Associate Professor and Chair of the Department of Economics at Lawrence University, David Gerard gave a presentation on Monday, Sept. 7 in Quigley Hall about the economics and politics of climate change.
It was titled “Climate Change is Coming: Should We Try to Look Busy?” and was centered around the perspective that climate change is no longer preventable, however there are economic options available to try and reduce the severity of global warming.
“It’s not a simple problem. It’s not a problem we can solve,” said Gerard. “We need to get past the mentality of solving and focus more about surviving.”
Gerard used a bathtub analogy in his presentation, where the faucet represented carbon dioxide emissions, the tub represented the concentrations of CO2 in the atmosphere and the drain represented the absorption of CO2 from the atmosphere by trees and oceans. The tub does empty out however the issue is that water is coming in faster than water is draining.
Currently the concentration of CO2 in the atmosphere is 400 parts per million. Pre-industrial levels were just below 300 ppm and according to Gerard, this number is expected to rise even more to reach 550 ppm by the end of the century.
Scientists are not certain what will happen in the future, however they do know that the temperature of the earth is increasing at an increasing rate. They guess the earth will warm by one to five degrees Celsius, with a variance of three degrees Celsius based on understandings of trapping heat. However, this is influenced greatly by economic growth and development.
What bothers economists, according to Gerard, is the chance of catastrophic warming which is classified as warming of the earth’s temperature by more than 11 degrees Fahrenheit.
To prevent this kind of warming, Gerard stated that action has to be taken now. In order to stabilize the tub at 550 ppm, carbon emissions have to be cut by 50 percent. To stop it at 450 ppm, emissions have to be cut by 80 percent.
Gerard’s stance on the situation was that it is not possible for world leaders to completely fix global warming for four main reasons. The first was because economic development and energy consumption are inexorably linked. There is a linear relationship between gross domestic profit and annual energy consumption according to Gerard.
His second reason was that fossil energy use is increasing rapidly. In 2012 fossil fuels represented 67 percent of the world’s energy source.
Between 2005 and 2012 total world consumption of fossil fuels increased by 25 percent. This is largely because of economic growth in Asia, where fossil fuel consumption increased by 57 percent during this time. Asia currently has 200 cities with populations of more than one million and represents one-third of the world’s energy use. In the United States fossil fuel usage also expanded due to fracking of natural gas and the discovery of oil as a result.
According to Gerard, electricity usage will be doubled within his lifetime which creates what he called an intractable problem. How can energy consumption be doubled while halving fossil fuel consumption? Particularly as fossil fuel is such a dominant source of energy for the world.
Gerard’s third reason was that there is a lack of serious political support, even in wealthy countries. In the U.S. the Environment Protection Agency recently passed a Clean Power Plan. This will reduce CO2 by 30 percent by 2030, however only in the U.S. This falls significantly short of the 50 percent global reduction needed.
Finally Gerard said the last problem is that wildly optimistic emissions scenarios tend to be wildly optimistic. He stated that demand needs to be cut in some way and the focus needs to start shifting to how to reduce the amount of warming and how to deal with it when it comes, rather than on how to prevent it.
Gerard proposed economic ways to deal with CO2 emissions in order to reduce catastrophic warming but also maintained that the bathtub is going to fill up regardless, it is just a matter of how much.
According to Gerard it is popular opinion among economists that implementing a carbon tax would be a positive and efficient way to reduce emissions. Gerard stated that when you tax something you get less of it and that a carbon tax would make alternatives relatively more attractive, even without subsidizing them.
Evan Schweitzer, ’16 is an economics major and attended Gerard’s presentation. He said the link between climate change and economics was something new for him.
“It was really interesting to hear from an economic perspective about an environmental issue,” said Schweitzer. “It was interesting to see how it could be economically reduced.”
Economics Professor and Department Chair Tomas Nonnenmacher agrees that a carbon tax sounds like a good option, however he believes the implication and enforcement of it could be problematic.
“I think most economists would say…a carbon tax is the right way to go about solving this problem. And the reason why, is that a lot of the alternative methods of trying to tackle carbon emissions are really hard to implement, maybe politically very difficult to implement,” said Nonnenmacher. “Every system of taxing or trying to reduce carbon emissions is going to be difficult to implement, how do you get people to pay the tax? The enforcement questions are ones that are really important, and those are really sticky political questions.”
Gerard also addressed the need to develop good institutions to foster economic growth around the world so countries, particularly developing countries are more prepared to cope with climate change.
Nonnenmacher said this is evident even within the U.S.
“The poor countries are the ones who are going to bear the burden or the brunt of anything that deals with climate change. We can see even in the United States…when Hurricane Sandy hit the East Coast, there was very different capabilities to deal with that than when Hurricane Katrina hit New Orleans. So when we look across the world…we can say, richer countries can deal with climate change a lot better than poorer countries can,” said Nonnenmacher.
However Nonnenmacher also explained how this shows the crux of Gerard’s intractable argument and therefore pessimistic outlook.
“Encouraging economic growth is one way we can mitigate the effects of climate change. Of course the tension is, is that economic growth and carbon emissions are very closely interlinked with one-another, so as you’re growing we often see an increase in carbon emissions and fossil fuel usage,” said Nonnenmacher. “And those ties are just going to get stronger and stronger.”