Timing Is Everything

David Zilberman

Professor David Zilberman

by Prof. David Zilberman, Beahrs ELP Co-director


Dear ELP-ers,

I hope 2015 has taken off to a good start for all of you and I wish everyone a wonderful year ahead. This year we will celebrate the 15th anniversary of the Beahrs ELP. As we continue to have more cohorts, the number of interested applicants is not declining and the alumni network is growing. Hence, we are moving towards sustainability and will stay around for a long time. While our agenda and faculty and staff are evolving, one topic has caught our attention since the very first day – Climate Change.

I became aware of Climate Change in the 1980s when scientists debated its significance and likelihood. The 1990s established that it is a major menace and humanity has to do something about it. Since then, we are debating on what to do. For economists like myself, it is clear that if humanity is serious about tackling the problem, we need to make emitters to pay for the greenhouse gases that they produce and we need to engage in developing and introducing technology that will slow and end greenhouse gas build-up. Kyoto was nice, and some of the cap-n-trade programs we see are very useful. But still, it was a small effort aiming to contain a huge wave. The reality made introducing solutions with teeth politically difficult. When energy prices increase, like in the 2000s, it is difficult to sell carbon tax, so people fought for alternatives that are far from optimal but now, prices of energy are declining in a big way. We also realize that we develop technologies that allow reducing the cost of alternative energies. Solar has is becoming more and more affordable in many developing countries, and has become cheaper than using diesel generators. Biofuels are becoming economically viable in the U.S. and in Brazil, food prices have declined in recent years, and we have the technology to have a Bio-economy that produces food and some fuel. Conservation has a huge potential. Already we have learned that if consumers need to pay more for their energy, they will switch to energy saving devices. If low energy prices will continue, some of the achievements of the past will slowly erode. But if we introduce some sort of carbon tax now, we can continue the momentum towards an alternative path of reduced greenhouse gas emissions. So now is the time to tax; it would be painful but much less than the alternatives. It is our challenge as citizens, to make sure that the tax money will go to good uses.

It seems that in the last few years, the urgency about climate change has eroded. Some spoke about Global Warming Hiatus (don’t tell anyone that I use Wikipedia, but it can be useful), but at the same time, we learned that 2014 is the warmest year on record globally. While there are uncertainties about the timing, dimensions, and impacts of climate change, there is a high probability that really bad things are likely to happen and most of the solutions have other beneficial impacts, they tend to allow us to do more with less, reduce air pollution, and to gradually transition away from non-renewable fuel sources. Therefore, we must do something about climate change and now is the time to take action.



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