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Shantanu S. Bhattacharyya
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Economics of climate change

I was almost certain that the Copenhagen meet will never result in a legally binding contract. But this was almost a disaster. I picked up the NY times lying at the student's lounge and poured over the dissapointing details of the last 72 hours at the climate summit. As I was about to finish the report, somebody from the other side of the room shouted "Damn it !! Why dont they understand its the economics !! "

It was a guy of 20 something, dressed in formals. "Economics did u say ???" I asked. He smiled back and extended his right hand. "Yep, pure economics. Both the problem and the solution. By the way my name is Steve". "Shan", I said shaking his hand.

"So tell me Shan, did you feel the rise of a fahrenheit in the average global temperature in more than a century ? Or did anybody notice the sea level rising by a few inches in so many decades ? No dude. Unless you avidly follow the National geographic or Nasa climate portals, you wont know and even if you did you wont care. Human race will keep on procrastinating abt saving it till mother nature really turn the 'heat' on us."
He seemed to have really given this issue a thought. He was probably looking for an opportunity to present his theory and I was only too happy to oblige.
"But economics. Its different. Its impact is not felt in centuries or decades but months or weeks. Half a percent interest rate hike in Japan will see its impact on the wall street in a couple of hours. In a highly globalised economy, every decision that any Govt takes, has implications for all of us."

"But most developed nations like US or Britain have shown considerable seriousness towards the climate change issue" I suggested.

"Yes, but the same developed nations also share the biggest responsibility in screwing the climate all this while. Having got industrialised and developed, it is easier for them to show concern about global warming. But translating that concern and responsibilty in the same ratio towards paying for the climate cause is economically non-viable for them. Mckinsey estimated the cost of EU's emission cuts to be about $1.5 trillion over the next 14 years. On the other hand, developing economies, though equally aware of the perils of rapid industrialization on the climate, dont want to put up roadblocks to their gdp growth. So developed nations want them to stop polluting while the developing nations want them to start paying for the mess they created. Climate can wait buddy, economics cant :)"

"Hmmm... seems like we will never get a solution to this. By the time all the countries get industrialized and are in a position to tackle global warming in an economically viable way, it might be too late" I said

"Yep it will be. According to an article in the wired mag, we already have enough pollutants in the atmosphere to sustain the global warming for another 1000 yrs. So, to put it crudely, we are already f*****."

"But I thot u said something about the solution. Economics itself being the solution."

He smiled and leaned forward a bit. "Yes. economics is the only solution. Ever heard of the climate change joke ??
Ques - How do you save the climate ??
Ans - Let the major financial institutions handle climate change for 20 yrs. They will mess it up so much that the Govts will be forced to bail the climate out :)
We both chuckled.

"Well jokes apart, all it takes is one Govt. with the will to invest in clean technology RnD. Charity never takes any cause too far. But if we can create even a few technologies that are clean as well as economically viable then it will set up a chain reaction. Other start-ups would follow which will have an established business model. Over a period of time, clean tech would become a norm, because it would have the benefit of economic viability enhanced by large subsidies any Govt will be too happy to provide. Developing nations wont have to necessarily choose between growth and cleaner environment. Countries like India and Bangladesh already have the natural advantage of abundance of wind, solar or hydel sources of energy. Just the idea to translate these sources into usable forms in a profitable way is lacking. Its just a matter of time, friend, just a matter of time ".

I am glad I met the guy. I am glad I had this discussion. Because even though the situation may be much more complicated and the solution much harder, I was feeling optimistic. I was convinced that it was indeed just a matter of time.

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