Air Date: Week of September 22, 2006

Robert Stavins is a professor at Harvard University’s John F. Kennedy School of Government and director of Environmental Economics Program at Harvard University.

Al Gore recently called for an immediate freeze on greenhouse gas emissions but critics say an immediate action will also freeze the U.S. economy. Living on Earth turns to Robert Stavins, director of Harvard’s director of the Environmental Economics program, to find out the economic impacts of climate change action.

Transcript

GELLERMAN: So what would happen to the economy if we took Al Gore’s advice and hit the brakes on carbon dioxide emissions. A person who’s thought a lot about that is Robert Stavins. Professor Stavins is the director of the Environmental Economics program at Harvard University.

STAVINS: I think that the Vice President has a point in which he says that global climate change is a very important problem. The question is to do something about it that’s going to work. That’s going to be sensible. And the most important thing to recognize about this environmental problem that really distinguishes it from other environmental problems we’ve dealt with, and I’ve studied these and worked on them both at Harvard and Washington for 25 years, is that this is a stock, not a flow problem. What we’re concerned about is the concentration of greenhouse gases in the atmosphere not the flow at any moment in time. Therefore it’s very important to recognize that we have flexibility in terms of the timing with which we can deal with the problem.

Therefore there’s no reason even if there were a crisis, which I don’t think it is at present, there’s no reason to think in terms of freezing emissions. Rather what we need to do is get onto a sensible trajectory to bring about the long term technological change that’s required to shift us gradually from coal to petroleum to natural gas and indeed away from fossil fuels altogether. That’s not going to happen overnight. That’s not going to happen overnight with coal-fired power plants. Or your car or my car or your furnace or mine but we need to begin to send the signals to begin to do that.

GELLERMAN: Critics of the Bush approach say what’s needed are mandatory caps on the emissions. Does that make sense form an economic point of view?

STAVINS: I agree that a cap on emissions will be required. I don’t think there’s any doubt about the fact that voluntary approaches, which are a big part of the Bush administration’s approach, voluntary approaches, will not be sufficient. The reason of course that they won’t be sufficient is that there are real costs of addressing the problem. If there were no costs, by the way, then voluntary approaches would be just fine. Everyone would be jumping up and down and just doing them. But there are real costs and that’s why voluntary approaches are not sufficient.

A cap will be required. The question is what’s the right trajectory over time for that cap? What I would say, based upon all of the economic analysis that’s been done, and that’s in Europe, the United States, and Japan, Australia, around the world, it points to slowing the emissions, the rate of growth of emissions of greenhouse gases, principally carbon dioxide. Stopping that growth and then reversing that growth. And then taking it down to even much more severe than even the Kyoto protocol would have. That’s the time path that’s actually needed.

GELLERMAN: Professor, are economics and environmentalism at odds or can you have both? Can it help the economy, or does it harm the economy by going green?

STAVINS: Well look, the causes of environmental problems are fundamentally economic. It is a result of market activity that we have environmental problems in the first place. Furthermore, there are important economic consequences of environmental problems. Hence an economic perspective is essentially very very very helpful, indeed it’s essential to diagnosing the problems and doing something about them that’s sensible. What one can do is to address environmental problems and address them in the most cost-effective way. There are sacrifices. We spend right now a substantial amount on environmental protection in the United States and we’re not in a constant recession. That doesn’t mean there’s zero cost because they don’t throw us into recession. So of course we can grow the economy and also address environmental problems.

GELLERMAN: Professor, thank you very much.

STAVINS: My pleasure.

GELLERMAN: Robert Stavins is director of the environmental economics program at Harvard University.

 

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