Climate change adaptation refers to our individual and collective ability to cope with Mother Nature’s more intense weather punches in terms of extreme heat, drought, fire, flood and many other place based risks. My microeconomics research, as sketched out in my 2010 Climatopolis book and my 2021 Adapting to Climate Change books, argues that capitalism accelerates our ability to adapt as market price signals encourage substitution and innovation. Whether government policy complements the private sector muffles the private sector’s efforts continues to be a major research topic. In my 2010 Climatopolis book, I asked; “If Milton Friedman ran the U.S FEMA (and thus committed to no generous ex-post bailouts to shocked places) how much faster would adaptation occur?” In my ongoing empirical work, I continue to study how extreme weather affects our economy. I see evidence of adaptation progress as the “climate damage function” flattens and this means that the same punches thrown by Mother Nature cause less damage over time. My students are studying this hypothesis in the developing world and investigating what frictions (such as government policy) inhibit adaptation from taking place. An example would be government price supports for agriculture that create a moral hazard effect. See this 2015 paper set in the United States. My Thoughts About the Work by Two Talented New York Times Journalists The New York Times continues to be the paper of record. Two of the leading authors for the Times are Christopher Flavelle and David Wallace-Wells. I link to their work so you can read it on your own. David recently published a huge New York Times Magazine piece that you can read here. I want to keep this entry short but I plan to expand upon the themes I present below. I must acknowledge upfront that I have not interviewed either of them about their climate change adaptation pessimism. My points I present here are based on my reading of their work. How Does a “Climate “Crisis” Emerge? Global greenhouse gas emissions will continue to rise. Read our 2022 NBER paper. We do not know how much global average temperatures will rise due to rising emissions and we do not know what “crazy” weather will emerge because of what we have collectively unleashed. In a series of case studies, Flavelle argues that we have built up billions of dollars of place based capital in increasingly risky areas such as Florida that face more severe disaster risk. He emphasizes the moral hazard effect that the expectation that there will be Federal Bailouts of struck areas encourages more rebuilding in these areas. So, he is telling a story that we do not learn from our mistakes. He does not explain who is the “adult in the room”? Why don’t city urban planners, the mortgage lending industry, the real estate development industry, the insurance industry adopt new “rules of the game” so that new real estate development is nudged to “higher ground” or if we build in risky places that private actors are incentivized to invest in pre-cautions that reduce the damage caused by the next storm. Starting with my Climatopolis book, I have argued that if people make place based bets (such as investing in Miami real estate), then they should flip two sided coins. They get to keep the upside appreciation if local prices rise but they also must “eat” the downside loss if local prices decline because of rising risk and better opportunities in other real estate markets such as Boston or Houston or Buffalo. I do respect his point that the public sector activism in insurance markets is causing an important free market distortion. As the social cost of this distortion rises, economic theory predicts that political reform will take place. Why should tax payers on “higher ground” bail out risk takers over and over again? Why reward “bad behavior”? As we saw with the economy’s reorganization during the COVID crisis of 2020, markets adapt and change when new news occurs if government does not distort price signals. The rise of the Zoom WFH experiment was an amazing example of adaptation. David Wallace-Wells argues that adaptation is costly and will exacerbate existing inequality. A quote “Talk enough about adaptation, and you drift into technical-seeming matters: Can new dikes be built, or the most vulnerable communities resettled? Can crop lands be moved, and new drought-resistant seeds developed? Can cooling infrastructure offset the risks of new heat extremes, and early warning systems protect human life from natural disaster? How much help can innovation be expected to provide in dealing with environmental challenges never seen before in human history? But perhaps the more profound