Matthew E. Kahn


On his book Climatopolis: How Our Cities Will Thrive in the Hotter Future

Cover Interview of May 24, 2011

In a nutshell

The core theme of Climatopolis is ironic.  Free market capitalist growth has caused climate change—but the same individualist forces will help us to adapt to climate change.

My starting point is that we have to be honest that we have collectively chosen to run a dangerous experiment.  The book’s first chapter is titled “Too Much Gas.”  As India and China and other developing countries achieve their version of the “American Dream,” global greenhouse gas emissions will continue to rise.

Climate change poses many potentially nasty threats for different parts of the world.  Yet we are not doomed.  Our ability to anticipate future suffering actually provides us with an “early warning” system to take pro-active actions ahead of time that help to protect our families.

Neither I nor anyone else has a crystal ball that precisely predicts how climate change will affect different cities ranging from Los Angeles to Cairo.  But, we “know that we do not know” and this provides strong incentives to plan ahead.  As climate scientists make progress predicting the increased likelihood of extreme weather events, this new information will affect where households live, how they live and the construction of the types of buildings where they live and work.

Climatopolis offers a preview of how urbanites will adapt to the scary and ambiguous challenge of climate change.

Consider the Moscow Heat Wave of 2010.  It killed thousands and this was a tragedy.  But a silver lining of this disaster is that people of Moscow learned that such extreme heat waves are now more likely to occur.  Such households will now purchase air conditioners and take other steps to protect their families.  Such “small ball” investment decisions will sharply reduce the death count from the next heat wave.

Capitalist firms play a key role in my optimistic vision.  Demand creates supply.  Profit-driven firms will pursue the introduction of products that are likely to be highly demanded.

If I am the only bald man in the world, then no drug company will engage in the costly and risky R&D investment to find a cure for baldness.  If profit-driven firms anticipate that climate change will sharply increase the demand for energy efficient products and housing designs that can withstand extreme heat and flooding, then they will have sharp incentives to develop them.

In this sense, capitalism evolves to help us cope with climate change. The anticipation of doom creates new profit opportunities that ironically help to protect us from the doom.