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18.8.06

Climate Change Incentives

Cass Sunstein writes that an important reason that there's been little progress in addressing climate change is that the US and China, the two largest contributers to the problem, don't stand to lose as much should warming come to pass. I agree that it's important to look at the incentives facing actors with respect to addressing climate change, but I don't think Sunstein's analysis is quite right.

I won't argue about whether Sunstein is right to say that the US and China stand to lose less from climate change than other countries -- it's at least plausible, so let's take it as given for the sake of argument. Sunstein still hasn't shown that the people or leaders of the US and China believe that their countries will face less harm from climate change. He merely assumes -- as economists are wont to do -- that because something is true, it is known to actors and affects their behavior. But his article is only interesting and new because we haven't been hearing the same argument from the mouths of leaders in those two countries. Proponents of inaction will tell you either that climate change isn't occurring, or that there's nothing (or at least nothing cost-effective) that we can do about it, or that it will benefit everyone (especially those famine-stricken third world countries that Sunstein says will be hardest hit).

The relevance of the comparative harms done by climate change is also limited. Whether climate change is costly enough to the US to prompt action has little to do with how costly it is to Bangladesh, especially in Sunstein's rational egoist model. If climate change hurts the US enough, it will take action, regardless of the impacts on other countries. At most, the comparatively greater harms done to other countries increase the injustice of the US's following its own internal cost-benefit analysis. Sunstein's implicit claim that the US and China see climate change as a net gain for themselves is a bit hard to swallow until you add in the time frame factor. A sufficiently strong shortsightedness will weight the immediate costs of action heavily enough that they overtop the later costs of inaction. This comparison between times is more significant in explaining the US's inaction than the comparison between countries in the severity of climate change impacts.

On a more conceptual level, Sunstein seems to have bought in to the environmentalist framing of the issue, and then imposed that framing on the actors he seeks to understand. So in calculating the costs and benefits that face the US, he defines costs and benefits in the same way an environmentalist does, placing high importance on the predicted effects of climate change and seeing action as entailing only a set of technical mitigation costs. But that's not how the powerful actors necessarily frame the issue. They hold a variety of other values and concerns that frame things differently, leading to decisions that may seem irrational within the environmentalist framing. We again need actual information as to how the powerful actors construct and work through the problem, rather than speculation about what would be a rational way to reach the conclusion that they reached.

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