# Is climate change an economic question?

The assumption that the Keeling Curve can be approximated with a function $$k=A+B\cdot e^{\alpha t}$$ leads to a solution with $$A=258.6$$, $$B=4,243\cdot 10^{-13}$$ and $$\alpha=0.0166$$ with a high correlation with measured data. The time parameter is years B.C. and $$k$$ is PPM atmospheric carbon dioxide.

The blue line is the Keeling Curve and the center of the red ribbon correspond to the function $$k$$. Since the Keeling Curve can be trapped by the function $$k$$ the parameters $$B$$ and $$\alpha$$ are measures (or invariants) of our modern civilization. The baseline parameter $$A=258.6$$ seems to originate from the pre-industrial climate:

If nothing breaks the (so far invariant) trend, the carbon dioxide content in the year 2100 will be around $$258.6+4.243\cdot 10^{-13}\cdot e^{0.0166\cdot 2100}=843.6$$ (in accordance with the business as usual scenario from IPCC) which more than doubles the carbon dioxide content of the year 2020: $$414$$ ppm. Due to the law of Arrhenius and IPCC, the increase of global average temperature then would be about $$3$$ Kelvin between 2020 and 2100.

Seeing what the $$1$$ Kelvin increment 1970-2020 have done to our society, the possible $$3$$ Kelvin increment 2020-2100 seems very devastating, so my question is

Are there economic theories applicable to find solutions to this problem? Are there discussion among economists how to reduce the usage of fossil fuels? A reference is desirable.

My view of economics is, the science of how to take care of once interests, as far as one can tell, in an efficient manner.

The Keeling curve, Arrhenius formula and IPCC's assignation of the climate sensitivity (the increment of temperature on Earth when the concentration of carbon dioxide doubles), is as far as one can tell information of high quality.

People react differently on global warming, from YOLO and 'there will be a growing market for air conditioning systems' to 'we want our children to have a greate future'. Economists among the latter group ought to make great effort to the question how their knowledge could be used to take care of their interest in an efficient manner.

• I suspect the standard economic theory is to just leave it alone and claim it isn't a problem because otherwise the market would be paying to fix it... Sep 9 '21 at 10:03
• @user253751 then your suspicion is blatantly wrong, which can be verified by looking at any introductory economics textbook dealing with the subject or heck even with few second spent on google search. Please do not spread misinformation about the subject matter.
– 1muflon1
Sep 9 '21 at 10:05
• Please edit the question to limit it to a specific problem with enough detail to identify an adequate answer.
– Community Bot
Sep 9 '21 at 11:29
• One of the main reasons replacing fossil fuels or making other changes to address climate change is so difficult is because doing so is so expensive (you can solve a whole lot of all sorts of problems if you're willing to throw enough money at it). Economics should be a core part of basically every suggestion for addressing climate change. Your question mostly shows climate change to be a problem, which doesn't seem too relevant to economics specifically. Have you looked into any of the solutions for or discussions around addressing climate change? Sep 9 '21 at 21:04
• @user253751 Part of the reason the market may not pay (enough) to fix it is because of negative externalities, except where those are taxed.
– J.G.
Sep 9 '21 at 21:23

Climate change in itself, its measurement and the fact that it is happening, and modeling its speed or trying to discover its causes (e.g., carbon emissions, methane emissions and so on) is not an economics question/problem. The process itself at the core is physical/biological and that is not what economics studies.

However, question of what policy we can use to best mitigate climate change or what effect climate change has on society is an economic question/problem.

Economics as defined by Robbins (1935, p16), is:

“the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses”

While you can find also different definitions/demarcations of economics this one is the most widely accepted one currently.

Under this definition questions like "Is climate change caused by $$CO_2$$?" is not an economics question in itself as we do not deal with alternative aims and scarce resources. So this would be purely environmental science/physics question.

However, questions of climate policy like: How much human/animal welfare is lost due to climate change? How much do various policy ideas actually help, and what do they cost? etc are inherently economic questions.

This is because here we are entering the world of scarcity where people have alternative aims. People want to enjoy clean air, but at the same time they want to consume products that create pollution. Moreover, substituting dirty pollution techniques for clean ones is often expensive so there are further tradeoffs. People here have to economize to figure out what the optimal balance between those aims is and this is what economics studies at its core.

What even more not only is this an economic problem, but in economics there is a whole subfield of economics, called environmental economics that actually focuses mainly on the issues of how to address climate change (although other issues related to environment are studied there as well).

