How to Think About Climate Change: Insights from Economics for the Perplexed but Open-minded Citizen

  • By Riccardo Rebonato
  • Cambridge University Press
  • 360 pp.
  • Reviewed by John R. Wennersten
  • April 26, 2024

A novel approach to our overheated-planet problem.

How to Think About Climate Change: Insights from Economics for the Perplexed but Open-minded Citizen

In How to Think about Climate Change, author Riccardo Rebonato argues that while the science of climate change is reasonably settled, the economics and ethics surrounding that science inhabit the “land of anything goes.” The premise of this at times abstruse book is to explore the problem of climate change from the perspective of economics and market failure. Rebonato writes of “externalities” like the cost of carbon emissions for the planet’s poorest populations. If we want to help these sectors succeed financially, he claims, we’ll have to increase energy consumption per person (even as the number of people increases).

The Earth has been warming over the last half-century, and many scientists today are not as confident about the anthropogenic origins of the warming as they are about the actual fact of it. It’s difficult to comprehend the phenomenon of global warming when there are so many economic and cultural factors that condition our understanding of it.

Rebonato points out that there seem to be two major ways to deal with the planet’s CO2 problem: via carbon sequestration and expansive afforestation. Both are expensive and may benefit primarily affluent nations. With afforestation, for example, a forested area the size of Brazil would be needed to remove the planet’s excess CO2. Further, McKinsey & Company, an international consulting firm, estimates that to meet the goal of a no more than 1.5°C increase in global temperatures above preindustrial levels, the 70+ countries that account for the bulk of the planet’s CO2 emissions would each need to come up with $9.2 trillion per year for the next 30 years.

“Irrespective of how successful we are in tackling climate change,” Rebonato writes, “society will change radically, and in difficult-to-predict ways.” Economics will weigh heavily in the readaptation of future generations, and we need to start developing abatement strategies on a large scale right now. But the author is doubtful that “indifferent selfish human beings” will rise to the occasion.

So what should we do? For starters, stop looking to politicians for answers to the problem. Rather, he suggests that economists and scientists should act as climate-change agents (the kind not easily kicked out of office). The challenge of global warming, he contends, “is too far-reaching for any political and ideological view to be allowed to hijack the climate-control agenda.”

Later in the book, Rebonato discusses the role of nuclear energy as an alternative to the carbon-produced kind. While he is aware of the environmental dangers of nuclear fission, he laments that taxpayers have been far more generous with wind and solar subsidies than with funding for nuclear-energy research.

In his concluding remarks, Rebonato shows concern about what he calls the “no-growth antimarket” agenda and its association with climate change. If everyone on the planet is to prosper, there has to be economic growth worldwide without any suspicious downgrading of market mechanisms. The task for the future, he insists, is to “grow more and better, not to embrace de-growth.”

Jack Wennersten is a regular reviewer on environmental subjects. His new book, City of Magnificent Intentions: An Environmental History of Washington, DC, will appear next year.

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