Bill Gates argues that we were insufficiently prepared for COVID-19. Does our failure to adequately prepare for this crisis portend a future under-investment to invest in self-protection to reduce our exposure to climate change risk?
In the case of COVID, we had enjoyed 100 years of little exposure to vast contagion. This certainly played a role in lulling us into a complacent mindset. Building on the work of Chuck Manski, a good research project (armed with a time-machine) would take the research back to each year before February 2020 to ask different people around the world about their perception and degree of worry about infectious disease risk as a major global challenge. I predict that few people would have ranked it has a major concern.
Imagine if a Presidential Candidate in 2016 had said, "I will set aside 1% of the Federal Budget (so roughly $30 billion a year) to spend on vaccine preparation and logistics." This candidate would have been mocked for wasting money.
Why didn't the drug companies invest in the architecture to have vaccines ready to be mass produced? My guess is that the answer is time-consistency. These for profit firms anticipated that the probability of a major contagion is low and if this state of the world occurs governments would not allow them to "price gouge". So, by backwards-induction --- it isn't profitable to take the risk to invest in such surplus capacity for a product that is highly likely to not be demanded. Activist government destroyed the incentive to take this risk!
Pivoting to Climate Change Adaptation
My optimism about our rising capacity to adapt to climate change has only been increased by the COVID crisis.
We now have zoom and major firms are roughly as productive working fact to face as WFH. Workers are now free to live where they want to live and this opens up many new permutations and possibilities.
We now have more imagination that scary scenarios can suddenly occur and that we can't rely on government to "save us". We are adults and we must use markets and market forces to cope with these changes.
Unlike with COVID, there is much more cross-sectional variation in shocks caused by climate change. Mother Nature is running many more experiments here as different places face a Texas Freeze, a West Coast Fire or a Hurricane Ida. Similar to Batting practice in baseball, this experience helps us to learn. An ideas are public goods.
In contrast, with COVID --- we didn't have enough experience with adapting to such risk and despite this major progress was made in keeping our economy humming along during crisis.
A key point that I want economists thinking about is that a "climate shock" is a shock to a place. This shock affects people who live and/or work at that place or own assets there or use products grown and produced there. Markets mediate the effect of the shock to a place on different people. In the case of a COVID-infection --- this is a shock to a person that can be directly amplified to another person through physical contact. Under what circumstances does a shock to places (climate shocks) look a lot like shocks to people (COVID infection)?
My 2021 book Adapting to Climate Change and my 2022 book Going Remote build on these themes.
In earlier work, I have contrasted adapting to terror attacks versus climate change. New risk adaptation work could explore the lessons learned from adapting to terror risk, infectious disease risk and climate change risk.