Custom Search

Monday, October 30, 2006

Environmental Economics

See previous post.

Now we even have a leading British Government Economist saying that it makes good economic sense to protect the environment and take measure to prevent climate change.

He predicts that if we do not prevent global climate change, world economic growth will begin to slow considerably. While he concedes that it is not certain that this will happen, he finds the economic risks far outweigh the uncertainty. He believes there is a need for the world governments to set regulations to encourage a move away from a carbon based economy through taxes or carbon trading. He also believes this can be done for as little as 1% of the global economic output and will create enormous opportunity for investment, not kill investment like some say.

In my view, there is a more pressing economic risk of staying depending on carbon based fuels, specifically oil: China and the rest of Asia is continuing to develop and increasing their demand for oil. As that demand increases, the price of oil increases. As our economy is do dependent on oil, that any increase in the price has a significant impact on spending, travel, transportation, and many other facets of our economy. The sooner we get off our dependence on oil, the better economic position we will be in when the price of oil really goes through the roof.