Climate Change: Some Basic Economics - Steve Colt - Institute of Social and Economic Research

Microsoft PowerPoint - Colt_AML_climate_economics_29may2008 Climate Change: Some Basic Economics Steve Colt Institute of Social and Economic Research University of Alaska Anchorage Alaska Municipal League 29 May 2008 Anchorage Overview The mother of all externalities How (some) economists think about climate change National climate policy – likely effects on Alaska What municipal gov’ts can do – a. [...] The “mother of all externalities” GHG emissions impose external costs When I drive, or use my furnace, or take the plane to Hawaii, I get the benefit Everyone else shares the cost – CO2 emissions are global – CO2 emissions are “forever” – from 50-100 years – Today’s and tomorrow’s impacts come from the rich-country baby-boomers’ emissions Reducing GHG emissions creates external benefits When I wal. [...] Risk Risk is when you know the odds: – It will rain about 1 day in 10 in Anchorage, or about 1 day in 2 in Juneau – Asessing risk based on reams of data is what actuaries do Uncertainty is when we do not know the odds – we don’t know the range of outcomes – we don’t know the probabilities of the outcomes Climate change effects are uncertain That’s why you cannot insure against it in the insurance. [...] Mitigation Mitigation = changing the future trajectory of GHG emissions and/or concentrations Adaptation = coping with what is or what will be Adaptation to Mitigation Policy For Alaska, Adapting to higher energy prices will be a major challenge – direct use of energy – embodied energy in all goods The higher prices will come in large part from global mitigation policy Special role of Municipaliti. [...] What municipalities can’t do Munis cannot price carbon – But they can ask for national action Munis cannot change individual values and actions – But they can make low-carbon choices more viable and more attractive Munis cannot opt out and hide – We’re all in this together, as you well know Thank You www.iser.uaa.alaska.edu.