questions are about distribution: Who gets those seeds? Who manages to build those dikes? Who is exposed when they fail or go unbuilt? And what is the fate of those most frontally assaulted by warming? The political discourse orbiting these issues is known loosely as “climate justice”: To what extent will climate change harden and deepen already unconscionable levels of global inequality, and to what degree can the countries of the global south engineer and exit from the already oppressive condition that the scholar Farhana Sultana has called “climate coloniality”?” These are great questions but note that these are economics questions. What is the quality adjusted price of the goods we need to continue to be safe, comfortable and healthy? David Wallace-Wells owns a computer and a cell phone. These products didn’t exist in 1940. Every day they grow cheaper and become of higher quality. This is what market competition does. More poor people in the developing world can afford these products as quality adjusted prices decline. Note that Wallace-Wells is rightly concerned with poverty and the challenges that poor people will face going forward. An economist would reply to his pessimism; “okay, you are not worried about Elon Musk’s ability to adapt to new risks. Let’s rank all of the world’s population with respect to their income. Who are the people who currently do not have the capacity to adapt to the serious challenges that wacky weather is posing? What income growth would give them the opportunity to adapt? Why isn’t this income growth occurring? “ Note that David Wallace-Wells is saying that economic growth in the developing world is the key to adapting to climate change. We need poverty alleviation to help everyone to be able to adapt. Here we agree. Economic growth is the key tool for adapting to climate change. Such economic growth reduces poverty. Here is a study of global poverty alleviation by a leading macro-economist. I recognize that I am positing that national economic growth reduces poverty. Is this a controversial claim?
My "Migration" to Substack
My "Migration" to Substack
How Will Houston Adapt to the High Heat?
The New Economic Geography of WFH
Homeownership Revisited: An Economist's Perspective
Homeownership Revisited: An Economist's Perspective
Understanding the Arguments Made by Climate Change Adaptation Pessimists: Part One
Understanding the Arguments Made by Climate Change Adaptation Pessimists: Part One
The Interesting Economics Related to the Marginal Cost of Avoiding Heat Exposure
The Interesting Economics Related to the Marginal Cost of Avoiding Heat Exposure
"The Water Cooler" and Spontaneous Face to Face Interaction in a Hybrid-WFH Economy
"The Water Cooler" and Spontaneous Face to Face Interaction in a Hybrid-WFH Economy
How Will the Rise of WFH Help Us to Adapt to Climate Change?
How Will the Rise of WFH Help Us to Adapt to Climate Change?
USC Economics Faculty Hiring Since 2015
USC Economics Faculty Hiring Since 2015
The New New Geography of Jobs
The New New Geography of Jobs
Connecting the Dots: The Common Themes Between My Three Recent Books
Connecting the Dots: The Common Themes Between My Three Recent Books
The Simple Microeconomics of Adapting to Real Estate Damage Caused by Flooding
The Simple Microeconomics of Adapting to Real Estate Damage Caused by Flooding
The Role of Qualitative Data in Academic Field Experiment Research
The Role of Qualitative Data in Academic Field Experiment Research
My Growing Set of Podcasts Discussing my April 2022 Going Remote book
My Growing Set of Podcasts Discussing my April 2022 Going Remote book
Marketing My Four Amazon Economics E-Books that Sell for $1 Each
Marketing My Four Amazon Economics E-Books that Sell for $1 Each
The Consequences of Banks Pursuing a "Double Bottom Line" as the Federal Reserve Prioritizes Climate Change Risks
The Consequences of Banks Pursuing a "Double Bottom Line" as the Federal Reserve Prioritizes Climate Change Risks
Applied Game Theory and the Medium Term Reputation Gains from the Recent China-USA Trade War
Applied Game Theory and the Medium Term Reputation Gains from the Recent China-USA Trade War
How Do We Nudge "Behavioral" Decision Makers to Adapt to Emerging Climate Risks?
How Do We Nudge "Behavioral" Decision Makers to Adapt to Emerging Climate Risks?
The Economic Consequences of Youth Pessimism About Climate Risk: Lessons from Slemrod's "Savings and the Fear of Nuclear War"
The Economic Consequences of Youth Pessimism About Climate Risk: Lessons from Slemrod's "Savings and the Fear of Nuclear War"
What Insights Does Economics Offer About the Nascent Biden Administration Transport Infrastructure Investment Program?
