...“no disaster happens overnight and every evil act or policy we witness today has a history” perhaps as old as humanity itself
Our chosen theme is alternatively referred to as Climate Economics-thus Economics of Climate Change means Climate Change Economics and vice versa. But, you may be asking: Why Climate Change in the first place? After all, as John Scales Avery [ref his: Lives in Economics-June 29, 2019] charged, “Economists are not used to thinking of the long-term future. However, the climate crisis is a long-term multi-generational issue. With a little thought, we can see that all future generations need to be considered. No one should want the human race to become extinct in a few thousand years. Nor should we wish the natural world to be destroyed. We have a responsibility to all future generations and to all the plants and animals with which we share the gift of life”. It is obvious, therefore, that climate change and the concern about it are of long term focus and status.
The Editorial Collective of Countercurrents did an instructive piece in their outing of August 15, 2019 titled: ‘A People’s Manifesto for Ecological Democracy’, in which they asserted, that:
Our planet is not a lump of inanimate matter circling the sun every year, providing humans free lodging, boarding and endless resources to exploit recklessly. She is a living, breathing, sentient being, to be treated with love, care and deep respect. Revered in all ancient cultures around the world as Mother Earth – She gives us generously but her respect needs to be earned too. Humans, even though they pretend to dominate it, are not ‘masters’ of the planet. We are not mysteriously destined to rule over all other species – whether plants, animals or microbes. Humans, like every other living organism, are the children of Mother Earth and just one out of millions of other forms of life. And it is the ability to coexist peacefully amidst immense diversity that makes all life itself possible.
Yet, there is the stubborn refusal in some quarters to acknowledge the reality of climate change. In obvious exasperation, Sandra White, writing on September 24, 2022 in The Mint Magazine, laments: “Despite growing evidence of climate change, only a few years ago I regularly heard people deny that it was happening. Temperatures are getting colder not hotter was one common view. And if global warming was happening it is all part of Earth’s natural cycles, was another”.
What’s Climate Change and all the fuss around it?
The Economist has put the essence of climate change bluntly albeit with a touch of journalistic excess in the following words:
Climate change affects everything from geopolitics to economics to migration. It shapes cities, life expectations and wine lists.
A basic fact is that human beings did not create the world or nature in which they found themselves and constitute a part, but unfortunately humans have registered very negative impact on nature, the environment in a bid to meet both necessary and reckless consumption objectives. In this vein, the rabid pursuit of economic growth especially in the Global North has been exposed as the principal culprit. Meanwhile, it has dawned on humanity that we should, as much as possible, preserve the environment in its original state, no matter the cost because the alternative model amounts to collective suicide, a process may indeed be painful.
In various academic circles, there is the shared position that countries of the Global South have been victims of climate change instigated largely from the Global North. As conveyed by Countercurrents, going down historical memory lane, with a hint at the justification of reparation even within a cooperative global understanding:
The history of modern colonialism, carried out over the last five hundred years by Western powers, cannot be undone but the injustice of the past can be confronted in the present and compensated for. All of us want to forgive and move on into the future but we cannot forget the crippling legacy of colonial abuse that has never really been brought to justice. . . . And the great injustice in this unfolding tragedy is that, the poorest and weakest sections of the global population are the ones who will bear the brunt of devastation, largely caused by the excesses of the richest parts of the world.
Thus although his sincerity is suspect, the US Special Presidential Envoy for Climate, John Kerry, during an address to journalists in Abuja, Nigeria in September 2022 laid a basis for the position that “If we are going to as a planet come together, we all have to be part of the solution. Obviously, apart from the fact that with higher levels of responsibility to countries that produce more emissions…,” adding that he was in the country “simply to talk about how we can do this future together in a way that works for everybody.”
The Economics Dimension
The economics of climate change refers to the study of the economic costs and benefits of climate change, along with the economic impact of actions aimed at limiting its effects. In this context, it has been variously demonstrated that climate change, in form of warmer temperatures, sea level rise and extreme weather will damage property and critical infrastructure, impact human health and productivity, and negatively affect sectors such as agriculture, forestry, fisheries and tourism. Unfortunately, however, recent work in economics tends to underestimate the urgency and scope of what has to be done-which is precisely why this theme qualifies for discussion.
Climate change has far-reaching externalities; it is indeed in essence an externality: As Daniel De La Torre Ugarte, Professor at the University of Tennessee reminds us, left on its own, the market will not solve the problem in a socially optimal way. As with any externality, without policy interventions, the emitter has little motivation to consider the costs in their decision-making. However, the externality of climate change has its own added uniqueness Apart from the fact that the emission of greenhouse gasses imposes costs on others that are not borne by the emitter, the costs will be felt over a long time period and over the entire world. Besides, the exact nature of costs is uncertain: as they are shaped by policies, market mechanisms, and other events.
