An Economic Case for Acting on Climate

When you're sitting in Boston with the average temperature is 48 degrees Fahrenheit, three or four degrees of warming in terms of average temperatures, that actually sounds nice. But if I told you that that corresponds to maybe 10, 20, 30 more days a year where it gets too hot to work outside, then it's suddenly a different story. As a student of economics, I see climate change as the ultimate market failure, it's the ultimate global public goods problem, so that's interesting from the intellectual standpoint but probably more importantly from a public welfare standpoint, I see climate change as probably one of the defining challenges of my generation. We're only beginning to understand the extent to which changes in climate, particularly as they manifest in increased extreme events, may affect economic welfare, economic productivity. Looking at U.S. automobile manufacturing plants, a week with six or more days above 90 degrees Fahrenheit results in roughly eight percent reduction in output and, more importantly, that output is not made up in later weeks, right, it's not like they just work overtime on a cooler week to make up for that. There's just so much uncertainty involved and we're trying to make policy on fifty to a hundred year timescale, something that we really haven't done before as a civilization.

And so being able to clarify even small catches, right, of the shroud of uncertainty that surrounds this issue is a hugely valuable task that places like Harvard are uniquely well positioned to tackle..