Climate change is (mostly) a development problem

Tonight, I will be making my weekly radio column on CHOI Radio X on the issue of Canada withdrawing from the Kyoto protocol and how that might not be such a terrible outcome. I know this may sound outrageous, but there are costs and benefits to mitigating climate change and we should only mitigate to the extent that it yields net positive results. As for the rest, adaptation might be a better policy.

First of all, I must confess that even though some of you may have pegged me as a conservative and that by extension I must be a climate change “denier”, I do believe that climate change is real and that a large part of it must be caused by human action. However, to say that climate change is caused by humanity does not logically imply a blank cheque for environmental policy.

In fact, I am more optimistic in general than many pundits and academics and a thorough reading of history can only give us an amazing appreciation of how ressourceful humanity is when it needs to adapt.  The dykes in the Netherlands (built well during the late Medieval age) or along the Thames in London are testimony of how humanity can adapt and shield themselves to variations in the natural environment. But adaptation is dependent on the amount of ressources that you might spend at low cost to protect yourself. Hence, the richer a society is, the easier the burden of adaptation is (especially if you account for discounting).

This is why the problems of climate change are mostly by-products of underdevelopment (yes I used that dirty word, no need for political correctness). For example, in a review of the academic litterature on climate change in the Journal of Economic Perspectives, Richard Tol looks which regions of our planet are the hardest hit. Unsurprisingly, the most industrialized and richest societies suffer very little, Eastern Europe and Russia are often net benefactors and those who bear the brunt of the pain are countries in Africa for whom climate change would be disastrous. Just look at the table reproduced from Tol’s work to see it.

Problems of water scarcity, increased malaria prevalance, reduced growth, increased poverty and mass migration (climate refugees) can all be settled by economic growth and wealth accumulation. As these countries grow richer, it will be easier for them to fight malaria with good hospitalization and proper healthcare systems, it will be easier to battle water scarcity if corporations can use capital markets to invest in water recuperation technologies and water conservation techniques for their own profits. It will also be easier to spend ressources on creating the necessary infrastructures to mitigate the effects of extreme weather events (hurricanes, floods etc.).

Hence, maybe spending less ressources on mitigating climate change might not be that farcical of a policy decision especially when there are tradeoffs to be made in order to get the best outcome with the least inputs.