Julie Satow’s New York Times piece on the post-Sandy boom in backup generator installations in New York is a good reminder that the economic impact of out-of-control climate change may not be as bad as many people fear, and that shouldn’t necessarily give us much peace of mind.
The basic issue is the same as the one where jobs installing iron gates on windows and alarm systems in houses are economic activity just like jobs installing refrigerators and audio-visual systems. Living in fear of crime is annoying all on its own, and needing to expend real resources on private crime-mitigation efforts rather than improving quality of life is annoying. But as far as the economy is concerned, a job is a job, and a sale is a sale. The same is true for a wealthy society’s response to adverse weather shocks. If we see a large shift in economic activity out of producing consumer goods and services and into stepped-up investment in flood mitigation, that doesn’t necessarily do a huge amount to reduce the quantity of economic activity. But it’s nature’s equivalent of achieving economic stimulus by paying people to dig holes and fill them back up again. An arms race of physical investment versus rising sea levels will be associated with plenty of economic output and plenty of business opportunities but with a much lower real standard of living than a world in which the ocean stays put and those resources can be put to some other use.