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Climate change looks too big to ignore or fix

by Megan Mcardle

Bloomberg

I am in the unpleasant position of believing that climate change is a real problem, and also believing that we are very unlikely actually to do anything about it. The collective action problem is just too hard. As recession-plagued Europe pulls back on its carbon-reduction efforts, Michael O’Hare seems to be in the same camp:

Not only will a lot of Europe around the edges be going under water, but a lot more will be Arctifying while the rest of the world broils. This pullback is not surprising, unfortunately.

The hard truth about climate stabilization follows from the nonnegotiable fact that the atmosphere is well-mixed, so a pound of carbon dioxide released anywhere has about the same warming effect everywhere: the climate benefits of greenhouse gas (GHG) reduction are diluted all over the world.

About a ninth of the people in the world live in Europe, so the European benefits of $1 million worth of climate stabilization are only about $110,000: To be worth it for them, climate policy has to have a benefit/cost ratio of 9.

That’s really hard to achieve, and the math is much more discouraging for any single country in the EU.

Even worse, the payoff comes after pretty much everyone in office is retired or dead.

What we have here, friends, is the granddaddy of all prisoners’ dilemmas, implicit in Hedegaard’s remark “It will require a lot from Europe. If all other big economies followed our example, the world would be a better place.”

Even for countries as big as China or maybe India, and even there for policies with a nice fat B/C ratio like, say, 6, the smart move if you think the rest of the world will step up and act is to do nothing and coast on it, and if you think the rest of the world won’t, to do nothing and at least not be a chump.

The collapse of European will results from tacit understanding of this game structure.

The best hope is probably cheap solar, which would be a simply enormous boon to the world, and something we should all hope happens, fast.

But the current solar market is heavily influenced by subsidies for installation, especially in Europe, and by subsidies for production, especially in China. If governments pull back, it’s not clear to me what is going to happen to prices over the longer term.

The second best hope is for the world to start putting some serious effort into mitigation: geo-engineering to slow the warming, and figuring out what to do with various low-lying and drought-prone places. There are simply no global institutions even remotely capable of getting the world to reduce its energy consumption.

So unless we get a cheap, clean renewable, we’re probably all going to be getting hotter, by and by.

Megan McArdle writes about economics, business and public policy for Bloomberg View. Follow her on Twitter at @asymmetricinfo. Email: mmcardle3@bloomberg.net