Dr. Kaushik Sridhar

Thinking about Climate Change

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Climate change is the biggest challenge humanity has ever faced. It will last for centuries, and fighting it will be hard. To address climate change, policy makers must deal with a complex array of players, make difficult trade-offs and think in new ways. People often ask economists to help with these sorts of decisions, because considering trade-offs is central to economics. However, economists need to think with particular care in this case, because the reasoning that worked thus far may not work in the face of extensive global change. The changes are too pervasive, and too many unknowns complicate forecasting the future and comprehending the present. You may think climate change is ‘the’ issue facing society. It’s bad. It’s worse than most of us think. It’s hitting home already and it will strike us with full force.

Crucial scientific questions about climate change remain unsettled. However, the best current understanding points to several sobering realities. Extreme weather will become more likely. As temperatures rise, the atmosphere and the oceans will gain increasing energy. Storms will become more powerful. Major storms, droughts and heatwaves will become more common.

Four Factors

Thinking about climate change is difficult for four reasons. 

First, it’s global rather than local. China’s air pollution makes it hard to breathe in Beijing, but it doesn’t immediately affect anyone elsewhere. However, carbon dioxide released into the atmosphere – no matter where – changes the world. Climate change’s global nature makes it harder to create or enact effective policy.

Second, while many challenges call for your immediate attention, climate change is “uniquely long-term.” Even though recent decades have been the warmest on record, they are only a precursor to much larger changes to come. 

Third, while many issues fade away with time or pass, “climate change is uniquely irreversible.” Even if people magically stopped adding new carbon to the atmosphere, the effects of what already exists will still cause temperatures to rise. 

The fourth factor is uncertainty. Climate science improves rapidly, but some vagaries remain about how the climate actually works. Other uncertainties come from not knowing what effect specific industrial pollutants will have or exactly how much of them have been or will be released into the air.

Climate change is unlike any other environmental problem, really unlike any other public policy problem. It’s almost uniquely global, uniquely long-term, uniquely irreversible and uniquely uncertain – certainly unique in the combination of all four.

“Free rider” and “free driver” issues complicate climate change. Free rider issues drive global warming. You don’t get any immediate benefit from acting in an environmentally responsible fashion and such actions are costly. You must act for the benefit of the other seven billion people on the planet. Communities can solve free rider problems, usually through people getting to know those whom their actions affect. By contrast, if someone acts to solve climate change technologically – through, for example, geoengineering – that person or country could drive positive climate change unilaterally, without anyone else’s permission. Politically, you can find precedents for optimism – the world came together in the Montreal Protocol to address the ozone crisis – and for pessimism. The Kyoto Protocol sought to limit greenhouse gas emission, but the US never ratified it, and it doesn’t limit emissions in China or India.

What Should You Do?

No action by a single individual in isolation will change things, yet acting to reverse climate change is a civic duty. Act well and appropriately. Make it your goal for your personal actions to lead to better policies, but don’t let individual actions crowd out necessary collective actions. Join with your fellow citizens to change what it means to be a member of the larger community. Recycle. Reuse bags, and take your own bags to the store. Bike to work. These steps are good, but only if done correctly. “Correct” is largely dependent on whether these individual actions lead toward the right kinds of policies, starting with pricing carbon. As Elisabeth Kübler-Ross articulated “five stages of grief,” you can move through several comparable stages:

  • Scream – Make your voice heard at all possible levels and venues. Call, write, tweet and demand action at the firm, town, state, national and global levels.
  • Cope – Your goal when you scream is to get others to listen and join you in action. When you cope, you acknowledge that climate change is here and real, and you act to take care of yourself. Treat climate change as a reality. If you buy a house, check the flood plain and assume sea levels will rise. If you live in an area certain to experience more storms and floods, like Manhattan, consider relocating. Expect the cost of insurance to rise. Vote against government supported flood insurance that pays people to rebuild their homes where they were destroyed by severe weather that will only get worse.
  • Profit – It will cost a lot of money to deal with climate change, but every time someone loses money, someone else can make money. In the short term, invest in industries that help with flood recovery and rebuilding houses. In the mid-range, expect carbon-intensive industries to stumble. Regulation to limit carbon emissions will harm the coal industry. Divest from fossil fuels, and invest in green energy and carbon-capture technologies. Expect melting ice to open the Arctic to exploration and investment.

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