding great joy in the Warsaw ghetto — mixed with their suffering, of course. All humans can get used to greatly reduced environmental conditions, mixed with suffering of course. The issue is WHO gets the chance to adapt, WHO gets the alternative treatments that make up for the lack of environmental services, etc. There are millions of poor people who get cancer from a reduced ozone layer, but only some people can get treatment for skin cancer. This perspective must be made apparent in any economic model that is to be considered credible.

    1. I agree Diane that we are already far, far into the perverse adaption described by Sen whereby the masses are increasingly choosing [or not] to be cut off from the outdoors and prefer man made artificial places. Even when the affluent well educated [comparatively] do venture to the outdoors they usually cannot do so without adapting it first. For example, in our local park run by Fairfax County, VA, near DC, the County -rather than buy land to expand the park to meet the growing population, instead “maximized” the exiting park space by adding parking lots – acres of parking lots in the heart of the park- and plastic playing fields- also very popular. I’m, not sure the general voter approves of this, but it seems to suggest that the natural environment with lots of wildlife is not as highly valued by the average Joe as a parking.

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About Dan

Dan Farber has written and taught on environmental and constitutional law as well as about contracts, jurisprudence and legislation. Currently at Berkeley Law, he has al…

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About Dan

Dan Farber has written and taught on environmental and constitutional law as well as about contracts, jurisprudence and legislation. Currently at Berkeley Law, he has al…

READ more