Economics, Equity, and Climate Change: Back to School on Climate Economics

Dr. Laurie Johnson, , | August 21, 2019, 1:39 pm EDT
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As an undergraduate, political economy was an easy major to choose because it helped me think of policy in terms of equity and incentives, two things that interest me the most. I care a lot about equity, and I found incentive structures very powerful in explaining real world problems and designing effective solutions.

To understand how these two things are related to political economy, it helps to look at the definition.

Political economy studies economic production in terms of its relations with law, custom, and government, and with distribution of national income and wealth.

The “equity” part is explicit in terms of the distribution of society’s resources, but equality principles are also embedded in many laws, customs, and governance structures.

The “incentives” component is narrower for economists. It traditionally focuses on monetary rewards or disincentives, and monetary costs that might not be included in market prices, such as pollution impacts. Specifically: what are the financial motivations or circumstances behind behaviors and choices and what would maximize the net gains (i.e. benefits minus costs) in terms of determining how much pollution is acceptable?

Political economy and climate change

Incentives and equity issues are pervasive in climate change economics, my field of study and the focus of my work.

On the “incentive” side, we have to ask questions like: How does it pay to pollute, and how can we make the monetary incentives right so that it no longer pays? How can we reward and encourage the production of cleaner energy? What are the economic impacts of climate change that should be included in market prices to reflect those “costs of production”?

Serious equity issues also surround climate change. They are everywhere. Who should pay carbon fees? Who will be harmed the most by them, and benefit the most? Who has “consumed” most of the fossil fuels and become the wealthiest in the process? Who is expected to be harmed the most from climate change? To what extent, if at all, was the wealth created through fossil fuel consumption shared equally?

The answers to these questions matter greatly in terms of what policies will be considered effective, fair and just, and indeed, whether or not they will be politically viable.

Enter climate economics literacy

As a long-time teacher of climate change economics, I’ve always aimed to cover both sides of the equation—getting both the ethics and the incentive structure right, and making sure these are presented clearly when a seemingly innocuous change in incentive structures has important equity implications. Unless our students understand both, we will not be training them to be sufficiently literate or effective in the climate policy world. I think teachers across all disciplines understand the critical need for their students to be economically literate, and indeed that many would like to cover economics as it pertains to their discipline.

Unfortunately, economics can be a dense topic that requires a lot of time to teach: most economics curriculum relies on traditional graphs and math that have to be derived in semester-long pre-requisite courses. This can make it unnecessarily obscure and turn people away from learning some very straightforward concepts they might otherwise enjoy studying or teaching.

Economists need to make it possible for all teachers, economists or not, to help their students be climate economics literate. And we need to make it accessible and interesting to all students.

Source: Climate Cost Project

You Change It! Climate Economics Game and video teaching series

It was with these goals in mind – making climate economics easier and interesting for all teachers and students – that my co-founder of the Climate Cost Project, Sieren Ernst, and I created a climate economics game called You Change It! The Climate Cost Project is a data and documentary project to help uncover, understand, and visualize the costs of climate change to American communities.

Early in our formation, the Project engaged high school environmental science teachers in a pilot for a student documentary-short film competition for climate-impacted friends, family, and neighbors, and an accompanying survey on how they have been economically impacted. Our goal with the survey was to document the many costs of climate change that don’t show up in official statistics, often because they are not covered by insurance. It was out of this pilot that the Climate Cost Project developed its larger programs, the Witnessing Change Short Film Competition and the Climate Impact Census and opened up the competition and data collection beyond formal educational institutions.

As part of our work with teachers, we felt we needed to provide better teaching tools on climate economics, so we created an interdisciplinary climate economics game and supplementary materials on how and why economists measure environmental costs. The game, which took over three years to develop and test, just won an international educators’ award.

We’ve also created a three-part August video teaching series covering three core topics in the game (among others): climate externalities, equity issues, and carbon pricing. The series is being released ahead of the game, which will be available very soon. Teachers across all disciplines in high school and college have enjoyed using it. You can find out more about the game and how to sign up for the series here. The teaching videos will only be available through August, so interested teachers should sign up now.

Climate economics, and indeed economics in general, doesn’t have to be hard to teach or learn, or dry and boring. Through intuitive real world stories and examples and experiential learning, it can be made accessible to teachers in any discipline, and to college and high school students alike. We hope you will join us!

Dr. Laurie Johnson is the Executive Director and co-founder of the Climate Cost Project, a data and documentary project on how climate change is impacting the lives of Americans. Laurie is also a lecturer in environmental economics at the University of Massachusetts, Amherst.

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Photo: Kim Hansen/Wikimedia Commons

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  • Vansh
  • butch koch

    When your paradigm is endless pillage and destruction of the natural world for GDP, there can be only 1 outcome, and it’s about to smack us hard.

  • ecological

    Degrowth is the most effective solution. Eco-sufficiency and life quality are more important than profit maximization. Please read https://www.degrowth.info .