A Critical Conversation on Climate Change ... - Green Choices

lessons unlearned 115Climate and the Price SignalAccording to economists, prices send out‘signals’. But what exactly do they contributeto the conversation about climate change?Prices are notorious for the strange thingsthey say about irreversible events, unknownsand the long term. Even the mostorthodox economists’ estimates of the costsand benefits of doing something about globalwarming differ by many hundreds ofbillions of dollars per year, depending onvariations in the assumptions plugged intoconventional economic models. 192Sometimes prices are positively tonguetied.‘The carbon market is not going tobe able to put sustainable development andeverything else into one price,’ says JackCogen, president of Natsource, the largestprivate buyer of carbon credits. ‘The carbonmarket doesn’t care about sustainabledevelopment.’ 193 Cogen’s view is reinforcedby many other carbon businesspeople, whoacknowledge privately that their incipientmarket actually has little or nothing to dowith climate.There are other ways, too, in which pricestend to keep to themselves the informationneeded to make climate-friendly choices,even in as mundane a matter as home-buying.Says activist and systems analyst GarLipow:‘Levels of insulation that pay for themselvesin four months to three years willseem a good deal when buying a house ona 30- or 15-year mortgage, given energysavings alone. But a problem arises whenmost homes don’t offer that level of insulation.After all, there are more importantconsiderations than energy costs. Is thehouse close to work, schools and shops?Also, there are the questions of layout, andappearance. If all homebuilders were requiredto offer this level of insulation theycould easily recover their costs and a significantprofit besides at a price that wouldstill lower overall cost of ownership tobuyers. But in the absence of regu lationrequiring this, homebuilders may offerhomes without such features. So long asmost homes don’t offer them, they sufferlittle loss in bargaining power. The oddsare homes with a similar location, layoutand appearance won’t be available with theadded energy conservation features. Withoutregulation, builders rationally believethey won’t gain enough bargaining powerin selling their product to make extra insulationworth adding. This is so eventhough the buyer would get a good deal bypaying enough for the added energy savingsfeature to allow the builder a significantextra profit.’ 194stimulate the development of alternative liquid fuels in time. ‘Waitinguntil world oil production peaks before taking crash program actionleaves the world with a significant liquid fuel deficit for more thantwo decades’, which would cause problems ‘unlike any yet faced bymodern industrial society,’ according to one US study. 190