What Insights Does Economics Offer About the Nascent Biden Administration Transport Infrastructure Investment Program?
Contrasting Adapting to Contagious Disease Risk with Adapting to Climate Change
Contrasting Adapting to Contagious Disease Risk with Adapting to Climate Change
Will the Biden Administration's Trillion Dollar Investment in Infrastructure Unlock the Potential of Post-Industrial Cities?
Infrastructure Investment Microeconomics
Infrastructure Investment Microeconomics
A Beach Haiku
Incorporating Local Public Health Dynamics into The Rosen/Roback Spatial Equilibrium Model
Incorporating Local Public Health Dynamics into The Rosen/Roback Spatial Equilibrium Model
Adverse Selection in Car Insurance Markets: What Happens When Car Sellers Offer Insurance to Good Drivers?
Adverse Selection in Car Insurance Markets: What Happens When Car Sellers Offer Insurance to Good Drivers?
Spatial Equilibrium and Haitian Immigration to the U.S
Spatial Equilibrium and Haitian Immigration to the U.S
Some Microeconomics of Extreme Heat Exposure in the United States
Some Microeconomics of Extreme Heat Exposure in the United States
Amazon's Big Data on Consumer Behavior Fuels its Entry into Urban Retailing
Amazon's Big Data on Consumer Behavior Fuels its Entry into Urban Retailing
What Does the Movie "Dirty Harry" Teach Us About Adapting to Climate Change Risk?
How Can the Insurance Industry Accelerate Climate Change Adaptation?
How Can the Insurance Industry Accelerate Climate Change Adaptation?
Ranking Academic Economics Power Couples Based on July 2021 REPEC Data
Ranking Academic Economics Power Couples Based on July 2021 REPEC Data
Academic Economist Productivity Rankings
Academic Economist Productivity Rankings
Stiglitz Versus Cochrane: What Are the Non-Market Quality of Life Impacts of Climate Change?
Stiglitz Versus Cochrane: What Are the Non-Market Quality of Life Impacts of Climate Change?
Some Microeconomics of Adapting to Wildfires in the American West Framed as a Gary Becker Problem Set Question
Some Microeconomics of Adapting to Wildfires in the American West Framed as a Gary Becker Problem Set Question
A Few Thoughts About Economic Growth as a Climate Change Adaptation Strategy
A Few Thoughts About Economic Growth as a Climate Change Adaptation Strategy
Climate Change Bets and Julian Simon versus Paul Ehrlich Again
Climate Change Bets and Julian Simon versus Paul Ehrlich Again
Cliff Winston's New Book Gaining Ground
Cliff Winston's New Book Gaining Ground
A Self Evaluation of My Two Years Directing the Johns Hopkins 21st Century Cities Initiative
A Self Evaluation of My Two Years Directing the Johns Hopkins 21st Century Cities Initiative
The Emerging New Economic Geography of the United States
The Emerging New Economic Geography of the United States
How Does Applied Microeconomic Research Accelerate Climate Change Adaptation?
How Does Applied Microeconomic Research Accelerate Climate Change Adaptation?
Do The Urban Poor Gain from Local Economic Growth?
Do The Urban Poor Gain from Local Economic Growth?