It is evident from the above that there are several dimensions to the cost of climate change. According to the IMF, the process of climate change is set to have a significant economic impact on many countries, with a large number of lower income countries being particularly at risk. In essence, the costs are not evenly distributed: developing nations will pay higher price; in particular, Sub-Saharan Africa bears high non-market costs; India and Southeast Asia will suffer 9-13% loss in GDP. On the other hand, developed nations will vary depending upon geography but the US will experience a 1-1.2% loss in GDP. More worrisome is the fact that those most affected—future generations– cannot speak up for their interests.
In its very concrete context, the cost of climate change has been ably summed up by Professor Raj Chetty of Harvard University-in his 2019 Presentation, “Using Big Data to solve Economic and Social Problems” -albeit using the neoclassical economics paradigm- in which he reported how researchers have estimated social costs of many different types of pollution, ranging from toxic air pollution to water pollution. Given the link between carbon dioxide (CO2) emissions and climate change, carbon emissions have received the most attention and Governments now use estimates of “social cost of carbon” when evaluating alternative policies. The guiding conceptual question is: how much does an additional unit of carbon emissions cost society due to environmental damage? Calculating this cost is challenging and is the subject of much research. For example, there is the Economics of Climate Change for Malaysia (ECCM) project which is a study undertaken by the Government of Malaysia in collaboration with the United Nations Development Programme (UNDP). The project started in July 2010 to assess the economic costs and benefits of adaptation and mitigation measures in specific sectors.
Before closing this section, a word on funding given that climate action needs huge funding. As a correspondent of The Economist, Edward Mcbride, paints the picture: “Adapting to climate change is urgent, feasible and woefully underfunded”. It is the imperative of funding climate mitigation and climate adaptation that gave rise to the concept and programme of climate finance. As defined by the United Nations Framework Convention on Climate Change (UNFCCC), “Climate finance refers to local, national and transnational financing- drawn from public, private and alternative sources of financing that seeks to support mitigation and adaptation actions that will address climate change”. It goes further to provide a technical background note while clarifying the essence of mitigation and adaptation when it states how:
The convention, the Kyoto Protocol and the Paris Agreement call for financial assistance from Partied with more financial resources to those that are less endowed and more vulnerable. This recognizes that the contribution of countries to climate change and their capacity to prevent it and cope with its consequences vary enormously. Climate finance is needed for mitigation, because large-scale investments are required to significantly reduce emissions. Climate finance is equally important for adaptation, as significant financial resources are needed to adapt to the adverse effect sand reduce the impacts of a changing climate.
It is pertinent to recall, in line with Wikipedia, that the UNFCCC established an international environmental treaty to combat ‘dangerous human interference with the climate system’, in part by stabilizing greenhouse gas concentrations in the atmosphere. The point is that the UNFCCC is the entity saddled with the responsibility of supporting the global response to the threat of climate change.
The challenge of climate change has taken a long time to unfold but has become especially threatening in last few centuries, resulting from rabid pursuit of economic growth-represented by larger GDP- with scant attention to consequences on the environment. To paraphrase the Countercurrents team, “no disaster happens overnight and every evil act or policy we witness today has a history” perhaps as old as humanity itself. Now, however, the realization has dawned that collectively the entire human species faces annihilation due to runaway global warming. The International Monetary Fund has asserted that “climate change has potential to do significant economic harm, and poses worrying tail risks. It is a global externality—one country’s emissions affect all countries by adding to the stock of heat-warming gases in the earth’s atmosphere from which warming arises”.
What appears to anger climate activists is the continued denial-now of course becoming increasingly feeble, of climate change and its causal consequences. In this vein, Sandra White has entered the contextual argument with a touch of psychological attachment and defense of the status quo by the powerful, to the effect that:
Climate change presents the kind of overwhelming threat that triggers denial. Most of us need the protection denial affords because the realisation that our modern, ordinary needs and desires are proving so destructive is genuinely un-faceable. On top of that, our prevailing, neoliberal economic model is accelerating the dismantling of the fabric of life on Earth alongside our social fabric. But the few at the helm of the economy profit from that model, believe in it, and depend on it for their sense of self-worth. Consequently, denial disables them even more when they contemplate the kind of far-reaching economic transformation needed.
