Changing Climate, Changing Economy

Changing Climate, Changing Economy

The Cournot Centre series

Edited by Jean-Philippe Touffut

How did climate change become an economic issue? Why is economic discourse so influential on the public policy of climate change? How can it best contribute to the scientific and public debates? Nine eminent scholars explain in this book both how economics has changed environmental understanding and how the study of climate change has modified the economy.

Chapter 2: Economics in the Environmental Crisis: Part of the Solution or Part of the Problem?

Olivier Godard

Subjects: economics and finance, environmental economics, environment, environmental economics


Olivier Godard As a positive, that is to say explanatory, science, economics must analyse the behaviour of agents enjoying a certain degree of freedom but subject to the constraints imposed on them by nature and institutions. As a normative science, economics must investigate the best way to organise production, distribution and consumption. (Malinvaud, 1975, p. 2) Thinking like a mountain. (Leopold, 1949 [1989], p. 129) INTRODUCTION The Earth’s climate is on the brink of serious disruption. According to the vast majority of competent scientists, and in particular the assessment reports regularly published since 1990 by the Intergovernmental Panel on Climate Change (IPCC), this is due to greenhouse gas (GHG) emissions produced by the human activities of production, transport and consumption. This can be traced back at least as far as the nineteenth century, when the industrial revolution started to spread through Europe, and which today has reached most regions of the world – notably Asia – with the exception of Africa. Global warming is the biggest environmental externality ever generated by the human economy, to borrow a phrase from Nicholas Stern, main author of the enormously influential Stern Review, a report on the economics of climate change commissioned by the British government (Stern, 2006). Economic activity – given its various forms and physical content over the last 150 years – lies, without a doubt, at the heart of the climate risk. But what about economic thinking? To what extent do the concepts and methods developed by the discipline of economics, particularly during the last...

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