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Can We Afford the Future?

Can We Afford the Future?

Doctor Frank Ackerman | Professor Bina Agarwal | Kevin P. Gallagher | Ha-Joon Chang | Ha-Joon Chang

(2009)

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Abstract

According to many scientists, climate change is a growing threat to life as we know it, requiring a large-scale, immediate response. According to many economists, climate change is a moderately important problem; the best policy is a slow, gradual start, to avoid spending too much. They can't both be right. In this book, Frank Ackerman offers a refreshing look at the economics of climate change, explaining how the arbitrary assumptions of conventional theories get in the way of understanding this urgent problem. The benefits of climate protection are vital but priceless, and hence often devalued in cost-benefit calculations. Preparation for the most predictable outcomes of global warming is less important than protection against the growing risk of catastrophic change; massive investment in new, low carbon technologies and industries should be thought of as life insurance for the planet. Ackerman makes an impassioned plea to construct a better economics, arguing that the solutions are affordable and the alternative is unthinkable. If we can't afford the future, what are we saving our money for? Can we Afford the Future? is part of The New Economics series, which uses the ideas behind a new, more human economics to provide a fresh way of looking at major contemporary issues.
‘Frank Ackerman provides the ammunition that advocates of strong climate policy need to debunk the conclusion that stabilizing our future climate is "too expensive".' Stephen H. Schneider, Stanford University 'This book is essential reading for anyone trying to understand the major economic debates around the major new long-term challenge of our times - global warming. Frank Ackerman has done us all a great service with this very accessible critical survey of the varied and complicated issues involved.' Jomo Kwame Sundaram, UN Assistant Secretary General for Economic Development
Frank Ackerman is a research fellow at Global Development and Environment Institute and a senior scientist at Stockholm Environment Institute-US Centre, both at Tufts University. He is a founding member of Economists for Equity and Environment (E3) and a member scholar of the Centre for Progressive Reform.

Table of Contents

Section Title Page Action Price
Acknowledgements vii
1 The status quo is not an option 1
The new debate 5
The invisible hand, and other fables 8
Economics without equilibrium 11
Four bumper stickers for better economics 13
2 Your grandchildren’s lives are important 15
Discounting the far future 18
Figure 2.1 \rCosts and benefits, by year 21
Figure 2.2 \rPresent value of costs and benefits 22
Discount rates and financial markets 23
Discount rates and first principles 24
3 We need to buy insurance for the planet 28
The climate change card game 28
Worst-case scenarios 30
Climate policy as insurance 32
Incalculable risks 35
How sensitive is the climate? 38
4 \rClimate damages are too valuable to have prices 41
Expensive, or priceless? 43
A bargain at twice the price 47
A craving for heat 48
Is hotter weather healthier? 50
Agriculture in a warmer world 51
5 Some costs are better than others 55
Energy savings without costs 56
Good costs and bad costs 60
Waiting for technology 64
6 Hot, it’s not: climate economics according to Lomborg 70
Whom can you trust? 72
Table 6.1 Lomborg’s bibliography: selected authors and frequency of citation 75
Costs, benefits, and consensus 76
Three hundred years of Kyoto 78
7 Much less wrong: the Stern Review versus its critics 82
What did Stern conclude? 83
Is the Stern discount rate too low? 85
How do risk and uncertainty affect climate economics? 88
How should damages and mitigation costs be estimated? 91
Did Stern underestimate the problem? 92
8 Climate, equity, and development 97
Responsibility based on emissions: should the polluters pay? 98
Figure 8.1 Shares of world population and CO2 emissions, selected countries 101
Responsibility based on income: should the rich pay? 102
Greenhouse development rights 104
All together now 107
Cost–benefit analysis versus climate justice 109
9 What is to be done? 113
Magic bullets that miss the target 116
The logic of carbon prices 119
The inefficiency of the market 121
Getting refrigerator prices right 124
Sulfur trading and why it works 125
Can we change fast enough? 127
Notes 133
Chapter 1 133
Chapter 2 133
Chapter 3 134
Chapter 4 134
Chapter 5 135
Chapter 6 136
Chapter 7 136
Chapter 8 138
Chapter 9 139
References 140
Index 146