Some Economics of Global Warming
By Thomas C. Schelling
The American Economic Review, Vol. 82, No. 1 (Mar., 1992), pp. 1-14
[Abstract Review]
The author discussed the effects on global warming on people, enviornment, economy, and some tackling strategies. The paper started off by pointing out the inappropriate metophar of greenhouse and the name should be replaced by "smudgepot effect". But since it is too late to change the term, it is more practical to focus on the effects on people. People accept discontinuous climate change when they “migrate” from northeast to southest; however, continuous change of climate is unbearable. Additionaly, the media discuss “hotter summer”, but never “warmer winter.” Interestingly enough, people 100 years ago would probably have appreciated a warmer winter.
Business activities such as finance or manufacture are little affected by climate; similarly for healther care, education, or broadcasting. Climate change becomes an issue when it is about enviornment, animals, or argiculture. As some argue that comfort is worth considering, it is fortunately that the models predict a greater impact upon winter. Overall, climate migrates slowly and does not make significant impact on human life unless it is catastrophy.
Nevertheless, global warming is still an ongoing issue. The question is what are the costs of reducing carbon emission? Developed countries have no self-interest in reducing 2% of GNP perpetuity to curtailing carbon consumption. Shall developing countries scarfice their citizins’ welfare and economic development? China accounts for 25% of emissions but expect to increase to 50%. That is a nation with power to make a difference to the world by commiting to a “social contract” for global warming, but will she?
Alternative solution is genoenginnering; for example, remove mature trees and storing them anaerobically; enhancing oceanic photosynthesis by “fertailizing” the ocean with iron; reforstation, or put something in orbit to reflect incoming sunlight and reverse the imbalance caused by greenhouse gases. Schelling believed that if genoenginnering is feasible, international greenhouse diplomacy will be transformed (p. 10).
Schelling stated that the best plan is the Marshall Plan dollars. Unfortunately, there was never a formula for distributing Marshall Plan dollars. Global warming was a problem in 1992; 15 years later, there is still no real solution.
ECON 500500 Reading and Writing in Economics
December 17th, 2007
