Climatopolis: The Future of Cities in the Hotter Future Matthew E. - - PowerPoint PPT Presentation

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Climatopolis: The Future of Cities in the Hotter Future

Matthew E. Kahn UCLA and NBER Institute of the Environment Department of Economics Department of Public Policy

Introduction

• The World is unwilling to cap GHG emissions
• Chapter One of Climatopolis is titled “Too

Much Gas”!

• Climate Change is coming
• Low probability, ugly scenarios become more

likely --- but we know this!

• Climatopolis = the microeconomic “small

ball” of how households and firms respond to “known unknowns”

My Book in a Nutshell

• In 2030, 60% of the world’s population will

live in cities

• Climatopolis examines the future of cities in

the face of climate change

• An optimistic book --- we have the right

incentives to invest to protect ourselves against emerging threats,

• We have enough time to prepare and innovate
• The Economist’s Review and Moscow’s

Horrible Heat Wave in the Summer of 2010

Climate Change’s Likely Impacts

• n Our Cities
• Different Cities around the world will face

some combination of:

• 1. Average hotter temperature and more

extreme temperature events

• 2. sea level rise and flooding
• 3. water scarcity
• Climate scientist: can and will quantify this

risk, such measurement is their job!!

• Assumption of “forecast convergence”

My Book’s Core Questions

• How will climate change affect urban quality
• f life in developed and developing country

cities?

• How will urbanites, urban firms and urban

politicians respond to the challenges posed by climate change?

• If a specific city’s quality of life deteriorates,

who suffers? land owners!

• An irony: Capitalism has caused climate

change but capitalism will go a long way to protecting us from climate change.

The San Diego Foundation’s 2050 Study “A Regional Wake Up Call”

• Useful Case Study
• 4 degrees hotter on Average
• Sea level will be 12-18 inches higher.
• water demand up 37% while supply will down

20%

• Wildfires will be more frequent and intense.
• Public health will be at risk, (kids and elderly)
• Peak electricity consumption up 70%

How Will Households and Firms Respond to these Predictions?

• Hotter climate --- up zone in temperate areas
• Alleviate water and electricity “scarcity” by

allowing prices to rise

• The induced innovation hypothesis posits that

for profit firms will respond to these expected price increases

• Wildfire and other disaster risk --- zoning and

insurance contracts to encourage precautions

• High frequency information provision --- heat

waves, smog alerts

Escape from San Diego?

• What if none of my predictions play out?
• If a city such as San Diego’s quality of life

suffers due to climate change, home owners there suffer an asset loss

• Households there can migrate to a Detroit or

another city whose quality of life is relatively better

• Migration acts as an implicit insurance policy
• Internet and “twitter world” keeps us fully

informed about evolving threats

Government’s Role?

• Carbon pricing (mitigation efforts would

certainly help adaptation efforts)

• Trusted information provider concerning new

risks

• Effective land zoning
• Allowing prices of increasingly scarce

resources (water and electricity) to rise to reflect fundamental scarcity

• Recognize that “Sea Walls” crowd out private

self protection

Adaptation in LDC Cities

• Same challenges but fewer private resources

for coping with shocks

• Kahn (2005): The Death Toll from Natural

Disasters

• Income growth protects the population from

agricultural price risks, health shock risks,

• Income allows one to purchase higher quality

housing reducing mortality and morbidity risk

Coping with Climate Change in the Developing World

• Economic development as the best adaptation

strategy

• Farmer suffering urban migration and the

challenges of absorbing such “environmental refugees”

• The Future of Bangladesh?

Free Trade is a “Friend” of Adaptation

• Cities in nations that are open and do not

impose tariffs on food imports will suffer less from food price volatility

• Similar to Paul Romer’s point that ideas are

public goods; the diffusion of new products such air conditioning, electric vehicles, renewable power will help LDCs to adapt

Conclusion

• In 2011, an under appreciation of the power of

free markets to help us adapt to evolving threats

• Some of us are “Homer Simpson” but this

actually helps us to adapt!

• Is my book dangerous? Lulling concerns
• Carbon Mitigation and adaptation are

complements

• But, my critics worry that the public will view

them as substitutes

Basic Books September 2010