The long-awaited “National Climate Assessment,” which “summarizes the impacts of climate change on the United States, now and in the future,” was released this week. “A team of more than 300 experts guided by a 60-member Federal Advisory Committee produced the report, which was extensively reviewed by the public and experts, including federal agencies and a panel of the National Academy of Sciences.” Their conclusion: “Climate change, once considered an issue for a distant future, has moved firmly into the present…. While scientists continue to refine projections of the future, observations unequivocally show that climate is changing and that the warming of the past 50 years is primarily due to human-induced emissions of heat-trapping gases. These emissions come mainly from burning coal, oil, and gas, with additional contributions from forest clearing and some agricultural practices” (You can read the entire report here: http://nca2014.globalchange.gov/report )
The major focus of the business community has been the economic impact of both climate change itself and the proposed solutions. As Alicia Mundy and Colleen McCain Nelson explain in their Wall Street Journal blog post, “Five Things to Know About the Climate Change Report,” “the big takeaway from the National Climate Assessment released Tuesday morning is that man-made climate change is affecting the U.S. economy and the everyday lives of Americans. The congressionally mandated study says extreme weather has already cost the U.S. billions of dollars, and it will only get worse” ( http://blogs.wsj.com/five-things/2014/05/06/5-takeaways-to-know-about-the-climate-change-report ). This certainly is a conundrum: ignoring climate change and continuing business as usual will hurt the economy as we are exposed to more severe weather events, but taking the measures necessary to mitigate immediate effects and reduce future harm isn’t exactly free, either, and would require some of the most established industries (oil, coal, and gas) to change their practices, possibly reducing their profits.
There is no lack of economists putting forth ideas for how to address climate change in a way that would minimize harm to or even benefit the economy. For example, Henry Jacoby, an economist at MIT’s business school, suggests that the best way to solve the problem is to tax carbon emissions. While he acknowledges that such a tax would increase the cost of oil and other carbon-emitting energy sources, which on its face appears to harm the economy, the tax — because it is a tax — would raise revenue that could be returned to the economy in the form of tax cuts in other areas (i.e., income taxes) and ultimately be neutral, or even beneficial, to the economy (http://www.npr.org/blogs/money/2013/06/28/196355493/economists-have-a-one-page-solution-to-climate-change ). And there are many, many more solutions being put forth by economists, liberal and conservative alike.
Which brings me to the point — why should you care? Because the economics of climate change is one of those “current events” type issues that may come up in conversation with your colleagues (“dinner party conversation,” if you will). You should be able to talk intelligently about it – do some reading, understand the arguments, and be ready to weigh-in should the opportunity arise.
Current issues of the Wall Street Journal are a good place to start. Check out this article: “Climate Change Is Harming Economy, Report Says,” (http://online.wsj.com/news/articles/SB10001424052702303417104579545510182551226?mod=mktw ), and then follow the links to additional articles on the same topic. You may find that the economics of climate change are more interesting than you thought!