Leading Academic Economist Offers Optimism about Climate Change Policy

Over the past three years, I’ve had the pleasure of engaging in podcast conversations with some truly outstanding scholars who have carried out important research in the realm of environment, energy, and resource economics, and recently was no exception, when my guest was Michael Greenstone, the Milton Friedman Distinguished Service Professor of Economics at the University of Chicago.  You can listen to our conversation in the latest episode of my podcast, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.”  Our full conversation is here.

In our conversation, Michael Greenstone talks about his graduate work in economics at Princeton, the path that took him to faculty positions at the University of Chicago, MIT, and then back to Chicago, as well as his time in government during the Obama administration at the Council of Economic Advisers.  In the process, Michael identifies both some high points and low points of his time in government, as well as some of the changes he has seen over the past twenty years in environmental economics scholarship.

When Michael reflects on his time serving as chief economist at the White House Council of Economic Advisers, he describes his work on regulatory policy, in particular trying to find a way to estimate in economic terms the benefits of reducing CO2 emissions.

“So, I had this idea, why shouldn’t the government have a coherent and uniform social cost of carbon? And I suggested it to [then Administrator of the White House Office of Information and Regulatory Affairs] Cass Sunstein at lunch one day, and we decided to set off on this journey to set a social cost of carbon for the U.S. government,” he remarks. “And we co-ran an inter-agency process and one thing led to another, and there was a U.S. government social cost of carbon at the end.”

Related to this, in recent years Michael helped launch and now co-leads the Climate Impact Lab at the University of Chicago, which is building a comprehensive body of research quantifying the impacts of climate change.

Interestingly, when I ask him to comment on the explosion of youth climate activism in recent years, although Michael voices some disappointment with young activists who have tried to turn climate change into a moral issue rather than an environmental, technological, and economic one, he notes that the energy and passion that young people have brought to the climate debate has been very effective in making others pay attention to it.

“These youth movements have been incredibly successful, in my view, in raising political consciousness in ways … that cold blooded cost benefit analysis somehow [doesn’t] seem to hit the mark. And I give them a lot of credit for that,” he says. “A second reaction is, I do not think that the right way to confront climate change is by treating it as a moral issue, or as an issue that is beyond economics. I think it’s a really interesting economic question that has all kinds of subtleties, but I do not think that the tools of cost benefit analysis and or economic analysis are inappropriate for climate change.”

Having worked extensively and intensively on climate change in both the scholarly and policy worlds, he voices considerable optimism about where we are now, and what the future is likely to bring.  He points to two trends he feels are most critical for building momentum in climate change policy debates. The first, he says, is that opportunities to leverage technology to reduce CO2 emissions are becoming more realistic as the costs of alternative energy sources continue to fall compared with the costs of fossil fuel sources of energy. The second, he says, is that people are beginning to experience in real time the impacts of climate change.

“I do think a real game changer has been that we can see the fingerprints of climate change now, in ways that we couldn’t 10 or 15 years ago,” he says. “I think the two things that we can see – the fingerprints and that it’s not as economically challenging a bar to jump over – have come together in a reinforcing way, and helped with the youth activism [by underscoring the fact that] we don’t have only infeasible responses.”

For this and much more, I hope you will listen to this 40th episode of the Environmental Insights series, with future episodes scheduled to drop each month.  You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program.  Previous episodes have featured conversations with:

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.

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Recalling the Past and Looking to the Future

Sometimes it’s helpful to recall the past as an aid to thinking carefully about the future.  The development of scientifically sound, economically sensible, and politically feasible climate-change policies would seem to be a case in point.  Such an approach is well illustrated by the thinking of Jonathan Wiener, the William and Thomas Perkins Professor of Law at Duke Law School, who shares his thoughts on the prospects for federal legislative and regulatory policy in the latest episode of my podcast, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.”  Our full conversation is here.

As you probably know, in these podcasts, I converse with leading experts from academia, government, industry, and NGOs.  Jonathan Wiener certainly belongs in this group.  Wiener, who also holds appointments at the Nicholas School of the Environment, the Sanford School of Public Policy, and Resources for the Future, has focused his research and writings for thirty years on a broad range of environmental policy issues, often from an economic perspective (once quite rare among environmental law scholars). 

Before launching his academic career, he served as a clerk for Judge (now U.S. Supreme Court Justice) Stephen Breyer on the U.S. Court of Appeals in Boston from 1988 to 1989. He also served at the White House Council of Economic Advisers (CEA), the Office of Science and Technology Policy (OSTP), and the U.S. Department of Justice (DOJ/ENRD), during the George H. W. Bush and Clinton Administrations.

