After a long time of negotations, a new climate accord has been reached by the 20th Conference of the Parties (COP20), in Lima, on the 14th December 2014. It is called the `Lima Accord‘, a draft text that is now viewed as a step towards the international climate conference to be held in Paris in 2015. I provide an overview of the main results, the difference to what had been decided before, and an overview of the different positions in the news.

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I have been visiting Matthew Kahn’s blog again, and he always provides interesting thoughts and opinions for environmental economists. This time he suggests that it is useless for the individual to act green since the overall impact is negligible, or, in his words, a “drop in a bucket”. To be fair, he uses this argument for economists that decide not to go to international conference for environmental reasons (carbon footprint), but his argument is certainly applicable to most green activities of individuals.

Here is why I do not like this sort of argument: So yes, he is correct from the perspective of a single person. If I decide to not fly then my impact on the world’s GHG emissions is so close to zero that any cost accruing to me should outweigh the benefits. Hence, if I were to rely on a standard Cost-Benefit Analysis using only self-centred preferences, then I should always fly and never act green (unless the green activity is an in-my-backyard activity).

Of course, much of the public good literature suggests this is precisely the reason for which public goods tend to be underprovided. But, obviously, in reality individuals are well-aware that their actions do have an impact well-above the immediate one, and this may be the reason for which they actually act green. One of these indirect impacts is, for example, a potential spillover effect, or network effect, which then induces others to think more carefully about their own choices, too. This spillover effect may be sizable, and there is a growing literature that studies this transmission of green behavior across generations or networks. The basic result of that literature is that, if there are enough individuals who actually do act green, then their actions may induce further green behavior by others and subsequently we may become a society that is strongly green oriented.

But, more importantly, an argument as the one raised by Matthew Kahn is dangerous insofar as it implies that green action by individuals is not worthwhile at all. If people start to believe this, then they will tune down their pro-environmental attitude, and instead expect the government to take over the role of the green actor. Of course, everyone is becoming more and more aware that, without a sufficiently strong grassroots movement, e.g. in the form of Agenda 21, it is undoubtedly clear that we would ruin this planet even faster than we currently are.

 

So folks, this is it. Anyone who ever thought it was impossible, there isn’t enough space, it is too expensive, or whatever other unreasonable argument was ever forwarded: The #energiewende is there, it is not only happening in Germany but worldwide. Take a look at Figure 1 below. Nuclear energy production is stagnating, and that for more or less the past 30 years, while alternative sources of energy, wind and solar, are now nearly producing the same amount of electricity as nuclear is. energiewende

This should be a slap in the face for all doubters, for all naysayers and pessimists alike. We do not need nuclear energy, we have safe alternative sources of energy, they are able to produce the same amount of electricity as nuclear is, and if they keep growing just for a little while longer as they have been growing during the past couple of years, then we won’t need nuclear energy in our future energy mix at all. And we might even be able to significantly reduce non-renewable sources of electricity production.

Has anyone seen a significant drag on economic growth from this #energiewende? Has anyone noticed a significant increase in unemployment? Where are the promised recessions, where are the masses of job losses, productivity reductions and losses in international competitiveness that we were promised if we were ever moving to greener sources of electricity production? Anyone? Honestly, the only recessions, the only losses in employment, the only high costs that we know about come from the financial world, from rich people juggling around billions of dollars a day to take advantage of minimal spreads in the name of economic growth; from the banks that try to push up their return on assets and sell us mortgage-backed securities based on worthless mortgages and that do more shadow banking than actual banking; from companies that try to make us believe that we need to buy more and more in order to become happier, better people. Is that really how it should be? Are we really barking up the right tree if we are anti-green? Do we not lose sight of where the real costs are? After all, we should remember that our economic system is part of the natural environment, and not the other way around.

#energiewende here we come!

 

 

In a previous comment I discussed some thoughts of Paul Krugman and Matthew Kahn on why US Republicans are so hawkishly opposing any environmental regulation. I add some thoughts of my own to this HERE but still felt somewhat unsatisfied. And decided to take all this to the data. You wouldn’t expect my surprise when I found the following.

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