INDG 401 Lecture Notes - Lecture 11: Magical Thinking, Resource Depletion, Carbon Tax
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9 Jun 2018
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Lecture 11 - ENVR 400
The challenge: decarbonaization
Foster: capitalism and wonderland
• Agriculture, the part of the economy the most sensitive to climate change,
accounts for just 3% of national output. That means there is no way to get a
very large effect on the US economy
• Even if the net output of US agriculture fell by 50% by the end of the next
century, this is only a 1.5% cut in GNP
• If climate change made all agriculture impossible, would the economy
contract by only 3%
• EXTREME STATEMENTS CONSIDERED NORMAL
Neoclassical economics
• The school of economic thought that now almost entirely dominate the field
• Any economy can be analyzed not by reference to how it produces or
consumes, but with reference to how individuals freely choose to maximize
their utility
• A neoclassical theory of growth has been developed which shows that a
capitalist economy can produce a stable economic growth over long periods
of time, based on the idea of individual optimization by consumers and firms
• When dealing with climate change, this is a deeply flawed approach. It
depends o being able to say what the marginal effect is, on the assumption
that the impact of this marginal effect is limited
How mainstream economics trivializes climate change
• High discount rate
o Low worth of future generations
o Even with discounting, the economy still trumps the environment
• Projections don’t include externalities
o Cost of pollution, resource depletion are excluded
• Magical thinking: reliance on inexistent technology
o Especially massive deployment of CCS
• Severe underestimation of consequences
o Linear thinking: estimates = sum of discrete identified costs
• High stabilization limits
Is continued quantitative economic growth possible?
• Limits to growth: overshoot is possible
Is continued economic growth even desirable?
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