Economics Vs. Environment: A False Dichotomy

mid-globeThe false dichotomy of economics versus environment has long existed because it is unfortunately too easy to sweep health and environmental costs under the rug or to have government consistently pick up the bill for consequences of short-sighted “growth”.

Here’s a letter sent to the Economist by former World Bank, senior vice president, Vinod Thomas, specifically arguing that by addressing climate change we are really safeguarding the economy in the long run.

It is true that climate change is not just an environmental problem; it cuts across all activities. Yet the recipe for economic growth from mainstream economists, including those of the The Economist newspaper, disregards climate change.  Yes economic textbooks cover externalities or spillover effects, but these have not been integral to growth analysis. A search finds abundant climate studies, but less than 0.5% of the numerous growth articles over the past 50 years seem to factor climate effects.

That allows politicians such as Jair Bolsonaro, Brazil’s president, to argue that environmental protection is inimical to growth,even as the emerging reality is the opposite. American policy too, sees any deregulation, including policy that mortgages the environment, as pro growth. Yes environmental destruction may boost short term growth, but the climate outcomes hurt long term growth and welfare.

So changing the conduct of growth economics is essential if we are to avert a climate catastrophe.Unless the economics profession stops ranking and rewarding countries based primarily on how much they deregulate and boost short term GDP, the climate action that you rightly call for will continue to lag dangerously.

Here is another discussion from the journal Nature that is more detailed and broader in scope:

The cost of a warming climate

 

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