Joachim Voth is a Multi Talented Man
I have known for a long time that Joachim Voth is an excellent scholar. Joachim and my colleague Nico Voigtländer have a fascinating research agenda focused on long term persistence. Their study of antisemitism across the centuries is a very important study. Now, I have learned that Joachim is also a great photographer. Take a look at his pictures of UCLA. You will see that this is a beautiful place to live and work.
Coastal City Resilience in the Face of Climate Change: The Case of NYU's Langone Medical Center
There is a full page ad on the back page of the B-Section of the NY Times today celebrating that NYU's Langone Medical Center is back in business after suffering bad damage caused by Hurricane Sandy in late October 2012. Note that only 3 months have past. Hurricane Sandy didn't destroy NYC. This wasn't Pearl Harbor. This is urban resilience in the face of climate change. When I argued this point in my 2010 Climatopolis book, people thought I was overly optimistic about our individual and collective ability to adapt to evolving (but predictable) threats. Unlike terrorists, we have a general understanding of how climate change will attack our cities. NYU will invest in precautions so that future floods cause much less damage. This is learning experience and forming rational expectations about the future is how adaptation will play out. To be a pessimist about adaptation requires embracing a strong view of behavioral economics and to assume that those facing the threat have no financial resources to help them cope.
My New "Sustainable Real Estate Course" at UCLA's Anderson School of Management
In Spring 2013, I will be teaching a new course at UCLA's Anderson School of Management. The thousands of students who have taken my classes at Chicago, Columbia, Harvard, Tufts, Stanford and UCLA all know that I'm a distinctive teacher. If you want a free taste of the goods, go here. My new Anderson School course has the lofty title; "Real Estate Investment and the Development of Sustainable Cities". I encourage interested students to enroll and to get in touch with me.
Here is the Description:
Here is the Description:
This course applies key ideas from real estate economics and real estate finance to investigate the incentives of developers, urban politicians, and real estate investors to produce “green homes”, “green communities” and ultimately “sustainabile cities”. Special attention will be paid to the opportunities from investing in energy efficient residential and commercial buildings and for developing and upgrading real estate in close proximity to public transit networks. The course will embrace an international perspective to examine the rise of Eco-Friendly Cities in developed and developing nations.
If you want to read the course outline and follow the action, click here.
Updating Urban Risk Maps in a Changing World
One of the many urban adaptation themes I stressed in my 2010 Climatopolis book was the importance of updating risk maps in coastal cities. Information is power! If urbanites learn that their property is now in a flood zone (because climate change has caused encroachment) then they will change their behavior and invest in stilts and other strategies to cope with the "new normal". Today the NY Times reports that all of this is now taking place in NYC. The Times points out the irony that the risk maps were only in the process of being updated when Hurricane Sandy struck in late October 2012. This highlights that we need to invest in more GIS research and trusted objective risk evidence. Once this evidence is produced and publicized, insurance markets will price this new risk and differential price insurance policies to incentivize those at risk to invest in optimal precautions. Ehrlich and Becker 1972 is worth a re-read here!!
How far can adaptation take us in mitigating the challenge of climate change? For economists, the key issue here is that we live in a "second best world". Of course, carbon pricing is the first best solution. But, at the world level this isn't going to happen. When you release the genie of climate change, how far can human ingenuity and just common sense take us in helping us to cope with new challenges? As usual, economists are more optimistic about the substitution and innovation possibilities than the "Leontief" environmentalists.
How far can adaptation take us in mitigating the challenge of climate change? For economists, the key issue here is that we live in a "second best world". Of course, carbon pricing is the first best solution. But, at the world level this isn't going to happen. When you release the genie of climate change, how far can human ingenuity and just common sense take us in helping us to cope with new challenges? As usual, economists are more optimistic about the substitution and innovation possibilities than the "Leontief" environmentalists.
Climate Change Adaptation by Income Group: The Cartoon Version
The NY Times has some talented people on payroll. Brian McFadden creates great cartoons. Below, I reproduce one from today and critique the substance of his cartoon. Similar to others at the NY Times, he needs to consult his econ 101 notes.
By its very nature, a cartoon can't convey much nuance. He is implicitly saying that climate change impacts will exacerbate existing inequality. The 1% will be better able to handle climate impacts than the 99%. He forgets that the 99% are growing richer over time and that absolute income (not relative income) is a key in helping individuals to adapt. The world economy will grow by 4% this year in per-capita income. This means that world per-capita income doubles in 18 years. Rising incomes help all of us to adapt to climate change.
As the 1% grow richer, their governments collect more tax revenue and can provide public goods to shield the population. McFadden also ignores price effects. In capitalism, new products and cheaper products are always emerging (think of your cellphone). The 99%'s purchasing power of climate adaptation friendly products will increase as entrepreneurs look at this cartoon and see that there are opportunities for those who innovate. Such innovation will lower the real price of adapting to climate change. Products we need such as access to reliable electricity and home materials that are resilient to flooding will become cheaper due to induced innovation.
Note the guy in the upper middle right panel who is eating a rock. While that's funny, McFadden forgets that international trade in agricultural products guarantees that this 99% dude won't have to eat a rock. His local supermarket will continue to be filled with tasty affordable stuff. It will just be grown elsewhere in the world as climate patterns shift. For the dude on the lower left panel whose insurance rates have gone up, why hasn't he read the fine print of his contract? If he moves to higher ground, he won't need to pay those higher rates. If he builds his home with materials that minimize flood risk and fire risk, competitive insurance markets will quote him a good rate. He is not a victim here even though the cartoon portrays him as one.
I have recorded a youTube video of my thoughts about this cartoon. Here it is. This is lecture #33 in my series.
By its very nature, a cartoon can't convey much nuance. He is implicitly saying that climate change impacts will exacerbate existing inequality. The 1% will be better able to handle climate impacts than the 99%. He forgets that the 99% are growing richer over time and that absolute income (not relative income) is a key in helping individuals to adapt. The world economy will grow by 4% this year in per-capita income. This means that world per-capita income doubles in 18 years. Rising incomes help all of us to adapt to climate change.
As the 1% grow richer, their governments collect more tax revenue and can provide public goods to shield the population. McFadden also ignores price effects. In capitalism, new products and cheaper products are always emerging (think of your cellphone). The 99%'s purchasing power of climate adaptation friendly products will increase as entrepreneurs look at this cartoon and see that there are opportunities for those who innovate. Such innovation will lower the real price of adapting to climate change. Products we need such as access to reliable electricity and home materials that are resilient to flooding will become cheaper due to induced innovation.
Note the guy in the upper middle right panel who is eating a rock. While that's funny, McFadden forgets that international trade in agricultural products guarantees that this 99% dude won't have to eat a rock. His local supermarket will continue to be filled with tasty affordable stuff. It will just be grown elsewhere in the world as climate patterns shift. For the dude on the lower left panel whose insurance rates have gone up, why hasn't he read the fine print of his contract? If he moves to higher ground, he won't need to pay those higher rates. If he builds his home with materials that minimize flood risk and fire risk, competitive insurance markets will quote him a good rate. He is not a victim here even though the cartoon portrays him as one.
I have recorded a youTube video of my thoughts about this cartoon. Here it is. This is lecture #33 in my series.
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