Editor’s Note: This concludes a two-part series with real-world examples of anticipating and ameliorating extreme weather events, a challenge throughout human history. Today’s post was originally published at MR on May 21, 2015.
Yesterday’s post explained how market incentives can address environmental issues, including the believed-to-be negatives of climate change. Prices of inputs and outputs, utilizing resources even if they are subject to the tragedy of the commons, incorporate dynamic environmental changes. Markets, in other words, offer the potential for dynamic responses.
If climate change reduces the productivity of land for wheat production, for example, the price of land will be high relative to its productivity. This generates an incentive for wheat farmers to seek new places for wheat production where land prices are lower. Hence, the 2012 Bloomberg news headline, “Corn Belt Shifts North With Climate as Kansas Crop Dies.”…
Editor’s Note: A classic post at MasterResource from a decade ago concerns the most important weather/climate strategy in a new political era. Written by Terry Anderson and Donald Leal of the Property and Environment Research Center (PERC), this post explains how humankind successfully meets challenges with adaptation rather than top-down government edicts. Part II is tomorrow.
Rather than simply throwing up our hands in despair with respect to what appear to be intractable problems of establishing property rights and encouraging markets in regard to global climate, we turn to a major theme of free-market environmentalism—dynamic markets provide the best hope for human interaction with dynamic environments.
Once we abandon static models of market equilibrium and recognize that people respond to changing environmental conditions (e.g., experiencing rising sea levels), as well as resource prices that reflect those conditions (e.g.,…
Yesterday’s post explained how market incentives can address environmental issues, including the believed-to-be negatives of climate change. Prices of inputs and outputs, utilizing resources even if they are subject to the tragedy of the commons, incorporate dynamic environmental changes. Markets, in other words, offer the potential for dynamic responses.
If climate change reduces the productivity of land for wheat production, for example, the price of land will be high relative to its productivity. This generates an incentive for wheat farmers to seek new places for wheat production where land prices are lower. Hence, the 2012 Bloomberg news headline, “Corn Belt Shifts North With Climate as Kansas Crop Dies.” Therefore even if the atmosphere as a GHG sink and GHG emissions themselves are not priced, prices correlated with the effects of climate change will induce adaptation.…