Will climate change stimulate or harm the economy?

  • #1

Main Question or Discussion Point

I'm reading about the parable of the broken window, which states:
The parable seeks to show how opportunity costs, as well as the law of unintended consequences, affect economic activity in ways that are unseen or ignored. Some conventional economic measures, such as GDP, can exclude the negative effects of capital destruction, while including the economic activity of its replacement. Thus, breaking a window may raise GDP, but harm the economy.
I was wondering if this can be related in some way to climate change as a whole. My reasoning is that given that climate change is a consequence of a lack of knowledge about the sum total negative and positive externalities of fossil fuel usage for the past 200 years, and how it contributes to the climate, then does that render the issue moot due to the above, and hence can be considered as a net positive for the economy? This renders the doom and gloom professed by many people, as a moot issue, and hence can be considered as irrelevant, in my opinion.
 

Answers and Replies

  • #2
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We know it has a negative impact globally. For every single actor, emitting CO2 (or similar gases) can be cheaper than the induced cost of this (!) CO2 on their own business/country. It is like littering. You are unlikely to stumble upon your own litter, but if everyone just dumps everything everywhere it gets worse for everyone.

All this has been studied, of course.
 
  • #3
We know it has a negative impact globally.
Yes, most of us know that. But, the point was to illustrate that climate change itself might stimulate the economy by virtue of imposing a new externality (in this case negative) that necessitates change or adaptability to these new future circumstances/prospects, which further spur the economy, up to a certain limit or point I should add. What are your thoughts about where we are in terms of this "certain limit or point" I mention?
It is like littering. You are unlikely to stumble upon your own litter, but if everyone just dumps everything everywhere it gets worse for everyone.
Yes, this is the tragedy of the commons in a nutshell.

Thank you for your input.
 
  • #4
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The dike industry is certainly happy, but that's not enough to avoid a reduction (or a slower growth) of the gross world product. It will be impossible to measure this reliably in practice, however, as the whole world changes over time and we don't have a control sample.
 
  • #5
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I predict a thread lock within 72 hours.
 
  • #6
The dike industry is certainly happy, but that's not enough to avoid a reduction (or a slower growth) of the gross world product. It will be impossible to measure this reliably in practice, however, as the whole world changes over time and we don't have a control sample.
Thanks for illustrating the issue. I'm not too sure if what you say is correct though, about the impossibility to calculate net externalities.

If this thread has reached its lifespan, then please go ahead and close it.

Thank you.
 
  • #7
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Thread closed.
From the PF policy here -- https://www.physicsforums.com/threads/climate-change-global-warming-policy.757267/ ,
CC/GW threads in this forum are intended for discussion of the scientific content of well-researched models of weather, climatology, and global warming that have been published in peer-reviewed journals and well-established textbooks.

Threads such "Is global warming real" or "Are humans the cause of global warming" are too broad and are subject to being locked. We want to encourage questions about specific research, news and events involved with climate science.
I predict a thread lock within 72 hours.
A bit over 5 hours...
 

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