Frank Ackerman, research fellow at Tufts' Global Development and Environment Institute and senior economist at the Stockholm Environment Institute, at a talk yesterday in the Tisch Library Hirsch Reading Room warned against using traditional economic analysis to deal with climate change issues.
In examining the problem of global warming, he said that it is improper to apply traditional economic concepts and paradigms.
"Cost benefit analysis, the way in which economists evaluate different ideas, requires a monetary value for everything, but the benefits of protecting the climate ... cannot be measured in dollars," Ackerman said. "You could say cost benefit analysis fails because it tries to place a price on the dignity of nature."
Another reason why traditional economic analysis is inapplicable to climate change is because it relies heavily on the use of mathematical averages, which fail to give an accurate picture of the situation, according to Ackerman.
"The average estimate of sea level rise might be a little bit less than a meter, which would be a hardship for low?lying areas, but that's only a limited part of the world," he said. "Fears about climate change are supposed to be based on worst?case scenarios. The average is not what matters when you apply it to climate change."
Ackerman also explained that it is challenging to use economic discount rates, which are traditionally used to calculate the value of present investments in the future, to examine environmental costs.
"We are talking about what we owe the people who might live after we are all gone," he said.
Ackerman was discussing his most recent book, "Can We Afford the Future? Economics for a Warming World" (2009), which scrutinizes traditional economic theory and presents the argument that implementing immediate climate change solutions would be economically priceless.
He began by describing the economic puzzle that his book studies, which served as inspiration for the title.
"What if we know something is absolutely required for the future of the earth and we can't afford it?" Ackerman said.
He briefly discussed the implications of current scientific research, noting the possibility of the environment shifting to an unfavorable state.
"A five degree temperature change, which is what scientists are now projecting may be seen fairly soon, would move the climate far out of the range of temperatures that humans evolved in," he said.
Ackerman highlighted a number of excuses for inaction and the lack of policy implementation, the first of which was what he called "fake science," where scientists ignore important facts and data.
He proposed applying the insurance paradigm in considerations of climate change solutions. The risks involved in climate change may seem minimal, he said, but still need to be insured against. This justified the costs of protecting the earth against climate change.
"Almost all homeowners have fire insurance, but the risk of your house burning down is 0.4 percent per year," Ackerman said. "How large is the probability of losing the Greenland ice sheet? Probably about the same size as having a fire."
Pulling up a chart that showed the government's spending on defense in the past several decades, he noted that the idea of spending money to prevent major risks is not unfamiliar to government.
"We take money out of current consumption to prevent against remote threats all the time," Ackerman said.
He concluded that it is critical for the United States to immediately invest in technology and industry that will facilitate the establishment of a more environmentally sustainable economy.
"We have to invent new technologies and jobs that will make it possible to create a carbon?free economy," he said. "What we need now above all is to spend money on creating new technologies that will create new forms of technology and new forms of renewable energy."
Senior Erin Taylor said that she thought the presentation's economic focus was a useful way to approach the climate change issue.
"I think it is a really important perspective because it is what politicians and the people who have power listen to," Taylor said.
Friends of Tufts Libraries sponsored the author discussion and Tufts' bookstore organized a book signing and reception after the talk.
