Energy Economist Robert Pindyck Advocates for Additional Research on Climate Adaptation in Newest Episode of “Environmental Insights”

Robert Pindyck, the Bank of Tokyo-Mitsubishi Professor of Economics and Finance at MIT's Sloan School of Management, presented his case for additional research on climate adaptation and the social costs of climate change in the newest episode of “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program,” a podcast produced by the Harvard Environmental Economics Program. Listen to the interview here. 

A transcript of the interview is available here.

Hosted by Robert N. Stavins, A.J. Meyer Professor of Energy and Economic Development at Harvard Kennedy School and director of the Harvard Environmental Economics Program and the Harvard Project on Climate Agreements, Environmental Insights is intended to promote public discourse on important issues at the intersection of economics and environmental policy.

Pindyck, a fellow of the Econometric Society, past president and fellow of the Association of Environmental and Resource Economists, and an Associate Scholar of the Harvard Environmental Economics Program, is an energy economist who has spent the past decade working on issues related to climate change and climate change policy. Author of the forthcoming book, “Climate Future. Averting and Adapting to Climate Change,” Pindyck said the book speaks to the role of uncertainty in the context of climate policy.

“There is a lot we don't know about climate change and how the system works. And my interest is what does that mean for policy? What do you do when you don't know certain things, when you're uncertain, when many of the characteristics of the system are uncertain? So that got me interested in this,” he remarked.

“I'm very, very clear in the book that it's extremely important to reduce emissions and that we have to do everything we can to reduce emissions quickly and as much as possible. But we also have to be realistic about what's going to happen,” he stated. “Despite our best intentions, the world may not succeed and likely won't succeed in reducing emissions enough to prevent a temperature increase [of] greater than two degrees. We can't just make believe that we're going to be able to do something that in fact we're not going to do.”

Possibilities and policies for adaptation, Pindyck pointed out, constitute a relatively new lens through which to view the future of climate policy.  

“What we'd like to do is to sharply reduce CO₂ emissions and prevent a temperature increase of two degrees Celsius, and as I started doing a bunch of calculations, it just became clear to me that, that is very unlikely,” he argued. “And then the question is, what should we do if that's very unlikely? Just say that's too bad or what? And I came to the view that we need to now start working on adaptation to get ready for that possibility.”

Pindyck strongly suggested that solar geoengineering is just one example of potential measures that could help mitigate the impacts of climate change. The others, he said, include the planting of trees and the design of new building codes to reduce the construction of new homes in flood zones. Pindyck said academics and policymakers must also focus more urgently on the social cost of carbon, and on defining an equitable discount rate that accurately addresses the costs and benefits that will accrue far into the future.

“This is simply an area where despite many, many years of work on discounting, we really don't know how to address the issue of discounting climate damages that are going to happen 50 or a hundred years from now. What kind of discount rate do we use? Do we use market rates? Do we use ethical arguments for choosing a discount rate? If so, whose ethics?,” he said.

Pindyck’s interview is the 11^th episode during 2021 in the Environmental Insights series, with future episodes scheduled to drop each month.

“Environmental Insights is intended to inform and educate listeners about important issues relating to an economic perspective on developments in environmental policy, including the design and implementation of market-based approaches to environmental protection,” said Stavins. “We speak with accomplished Harvard colleagues, other academics, and practitioners who are working on solving some of the most challenging public problems we face.”

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