Book Club

The Chair read for you Comment les économistes réchauffent la planète ? from Antonin Pottier

Published on 28 October 2019

How economists are warming up the planet [1]. This is through this book, with a title deliberately provocative, that Antonin Pottier, assistant professor in the EHESS, develops his thesis on how the economists help curb the implementation the effective actions against global warming.

The author goes back quickly on the climate situation, which is getting worse. Human activities generate a big amount of greenhouse gas, which, once in the atmosphere, hold the solar heat. It exists several uncertainties, for instance on the reaction of the climate system facing a strong increase in greenhouse gas concentration or on the damages caused by the global warming on human societies.

The economists targeted by Antonin Pottier in this book are orthodox economists, from the “center of the discipline”, their works are very general and theorical. These economists have been criticized for their deep belief in the benefits of markets. The author called “market fundamentalism” the ability of this economists to strongly believe in the perfection of markets. This fundamentalism allows the appearance of climato-scepticism because market failure do not exist on this perfect market. Global warming (which is a market failure) cannot exist.

Among these economists from the “center of the discipline” described by the author, some of them may nevertheless consider climate change as an economic problem. These economists are looking for the optimal warming. They do not want to minimize the global warming, but they want, using tools like cost-benefit analysis, to find the warming that would minimize his cost for the society. This research of the optimum rises up the economists with respect to climate experts from other disciplines because it puts them in the center of the management of the climate problem.

The author then talks about the dispute on the discount rate. When a climate policy is imple-mented, benefits will be seen in the future. However, a benefit received in the future has less value than the same benefit received today, that is why a discount rate is necessary to evaluate future benefits. The choice of this discount rate, that determines the implementation of a climate policy, depends on how much future generations mean to us, and is a debate among economists.

Finally, the author denounces what he called the “dogmatic belief” that economists have in a single and global carbon price for solving the climate issue. This solution, theoretically efficient, cannot work because there are no institutions upper than states and powerful enough to control a global carbon market. Institutions have to exist in order to implement a carbon market.

Antonin Pottier sometimes goes to the easy criticism of unorthodox economists against orthodox economists. For example, when he blames econometric studies on impacts of climate change for their statistical bias, or when he is ironic with the perfect world where theoretical economists live in. However, he brings us to think seriously about the way economists address the climate issue. The author shows the limits of the economic analysis when he speaks about the inability of economists to consider a devastating climate change for human societies. He also gives us some ideas to better take into account effects of climate change on economic analysis. He mentions for instance, Weitzman’s works which indicate that cost-benefit analysis are not complete due to the difficulties of taking into account the increase of natural hazards

Maxime Ollier, Research Fellow on « Climate change effects on inequalities of farmers’ income »

[1], Antonin Pottier, Comment les économistes réchauffent la planète, (2016), Anthropocène Seuil, 18.00 € TTC, 336 pages