The keynote speaker for BuildingEnergy13 will be Alex Blumberg of NPR’s Planet Money and PRI’s This American Life. He will be speaking on “economics for environmentalists”.
As anyone knows who listens to his pieces on All Things Considered, Morning Edition, the Planet Money podcast , or any of the economics episodes that This American Life has broadcast (“The Giant Pool of Money” in particular), Alex presents and explains complex economics ideas with real wit and clarity.
I’m really excited about this. In my opinion, economics is a weak point within the NESEA community.
Some questions that I have mulled for some time that might make their way into Alex’s talk include these:
Carbon tax versus cap & trade. “Cap & trade” garnered much attention a couple years ago but has completely disappeared from the debate this election year. I realize in the current political climate, hoping for either cap & trade or a carbon tax is a delusional pipe dream. But the political climate might change as the global climate does, and the NESEA community should be prepared to advocate for good policy, which means we need to understand this issue closely.
The discount rate question. This boils down to trying to calculate how much it’s worth spending now to benefit ourselves—or our descendants—in the future. This question applies to a broad range of scales, from individual projects and buildings all the way to regional and national policy. Here’s a quick example of what “discount rate” is about, not to explain the concept but to communicate the consequences: Nicholas Stern (lead author of “The Stern Review on the Economics of Climate Change”) has advocated for a discount rate of 1.4%. Using this rate means that it’s worth investing $247 billion today to head off $1 trillion in damage 100 years from now. On the other hand, William Nordhaus, the Yale economist, has argued for a discount rate of 6%. Using this rate means that it’s only worth investing $2.5 billion today to head off $1 trillion in damage 100 years from now. Big difference, no? The discount rate question is huge, and we need to try to get a handle on it.
“The tragedy of the commons.” Garret Hardin introduced this concept to a wide audience in 1968, and it’s more relevant now than ever. The basic idea is that individuals, acting completely sensibly and in their own self-interest, can do serious damage to the common good and ultimately can sabotage their own well being through a series of otherwise completely rational acts. Nobel Prize-winning economist Elinor Ostrom has done some really interesting work on how to evaluate and manage the problem, work that’s more than germane to NESEA practitioners, and it would be interesting to get an accessible explanation of her theories.
Accounting for energy replacement costs. The Carbon Age has allowed people to benefit from cheap energy. That cheap energy will not last forever. Should the inevitable depletion and ultimate disappearance of fossil fuels have any impact on the price we pay for that energy now? Or can we just maintain the status quo and continue to ignore the issue?
The Jevons paradox. Mid-19th-century economist William Stanley Jevons observed that as England got more efficient at burning coal, England burned more coal rather than less. Odd, no? If we get more productivity from a unit of coal, shouldn’t we need to use less coal? Apparently, it doesn’t work that way. This is a potentially inconvenient idea for an organization of practitioners who advocate ever and ever more efficient use of energy, and we would benefit from understanding the concept and its applications and misapplications.
Can a growth economy be reconciled with lowered resource usage? Despite the hopeful thinking of many NESEA practitioners, it’s hard to avoid the conclusion that we face a choice between either achieving dramatic reductions in carbon output or maintaining historic levels of economic growth—we can’t have both. Or can’t we? I personally have a hard time imagining how we can move to more expensive, less portable and storable energy sources such as solar and wind and still maintain the same levels of economic growth we’ve enjoyed the last couple of centuries. But that may be a result of my own limitations.
On this, and my other questions, perhaps Alex Blumberg can shed some light and show me the error of my ways. I invite you to come to the keynote address next March 6th and find out.