Matthew E. Kahn


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

Cover Interview of May 25, 2011

A close-up

To tackle climate change, we must reduce our greenhouse gas emissions.  In an economy in which there are more people who are growing richer over time, the only way we can reduce our emissions is if greenhouse gas emissions per dollar of economic output fall sharply.

For this we will need technological progress; we will need to phase out fossil fuels such as coal, gasoline and natural gas, and replace them with renewable power.

Such progress will require all consumers to face higher prices for “cheap” fossil fuels—and this requires government intervention.

Should we raise gas taxes and more generally fossil fuel prices to accelerate the transition to the green economy?  Many environmentalists—including myself—would favor this.

I believe that there are significant social costs associated with the status quo reliance on fossil fuels.  And I am optimistic that clever entrepreneurs will respond to pricing incentives.  They will make technological progress in bringing electric vehicles and solar panels to the market place.  Such “green innovation” would allow us to achieve the win-win of ongoing economic growth without the local pollution and greenhouse gas emissions consequences.

But President Obama has risked no political capital pursuing such policies.  Indeed, in the midst of ongoing recession, would “Joe the Plumber” re-elect a president who raised energy prices through government policy?

Recognizing the political challenge in changing the rules of the game and raising the cost of fossil fuel energy, Democrats have tried alternative strategies for increasing voter interest in carbon mitigation policies.

Al Gore’s movie, An Inconvenient Truth, can be viewed as a variant on the “Shock and Awe” strategy of changing perceptions through offering a vision of how our future might look like if we continue to produce increasing quantities of greenhouse gas emissions.

Perhaps in part due to Al Gore’s efforts, climate change mitigation is a partisan issue rather than a national security issue.

Today, there is a sharp political cleavage between the political left and right.  Survey research documents that in 2008 there was 34 percentage point gap between Democrats and Republicans in their agreement with a statement that the effects of global warming have already begun, up from a 4 percentage point gap in 1997.  And I see no signs that this political gridlock will go away.

I wrote Climatopolis because I wanted to start a debate on how individuals and firms respond to a growing “crisis” when their government has been unable to pre-empt the emerging threat.