Why is Beautiful California Losing Congressional Seats? Constrained Local Housing Supply Influences National Politics
Why is Beautiful California Losing Congressional Seats? Constrained Local Housing Supply Influences National Politics
Unlocking the Potential of our "Unlocking the Potential of Post-Industrial Cities" Book
Unlocking the Potential of our "Unlocking the Potential of Post-Industrial Cities" Book
Why Climate Economics Continues to Succeed
Why Climate Economics Continues to Succeed
The Microeconomics of Enhancing the Effectiveness of Government Spending $2 Trillion Dollars on Infrastructure
The Microeconomics of Enhancing the Effectiveness of Government Spending $2 Trillion Dollars on Infrastructure
The Revealed Preference of Porch Pirates
The Revealed Preference of Porch Pirates
The Great Climate Change Race Between The Rising Threat and Our Increasing Ability to "Take a Punch"
The Great Climate Change Race Between The Rising Threat and Our Increasing Ability to "Take a Punch"
Understanding the High Cost of Military Drone Use Using a Rebound Effect Model
Understanding the High Cost of Military Drone Use Using a Rebound Effect Model
The Resurgent Consumer City by Fall 2021
Some Urban and Environmental Economics Links
Free Copies of a New Urban Economics Book: Unlocking the Potential of Post-Industrial Cities
Free Copies of a New Urban Economics Book: Unlocking the Potential of Post-Industrial Cities
Climate Change Adaptation Lessons from Freezing Texas
Unlocking the Potential of Post-Industrial Cities
The Revealed Preference Approach for Learning Microeconomics
Backwards Induction and the Demise of U.S Gas Stations in the Year 2045
Backwards Induction and the Demise of U.S Gas Stations in the Year 2045
Platform Competition and the Urban Economics of Free Speech
Platform Competition and the Urban Economics of Free Speech
How Can the Biden Administration Boost Quality of Life in Post-Industrial Cities Such as Baltimore?
How Can the Biden Administration Boost Quality of Life in Post-Industrial Cities Such as Baltimore?
Some Rust Belt Urban Economics
Free Environmental Economics Lecture Notes and Exam Questions and Access to a High Quality $8 E-book Textbook
Free Environmental Economics Lecture Notes and Exam Questions and Access to a High Quality $8 E-book Textbook
Veblen and Conspicuous Consumption Revisited: The Beneficial Role of "Invisible" Masks During a Pandemic
Veblen and Conspicuous Consumption Revisited: The Beneficial Role of "Invisible" Masks During a Pandemic
The Economics of Personal Responsibility and Human Development
The Economics of Personal Responsibility and Human Development
Will President Biden's Low Carbon Policy Efforts be Slowed Down by the Gruenspecht Effect and Slow Economic Growth?
Will President Biden's Low Carbon Policy Efforts be Slowed Down by the Gruenspecht Effect and Slow Economic Growth?
Will the Rise of Work from Home Lower Uber's Medium Term Profits?
Will the Rise of Work from Home Lower Uber's Medium Term Profits?
Some Research Notes on Using Geo-Tagged Cell Phone Data to Study Urban Economics Questions
Some Research Notes on Using Geo-Tagged Cell Phone Data to Study Urban Economics Questions
In the Year 2030, How Will Applied Microeconomists Study the Consequences of the 2020 COVID Shock?
In the Year 2030, How Will Applied Microeconomists Study the Consequences of the 2020 COVID Shock?
The Microeconomics of the Rise of Green Buildings and Climate Change Adaptation: A California Example
Using the Supply and Demand Model to Understand China's Recent Electricity and Coal Shortage
Using the Supply and Demand Model to Understand China's Recent Electricity and Coal Shortage
Competition in the Non-Profit "Green" Sector or the Industrial Organization of Non-Profits
Competition in the Non-Profit "Green" Sector or the Industrial Organization of Non-Profits
Why Does JHU's Twenty First Century Cities Initiative Focus on Urban Economic Growth?
Productivity and Climate Change Adaptation in a Spatial Economy
Productivity and Climate Change Adaptation in a Spatial Economy
Climate Change Adaptation in a Spatial Economy
Climate Change Adaptation for Urban Indian Slum Dwellers: A New Economics Research Agenda
Climate Change Adaptation for Urban Indian Slum Dwellers: A New Economics Research Agenda
My Next Steps in Working on Climate Change Adaptation Microeconomics
My Next Steps in Working on Climate Change Adaptation Microeconomics
The Lulling Effect and the Upcoming COVID19 Vaccine
The Lulling Effect and the Upcoming COVID19 Vaccine
Announcing the Formation of Climate Economics: A New Climate Resilience Consulting Firm
Pandemic Microeconomics Revisited: The Incentive Effects of Liability Shields for Contagion Risk
Pandemic Microeconomics Revisited: The Incentive Effects of Liability Shields for Contagion Risk
Clean Air as an Experience Good in Urban China
Clean Air as an Experience Good in Urban China
The Social Benefits of Social Capital in Fire Fighting Units Contrasted with the Social Cost of Social Capital in Police Units
The Social Benefits of Social Capital in Fire Fighting Units Contrasted with the Social Cost of Social Capital in Police Units
Some Thoughts on the 2019 JEL Review of My Co-Authored China Book
Some Thoughts on the 2019 JEL Review of My Co-Authored China Book
Al Pacino's Serpico and the Economics of Rotten Apples and the Missing Data Problem.
