another stiglitz on green

March 3, 2009

Stiglitz and Stern hope that the new administration will take global warming seriously:

Obama’s chance to lead the green recovery, by Joseph Stiglitz and Nicholas Stern, Commentary, Financial Times: We face two crises: a deep global financial crisis … and an even deeper climate crisis… The scale of risk from climate change is altogether of a different and greater magnitude, as are the consequences of mismanaging or ignoring it. …

The investments necessary to convert our society to a low-carbon economy … would drive growth over the next two or three decades. They would ensure that growth, with accompanying improvements in standards of living, was sustainable. The path that we have been on is not.

The economic crisis will leave the US and other economies greatly weakened and it will be imperative to increase efficiency. One area in which there is ample room for improvement is in the energy efficiency of businesses, consumers and the government. …

Private investments are driven by market signals. These signals are distorted because we have been pricing one of the world’s scarcest resources – a “good” atmosphere; or the societal costs of emissions, which lead to a “bad” atmosphere – at zero. Not surprisingly, this has led to inefficient outcomes, with emissions levels too high and too little effort devoted to energy conservation and research.

Providing a strong, stable carbon price is the single policy action that is likely to have the biggest effect in improving economic efficiency and tackling the climate crisis. … We may not be able fully to resolve the risks of the financial crisis quickly; but we can take actions now that will markedly reduce uncertainties about future carbon policies and prices. … The problems of global warming cannot be attacked without the participation of all countries. The world has been waiting for the US: there is now reason to believe that it is ready to lead.

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