Recently, in 2018, William Nordhaus even got awarded the Nobel Prize in Economics for his work on economics of climate change, so this subfield of economics is quite prominent nowadays.

If you want to get some introduction into the subject you can have a look at basically any 101 economics textbook (virtually all modern economics textbooks include at least a chapter on environmental economics) or you can get directly some introductory textbook for environmental economics such as:

Introduction to Environmental Economics by Hanley et al.

If you want some non-academical introduction, then an excellent book is:

The Climate Casino: Risk, Uncertainty, and Economics for a Warming World from the above mentioned Nordhaus

———————————-

In response to an edit of the question:

Are there discussion among economists how to reduce the usage of fossil fuels? Reference is desirable.

Yes, this is actually very well researched question. For example, most economists advocate high taxes on $$CO_2$$ (i.e. look up Pigovian taxes). These taxes strongly incentivize business to find alternative ways how to produce goods and services that reduce emissions and make their products more expensive and less desirable to customers, or there are also cap and trade schemes which first limit amount of $$CO_2$$ which government will tolerate and then auctions rights to emit $$CO_2$$ below the set level to various business.

This is discussed in virtually any econ textbook, so you can again have a look at Hanley et al cited above (but you will find this even in pure economics books not just in environmental economics books) or you can have look at Elkins, P., & Baker, T. (2001), which is excellent survey of carbon tax and cap and trade literature.

There are other more niche policies, but it would be too broad to cover in full depth of this literature in one post, so just have a look at Hanley et al and sources cited therein.

• There are ideas about how global warming will affect economy and ideas why the market should be free, but are there ideas how economy may affect the mitigations? Thanks for the tips of literature though.
– Lehs
Sep 9 '21 at 11:23
• @Lehs I think yes this was already explored from virtually any angle you can image, effect of economy on environment and environment on economy, effect of policy on environment but also effect of environment on policy - in econ almost everything is endogenous so people often look at these reverse relationships from the get go. You can find discussion of that in the above mentioned sources or sources cited therein. Or you can ask another separate question as a reference request
– 1muflon1
Sep 9 '21 at 12:32
• @Lehs I also added some further references in response to your edit
– 1muflon1
Sep 9 '21 at 12:52
• It's a tradegy of the common. The common market and the common planet. Economist really should try to analyze the possibility of a new trend of the Keeling Curve.
– Lehs
Sep 9 '21 at 15:13
• A livable enviro can become a scarce resource. Sep 9 '21 at 23:28

What is in the realm of economics is not well-defined. Nowadays, you see many topics that were traditionally tackled by political scientists, sociologists, criminalistics, psychologists, epidemiologist, statisticians, etc. are being studied by economists. Some people say economics broadly is defined as the science of studying the incentive of humans. I would say in the modern usage of the word, economics is not defined by the subject but by the methodology. So, if you apply the methods of economics to questions related to climate change, then you can say climate change is (also) an economics question.

Actually, there are more and more people in top econ departments working on environmental issues. I just recently saw a PhD-level course on Environmental economics in a top tier university. If you want to get a flavour of how economists think about these issues, I would recommend reading the following books:

G Heal A celebration of environmental and resource economics. Rev Environ Econ Policy (Oxford Journals, 2007)

R Perman et al Natural resource and environmental economics, Chapters 1-3 ( Fourth Edition, Pearson 2011)

"Are there economic theories applicable to find solutions to this problem?"

There's a whole field dedicated to just that - ecological economics. Although it may not have started there, the Club of Rome rose to prominence by publishing "The Limits to Growth", and now there's a strong tradition of examining what the economy of a post-carbon world looks like.

"Is climate change an economic question" could probably be reformulated as "is economics a climate change problem"? (Another answer here brings up Nordhaus' Nobel prize - for non-economists and non-classical economists this is a prime example of how economists fail to grasp the problem. See "The appallingly bad neoclassical economics of climate change")

A lot of debate now is about decoupling growth from carbon emissions vs degrowth (degrowth primer here: What does degrowth mean? A few points of clarification). Prominent degrowth authors to read include Jason Hickel, Giorgios Kallis, Timothee Parique and Julia Steinberger. Parique's Masters thesis is online here: https://tel.archives-ouvertes.fr/tel-02499463/document

Here's a paper on the argument between the two positions - it's not clear that green growth is happening or is possible: A systematic review of the evidence on decoupling of GDP, resource use and GHG emissions

And of course Kate Raworth's Doughnut Economics and others are investigating how to make a circular economy - presumably related to degrowth although I'm not sure of how the two link. Principles for a sustainable circular economy