Reflecting on his time in Washington, Professor Wiener recounts in our conversation the sense of bipartisanship that permeated environmental policy discussions on Capitol Hill during the Bush 41 and Clinton years. “On the issue, for example, of designing an economic incentive-based policy to reduce greenhouse gas emissions, there was, I would say, substantial agreement among all of those involved,” he says.

Wiener explains how there have also been significant changes in the scholarly world of environmental law in recent decades, including more mainstream support for economic incentive instruments, and for the use of economic analysis to evaluate the costs and benefits of laws and regulations.

“The advocacy of cost benefit analysis has shifted over time so that now one sees a lot more advocacy [on behalf of] economic analysis and cost benefit analysis to demonstrate the large social gains from environmental policy,” he remarks.

Jonathan also addresses the prospects for the Biden Administration to make headway on climate policy, saying that it started on the right foot. “President Biden issued a memorandum on modernizing regulatory review on his first day in office, which reaffirmed the executive orders from the Clinton and Obama Administrations.” Yet Wiener goes on to acknowledge that the administration’s promise to issue a revised estimate of the social cost of carbon has yet to be fulfilled.

At the end of our conversation, Jonathan Wiener offers – as a contrast with the slow pace of government action – his optimism that youth movements of climate advocacy which have become prominent in recent years hold great promise for advancing policy in the years ahead.

“On campuses across the country and around the world, one sees enthusiasm, energy, some sense of impatience and indignation, that the earlier generations didn’t address these problems adequately,” he says. “I think we anticipated, when you and I and …others were working on climate change policy design back 30 years ago, that we needed to design the institutions well so that we would not face a crunch time later of trying to address climate change in a big hurry. Unfortunately to some extent, we are in that crunch time right now.”

For this and much more, I hope you will listen to my compete conversation with Jonathan Wiener, which is the 35th episode in the Environmental Insights series, with future episodes scheduled to drop each month.  You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program.  Previous episodes have featured conversations with:

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.

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The Social Cost of Carbon Redux

We find ourselves in a period when concerns about climate change impacts are increasing (see the report just released of the IPCC’s AR6 WG3 Summary for Policymakers), federal climate legislation seems less and less likely, the U.S. Supreme Court may significantly restrict EPA’s authority to regulate greenhouse gases, and other U.S. courts are at least temporarily preventing the administration from using the Social Cost of Carbon.  In the midst of all this, it’s worthwhile thinking critically and dispassionately about the benefits and costs of environmental protection.  There is no one better to reflect on this than my podcast guest, Maureen Cropper, Distinguished University Professor of Economics at the University of Maryland.  You can listen to our conversation in the latest episode of my podcast, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.”  Our full conversation is here.

In these podcasts, I converse with leading experts from academia, government, industry, and NGOs.  Maureen Cropper fits well in this group.  In addition to her professorship at the University of Maryland, she is a Senior Fellow with Resources for the Future, a (very active) member of the National Academy of Sciences, and a Fellow of the Association of Environmental and Resource Economists

She has long focused her research on valuing environmental amenities (particularly in regard to environmental health effects), the discounting of future health benefits, and the tradeoffs implicit in environmental regulations. Her current research focuses primarily on the costs and benefits of air pollution control efforts in India, and on the valuation of climate amenities.  

When I ask Maureen Cropper to assess the Biden Administration’s environmental and resource policies, she remarks that it seems to be heading in the right direction, at least on one important component.

“I do think that there has been momentum to further the cause of estimating and using the social cost of carbon. After all, on Biden’s first day [in office], he actually reinstated the Interagency Working Group, which had been disbanded by President Trump and … announced that we were going to make progress in revising the social cost of carbon. I do think that a lot has been done along those lines,” she says. “Although … what we see and how it’s used may be affected, is likely to be affected … by recent [court] rulings.”

Current estimates of the social cost of carbon range between 50 and 60 dollars a ton, but Cropper notes that it could be increased to 100 dollars per ton or more if the discount rate is changed from three percent to two percent.

She goes on to express some doubt about the effectiveness of current U.S. climate policies, noting that she is “not particularly optimistic about the rate at which greenhouse gas emissions are being reduced.” But she also expresses her admiration for recent youth movements of climate activism.

“I actually do see the attitudes that they have which really are very encouraging to me in terms of what’s happening in the country as a whole,” she says.  “It does seem like a very good indicator perhaps, or bellwether one hopes of things to come.”

For this and much more, I hope you will listen to my compete conversation with Maureen Cropper, the 33rd episode in the Environmental Insights series, with future episodes scheduled to drop each month.  You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program.  Previous episodes have featured conversations with:

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.

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