A Changing Economy for a Changing Climate

Author: Amorette Hernandez

 

 

Env Econ

The demand for climate change-combating, market-based solutions is growing fast, and Eliot Evans ‘21 is starting an Environmental Economics Club on campus to learn about this cutting-edge field from industry experts.

"I want the club to spread awareness and foster reflection on both market solutions to environmental issues as well as whether or not our economic goals as a whole must change in the face of this unprecedented challenge," said Evans, who is an Economics major and Sustainability minor. "This is an opportunity for students to discuss solutions and gain insight into post-graduation career options.” 

 

Economics typically focuses on choices of production and consumption, but what about conserving? Balancing the desire for growth and the protection of natural resources is central to environmental economics. Is ‘sustainable growth’ an oxymoron, or is it possible?

“The field of environmental economics poses so many critical questions that society needs to answer,” said Dr. Rachel Novick, Director of the Sustainability Minor. “We are excited that Eliot and other students are going to be exploring them through guest speakers and discussions as their new club gets underway.”

Some institutions, like the non-partisan think tank the Capital Institute, are beginning to suggest that growth in our economy should take into account not only metrics like GDP but also growth that contributes to sustaining our environment. For example, economic growth can include the value of rich ecosystems, self-sustaining renewable energy sources, increasing natural capital or social capital, and climate change resilient infrastructure technology.

Simple cost-benefit analyses for businesses often fail to include environmental benefits; without direct profits from sustainable practices, there are no incentives to spend time and money on them. 

There is an urgent need to consider potential strategies to combat climate change as greenhouse gas emissions continue to rise. One approach may be market-based strategies. Two strategies, cap and trade and carbon taxes, address the cost-benefit analysis issue by placing a direct cost on carbon emissions, incentivizing businesses to adopt creative methods for decreasing their emissions. 

"Climate-Friendly Capitalism", an unexpected but growing investment strategy, is becoming more popular among investors, who exert their leverage to encourage companies to commit to reducing their emissions. Although commitments tend to be vague, investors have been initially successful with major oil companies like BP, Shell, and Chevron. These investors are not motivated solely by altruism. Investors cite concerns over the consequences of climate change for their other investments especially in real estate, property development, and health care as a driving rationale.

All interested undergraduates and graduate students are invited to email Eliot at eevans9@nd.edu for more information or to join the Environmental Economics Club.