It is common knowledge that globally, as populations increase, carbon emissions will increase. Thus, it is projected that as the large populations in Asia (India & China) continue to develop economically, carbon emissions will continue to increase. As documented and shared by R.K. Pachauri, Chairman, IPCC and Director-General, TERI in his Keynote Address on the theme, “Achieving sustainable development”-New York, 30 June 2008, the consequences are dire, such as:
- 1 to 3.2 billion people will experience increased water scarcity by 2080
- Crop revenues could fall by 90% by 2100 in Africa
- 20-30% of species could be at risk of extinction if increases in warming >1.5-2.5°C
As would be expected, these expressions of risk are determined fundamentally by location in time and space. A report shared by Professor Joseph Stiglitz registers its relevance at this point as it highlights how inadequately the climate change issue is not being addressed appropriately as deserved from the perspective of the citizens-with USA on the spot, hear the Prof’s report on a court case in the USA:
Juliana, et al. v. United States of America, et al. is a climate justice-based lawsuit filed in 2015 that is being brought by 21 youth plaintiffs against the United States and several of its executive branch positions and officers. The plaintiffs, represented by the non-profit organization Our Children's Trust
The lawsuit asserts that the government violated the youths' rights by encouraging and allowing activities that significantly harmed their right to life and liberty, and sought the government to adopt methods for reducing greenhouse gas emissions. Brought under provisions of Constitution and Comon Doctrines. The public trust doctrine is the principle that the sovereign holds natural resources in trust for public. Key issue is intergenerational equity
It is pertinent to highlight if only briefly, the Intergovernmental Panel on Climate change (IPCC) whose work is guided by the mandate given to it by its parent organizations: the World Meteorological Organization (WMO) and the United Nations Environment Programme (UNEP). Its role is to assess on a comprehensive, objective and transparent basis the scientific, technical and socio-economic information relevant to understanding the scientific basis of climate change, its potential impacts and options for adaptation and mitigation.
As I have often asserted, based on an adapted philosophical position, every problem is a solution in hiding; hence, I contend that with honest commitment, the challenge of climate change can be addressed by humanity through cooperation erected on science and justice.
Looking Optimistically beyond Now
The Countercurrents Collective already cited at length posed a series of critical questions and interestingly came to an optimistic vision:
Where do we go from here? What are the most pressing issues that need to be addressed today? What can we do to regenerate hope? Are human beings redeemable at all? Yes, of course they are. Humans are the only creatures on the planet, who look after, not just their young, but also their elderly, sick and disabled members. Humans are in other words, at their finest, when they fight against injustice or show solidarity and empathy towards each other, especially the weakest in their midst. It is these noble qualities, of an otherwise flawed species, that need to be preserved and nurtured at all costs, in all that we do. They are the only source of hope for our future.
Some of the principles we need to firmly uphold and base our actions on have been articulated as follows (adapted from: A People’s Manifesto .for Ecological Democracy):
- World citizens must insist that historical polluters bear their exactly accounted share of the US$200 trillion cost of reducing atmospheric CO2 back to 300 ppm CO2. It must also insist that all nations meet their exactly accounted share of inescapable Carbon Debt. Failure to pay this ecological debt will mean automatic cancellation of all globally-owed financial debt of developing countries throughout the world.
- All countries must urgently implement water saving, arable land saving, climate change, sustainability, re-afforestation and land restoration measures. Stop dirty transport, dirty energy and prevent air pollution deaths – 9 million people die worldwide from air pollution each year, including over 1 million in India.
- Individual nations can lead the way to zero emissions and thence negative emissions for developing countries, by adopting renewable energy, re-afforestation,, energy efficiency and building a sustainable, needs-based economy.
- Every economy must decouple itself from fossil fuels. Private ownership of vehicles should be discouraged and public transport should be encouraged. Coal, nuclear and hydropower must be phased out. Clean energy like solar, wind, tidal etc should be the only energy production systems that the government builds on a large scale.
- Further, energy production must be localized. Village communities and home owners should be encouraged to produce energy for their use. If they produce extra, they should be allowed to sell it to the public grid. National policies must help resolve the current crisis of overconsumption by a few and under-consumption by the many, as well as ensure the greening of energy.
- Our ecosystem is a Commons and the ownership of the ecosystem should be handed over to the public. The idea of the Commons should be incorporated in school curriculum and a wider understanding of it should be encouraged through the public media, so that everyone becomes the custodian of the ecosystem. People should be the custodians of rivers, lakes, ponds, forest and the sea. Any changes to the status quo of these common assets should be done only with the assent of the public.
What emerges from the foregoing is the reality of a terrible danger that awaits humankind if the present reckless pursuit of wealth at the detriment of vital nature continues as it must not. I come in peace, please.