Saturday, January 8, 2011


Just finished Matt Kahn's book, Climatopolis: How Our Cities will Thrive in a Hotter Future. His main goal, as he states often on his blog, is to introduce some microeconomics in the climate change discussion. He does in a couple of places, however to me a large portion of the book came off as attempts to make more specific predictions than he was capable of making. A few comments:

On page 86, Kahn highlights the important changes in air quality in California brought about since the 1980s by good regulation. Among economists, there are plenty of examples of when regulation fails and produces unintended consequences. However, I never hear economists commend regulation for doing basically what it was supposed to do. With Cali regulations, there is still the complaint that they hit the poor disproportionately hard, but nonetheless the air in LA is much cleaner than it was 20/30 years ago and I think good regulation is at least a small part of that story.

Specifically on page 194, but truly throughout much of the book, Kahn at least hints at the idea that climate change presents the world with a lot of zero-sum decisions. For example, I see Kahn claiming that (basically) Buffalo, Cleveland, and Detroit will likely all be made better off by climate change; LA, Miami, and New York will likely be made worse off. I wish this would have been a major explicit theme of the book - the contrast between problems posed by climate change (where there are winners and losers) and economic problems (where there are winners and... winners). One of the most important and misunderstood aspects of economic life is the fact that it is NOT zero sum. I enjoyed the contrast and would be interested in a book/article/paper by Kahn that emphasized the difference (and implications) in greater detail.

On page 201, Kahn talks about "the victims" of climate change. Throughout Chapter 3 he also talks about the victims, stating that he is not interested in helping those who do not take into account the risk of climate change if they suffer the consequences. There is a definite parallel to the recent bank bailouts and the idea that some cities might get bailed out by the federal government if climate change does present us with a day of reckoning. Kahn hopes that governments can precommit not to protect those who suffer, but recent history suggests that is an impossible task.

Last thing - I want to commend Matt for his discussion of the role of insurance in human adaptation to climate change. I thought that was the most interesting section in the book and wish it wasn't buried at the end. If I had to recommend one portion for those who don't want to read the entire book, that would definitely be it.

1 comment:

Laurent Franckx said...

This review makes several interesting points, and surely the point about the role of insurance is correct. I don't agree that governments are unable to commit not to bail out people behaving dangerously: this is precisely what the Belgian government has done in the field of flood insurance. I discuss this, and other aspects of Kahn's book, in more detail at

Compared with the totality of knowledge which is continually utilized in the evolution of a dynamic civilization, the difference between the knowledge that the wisest and that which the most ignorant individual can deliberately employ is comparatively insignificant. ~Fredrich Hayek in The Constitution of Liberty