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Henningsen: Climate Change Economics

Dealing with climate change requires sacrificing short-term economic benefit in favor of long-term environmental health.

That’s a tough sell, but environmentalists have long hailed the European Union for its willingness to make that trade-off, requiring increasing use of renewable energy, for example, and setting strict emissions standards for its 28 member nations. Europeans, it’s said, take the long view – in marked contrast to America’s apparent devotion to immediate economic gratification, regardless of long-term environmental costs.

That may be changing. Europe seems to be dialing back on its commitment to addressing climate change, pushed by a troubled economy, rising energy costs, and the increasingly anemic state of its industry. In January, the EU proposed ending required national targets for producing renewable energy after 2020 and took a pass on pushing laws controlling fracking. Although it did call for a 40% cut in carbon emissions by 2030, the EU seems to be bowing to immediate economic reality – knowing that member nations won’t unite behind stricter regulation.

At the same time, some American industries, habitually allergic to any interference with the bottom-line, are discovering an environmental conscience – for economic reasons. Worldwide droughts threaten the water supplies Coca-Cola needs to produce soda and complicate production of sugar cane, sugar beets, and fruit that go into Coke products. Extreme weather also disrupts cotton production Nike depends on for its clothing lines. Executives of both companies recently told The New York Times that global warming “contributes to lower gross domestic products, higher food and commodity costs, broken supply chains and increased financial risk.” Both companies now lobby for more government attention to climate change.

Two things strike me about this. First, the apparent European retreat on climate change while American industry begins to pay more attention to it is a classic example of how broad change occurs. It’s never uniform, but an incredibly messy process characterized by two-steps-forward-one-step-back, multiplied seemingly infinitely, as self-interest gradually develops into mutual concern. But it does happen. Think, for example, how American attitudes and policies about smoking have changed since the release of the Surgeon-General’s report in 1964.

Fifty years, you say – the environment doesn’t have that long. I know, but the plain fact is that people – and industries – don’t change because someone tells them they should but when they tell themselves they must.

And that’s the most important point: some American industries are beginning to tell themselves it’s time to change. They’re no longer marching in lockstep with Big Coal, claiming that environmental regulation is more economically damaging than socially beneficial. Coke and Nike have begun to argue to the contrary. Let’s hope they have company, and soon.

Vic Henningsen is a teacher and historian.
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