Environmental economics and the economics of

Transcript:Environmental economics and the economics of:
Environmental economics and the economics of global warming The Macro-Economics of European Economies MSc in Economic Policy Studies John FitzGerald, March 2015 Course Outline How does an economy work? JF 16-1-2015 The genesis of macroeconomics AM 23-1-2015 Modern macroeconomics AM 30-1-2015 Banks and financial markets AM 6-2-2015 The recent crisis AM 13-2-2015 The labour market JF 20-2-2015 Fiscal Policy JF 6-3-2015 Trade JF 13-3-2015 Environmental economics & the economics of global warming JF 20-3-2015 The future of the Irish economy AM and JF 27-3-2015 Outline of Lecture Theory – Economic Tools for Analysis Science of climate change Economic tools for analysis in environmental economics Presentation: The origins and resolution of the current crisis in Estonia, Bulgaria, Greece and Spain Break Presentation: The origins and resolution of the current crisis in Latvia, Portugal, Spain and Italy Applied – examples of environmental policy design EU emissions trading scheme Carbon taxes Other Policies The science of climate change - 1 What is the sustainable level of emissions? Scientific consensus Climate is warming Due to human behaviour – greenhouse gases IIEA Occasional paper 3 http://www.iiea.com/news/climate-change-report Greenhouse gases accumulate in atmosphere Safe stopping distance very long Concentrations of greenhouse gases to double by 2100 Likely increase in temperature of between 2° and 4° To keep it to 2° need to greatly reduce world emissions Considerable uncertainty Better safe than sorry? The science of climate change - 2 The higher the temperature rise the greater the damage Non-linear effects – the bigger the increase in temperature the bigger the damage Modelling of climate change impact by region important Damages not evenly distributed Provide monetary estimates of damage However, not everything is quantifiable e.g. biodiversity Adaptation costs – and ability to pay them Discounting future costs – damages v adaptation costs Problem – far in the future Equity weights – because damage may be greater in poor countries The science of climate change - 3 “Climate change is a moral problem. The main reason to reduce greenhouse gas emissions is a concern for far away lands, distant futures and remote probabilities.” The people who emit most are least affected. “If you do not care about risk, the future, or other people, then you have little reason to care about climate change” (Anthoff and Tol, 2010) Economic Tools for Analysis Externalities - market failures Valuing the environment Cost-Benefit analysis Trade and the environment Instruments for policy Environmental externalities