A short read for your weekend.

This will not be news to many of my readers, but there’s a message in here for you too.

Today is the students’ climate strike. As a consequence, there’s been lots of chatter on radio about this. One chap called in to say “why are we all expecting the government to do something – we can all do things, we don’t need government”. Well, yes and no.

Sure we can all do things, but most people tend not to get to excited about stuff until there is a direct effect on them. For climate change, this might happen way too late. But, if we make it more likely folks will pay attention and change their habits now, maybe we can get more action on alleviating climate change.

How do we do this? Well, economists like to talk about a concept called “market failure”. Markets tend not to work very well where there are no property rights, when there are externalities (if for example, I pollute but do not pay for this, so others bear the costs of my polluting) and a whole list of other things which are not so relevant here. So here’s a question, who owns the climate, atmosphere etc.? The answer is all of us and none of us. There’s no one to say you’ve had an impact on me (degraded the environment) and I need to charge you for this. As a result, there is no “price” on the environment. There is therefore, no real incentive for an individual to make an effort to maintain the climate. Governments, however can charge for “using” the environment. Unless governments intervene in the market, polluters have little incentive to curate the climate.

The market on its own will not price for the climate. Polluters therefore do not face the true costs of their use of resources etc and the subsequent effect on the climate.

Yes we need governments to intervene. Some people/businesses will act to protect the environment regardless, others, the majority, will not. Relying on the community spirit of people is never going to be enough. Governments need to act to price the environment and provide incentives for everyone to value it in their market dealings and pay the cost of depleting or degrading this resource.

Of course, this might have an unacceptable impact on some users/consumers, but this too can be dealt with by the government using tax, welfare, rebates etc. (I might talk about this at a later date….or not).

Why are we waiting?

In part maybe, because folks who do care see the government procrastinating and say we can do this without them. It’s beholden on economists and policy nerds to speak up and explain that yes, we can act individually, but government action is necessary to get a big enough response to really make a difference.

Activist economists explaining what the options are – I’d like to see that.