Al Pacino's Serpico and the Economics of Rotten Apples and the Missing Data Problem.
Peer Monitoring and the Urban Police: Lessons from the Microeconomics of Microfinance
Peer Monitoring and the Urban Police: Lessons from the Microeconomics of Microfinance
The Urban Economics of Big City Mayors
The Urban Economics of Big City Mayors
Private Nursing Homes, Product Differentiation and Reducing COVID-19 Contagion Risk
Private Nursing Homes, Product Differentiation and Reducing COVID-19 Contagion Risk
Will COVID-19 Reduce Smoking Rates Today and Thus Reduce Future Cancer Risk?
Will COVID-19 Reduce Smoking Rates Today and Thus Reduce Future Cancer Risk?
Real Estate Windfalls from Delaying the Fall 2020 Semester
Real Estate Windfalls from Delaying the Fall 2020 Semester
Open Source Collaboration versus Winning the Race for Receiving a COVID-19 Vaccine Patent
Open Source Collaboration versus Winning the Race for Receiving a COVID-19 Vaccine Patent
Will the COVID-19 Induced Ballooning Budget Deficit Lead to More Efficient Taxation?
Will the COVID-19 Induced Ballooning Budget Deficit Lead to More Efficient Taxation?
Larger Firms Have an Adaptation Advantage in Coping with Ongoing COVID-19 Infection Risk
Larger Firms Have an Adaptation Advantage in Coping with Ongoing COVID-19 Infection Risk
Has the Profitability of Selling Car Insurance Increased in Early 2020 Due to COVID-19?
Has the Profitability of Selling Car Insurance Increased in Early 2020 Due to COVID-19?
Will Richer People Further Increase their Social Distancing in Post COVID-19 Urban Life?
Will Richer People Further Increase their Social Distancing in Post COVID-19 Urban Life?
Low Carbon Suburban Living in 2021 in our "Post-COVID19" World
Low Carbon Suburban Living in 2021 in our "Post-COVID19" World
Do Social Networks Increase or Decrease the COVID-19 Contagion Rate?
Do Social Networks Increase or Decrease the COVID-19 Contagion Rate?
An Open Source Clinical Trial of Coronavirus Vaccines
An Open Source Clinical Trial of Coronavirus Vaccines
Measuring the Medium Run Productivity Costs of the Coronavirus Recessions
Measuring the Medium Run Productivity Costs of the Coronavirus Recessions
Will the Fear of the Coronavirus Reduce Baltimore's Long Term Murder Rate?
Will the Fear of the Coronavirus Reduce Baltimore's Long Term Murder Rate?
The Urban and Environmental Economics of Voluntary Social Distancing
The Urban and Environmental Economics of Voluntary Social Distancing
Why Did Wuhan’s Officials Respond Slowly to the Spread of the Coronavirus?
Why Did Wuhan’s Officials Respond Slowly to the Spread of the Coronavirus?
Should the City of Baltimore Issue More Municipal Debt?
Should the City of Baltimore Issue More Municipal Debt?
Does the Coronavirus Offer a Test of the Rare Disasters Asset Pricing Model?
Does the Coronavirus Offer a Test of the Rare Disasters Asset Pricing Model?
My Research and My Books
My Research and My Books
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