Time for a rethink on climate change, say top environmental economists

27 Feb 2012

Governments have done so little to reduce greenhouse gas emissions, they should consider investing into the Rand D of large scale geo-engineering projects and their governance, according to 26 of the world’s leading environmental economists.

Examples could include firing sulphates into the atmosphere, Iron fertilisation of the oceans or oceanic ‘heat pipes’.

A ten point consensus, published this month in a book edited by two top environmental economists at The University of Manchester, argues that among other things, policy makers should ‘think outside the box’ to tackle climate change.

Also, argues the consensus, greenhouse emissions should be taxed or capped to help consumers, businesses and governments account for the social cost of their behaviour.

Professors Alistair Ulph and Robert Hahn - from the University’s Sustainable Consumption Institute (SCI) - say that despite ambitious international targets to cut greenhouse gas emissions, little progress has actually been achieved.

Their book published by Oxford University Press is built around a University of Manchester conference honouring Nobel Prize winning economist Professor Tom Schelling in 2010.

“Emissions from one country may be a small part of the global emissions that drive climate change - which means there is an incentive for such countries not to act to cut emissions unless others do so,” said Professor Ulph, who is Director of the SCI.

“Moreover, the impact of global warming and the costs of reducing emissions vary across regions and time periods, so a divergence of interests pits country against country and generation against generation.”

Game theory reveals a series of virtually intractable problems  - such as tipping point analysis and the prisoners’ dilemma - which stand in the way of international agreement between nations. Most game theorists – such as Schelling-  are pessimistic about ever getting agreement on climate change.

“Because the prospect of international action is so slim, Schelling argues that policymakers need to think outside the box,” he said.

“More research and development is needed in technologies for removing CO2 from the atmosphere and for managing solar radiation, even though these technologies may not be deployed for decades.”

Professor Hahn said: “Many countries already have explicit or implicit prices on greenhouse gas emissions.

“But the large revenue streams that result should be used productively by reducing other taxes that distort economic activity.

“If we do fail to regulate greenhouse gas emissions that contribute to global warming or find alternative strategies, then the damage could be catastrophic.”