Environmental dollars and sense: Q&A with Robert O. Mendelsohn

For more than four decades, Robert O. Mendelsohn, an environmental economist, has researched the benefit of protecting the Earth’s environment. As the Weyerhaeuser Davis Professor of the School of Forestry and Environmental Studies, a professor in the Department of Economics, and a professor in the School of Management at Yale, he studies the impact of greenhouse gases, including the effects of climate change on agriculture, forests, water resources, energy, and coasts.

For Earth Day, YaleNews sat down with Mendelsohn to discuss his field of research and learn more about the greatest challenges to halting climate change; why it is so hard for governments to work together; and what he sees as the most promising solutions. An edited transcript of that discussion follows:

What is an environmental economist?

An environmental economist brings the tools of economics to bear on environmental management. The field was just getting started when I was a graduate student in the 1970s. Before then, we were able to measure the cost of protecting the environment, but we couldn’t measure the benefits. Because of that we were managing the environment more or less haphazardly, without having a good sense of whether or not the specific choices we were making were worth the cost. I’ve spent my career measuring the benefits of protecting the environment.

How does one do that?

It’s hard to measure some things in a reliable way, like the value of a lion or a tiger. One simple measure is to look at various behaviors people have that show you they care about the environment. For example, some people who live in a polluted city will buy extra filters for their air conditioning, so the air they breathe in their home is extra clean. That tells us this matters to them and they are willing to spend at least a certain amount of money to protect themselves.

As an economist, how do you engage with climate scientists?

I’ve studied climate change for the last 20 years, looking at how the climate is going to be different, what the damages are going to be, and what we will do in response. Using results on the science side, I’ve tried to estimate what will happen to the economy — initially in the United States.

Having done that, one of the things I’ve found — which surprised me — was that as you go into northern parts of the United States, climate change is probably going to be economically beneficial. People may be better off if it’s a little bit warmer. In 50 years, Connecticut might look like North Carolina. There will still be forest here, but it will be slightly different. The things that are just barely hanging on, like maple trees, will probably be gone, replaced by oak trees.

If you want to see more harmful effects of climate change, you have to go south of the United States. I’ve started to work internationally, mostly in the low latitude countries. And sure enough, as we’ve done more and more studies, we see that this is in fact where most of the damage will be.

So from an economic standpoint, some areas may actually benefit from climate change?

At first we thought climate change meant that we’d all be worse off. But research is showing us that isn’t the correct model. Climate change is going to hurt if you’re already too hot. But if you’re too cold it’s going to be helpful. And if you’re right in the middle — like the United States — it won’t have much of an effect for a while.

Can you give us an example?

Economists turn everything into dollars. There are effects on the economy that are easy to measure, such as the U.S. agricultural sector. At first, it might benefit from a warmer climate, but when warming gets to be too high, it will eventually be harmed. Using real numbers, if the current benefit is $80 billion, it might go up to $81 billion, but then could contract to $75, $65, or even $55 billion, depending on how warm it eventually got. You’d actually start to see large damages.

What do you see as the biggest challenge to halting climate change?

Mitigation — stopping greenhouse gas emissions — is extremely hard to do because the whole planet has to do it together. We were counting on burning fossil fuels for the next 300 to 500 years. So to suddenly give it up turns out to be very expensive.

The United Nations recently released a report by the International Panel on Climate Change that called for a radical shift to alternative energy forms, saying it would shave only 0.06% off economic growth. Do you agree with such an aggressive approach?

Shaving even .06% off of growth each year is actually a huge amount. In economic terms, it means you’re trying to keep temperature warming to about two degrees. That target requires an immediate, abrupt, and expensive transition to renewable energy, which is going to cost us somewhere around $90 trillion in present value. When you look at the present value of the benefits — which we may not reap for 100 years — they are less than a tenth of $1 trillion. That’s a very deep sacrifice today for a benefit we won’t see in our lifetime.

The second problem is that adaptation is underestimated by the United Nations. It’s hard for them to think that the world can adapt to anything beyond two degrees.

What options does adaptation offer?

Instead of holding warming at two degrees, we could be talking about four degrees. Most of the ecosystems on earth will do very well in a CO2-enriched, wetter world. If you go beyond four degrees it’s a different story. Then the damages start to get very large. But the cost of holding things at four degrees is closer to $10 trillion, which is a tenth of the cost of holding things at two degrees. Now you’re in a bargaining area, and yet the benefits are so much more.

If the world gets warmer by four degrees, we will adapt. Everyone will have an incentive to do so. Individuals will change their behavior, as will farmers and corporations. It may mean exercising in the morning, when it’s cooler, planting heat-loving crops, or building a sea wall. What the scientists are telling us is that the earth is not coming to an end, but it will be different.

What percentage of greenhouse gasses do we produce in the United States?

The United States is responsible for 25% of greenhouse gasses on the planet. China is responsible for another 25%. The European Union produces about 20%, and other emerging countries produce about another 30%.

Europe has talked about doing something dramatic, but they’ve cut only about 1% of their emissions. The U.S. and China have never talked about doing anything dramatic.

Why have governments been so slow to respond?

When it comes to mitigation they are slow to react because nobody wants to be first. And if the only thing on the table is two degrees and it costs $90 trillion, nobody wants to do it.

One of my goals is to get them to stop talking about two degrees and to start talking about four degrees. Now you’re down to a much more affordable budget that doesn't require radical changes right away. You have time to think it through, to make deals, and to figure out how you’re going to do it.

Do you think it’s important to look at things that can be done by 2020 or by 2100?

We do need to start right away. Every time we choose to delay, we have to settle for an even higher target, and that’s not in anybody’s interest. In another 20 years, four degrees will start to look expensive, and then you’re going to have to start talking about five degrees. That’s what I'm most worried about.

"There is no such thing as a silver bullet when it comes to capping emissions. It’s important to start now with things that are relatively cheap for us to do."

How do we go from recommendations to action?

If you pose two degrees or nothing, the planet has picked nothing. Unfortunately, we’re losing opportunities, even though there are a lot of inexpensive things we could do. We could do an awful lot of mitigation for $5 per greenhouse gas ton. It’s terrible to leave that on the table.

The problem is that if we take action today, the results aren’t felt for 100 years. Everything moves really slowly in earth systems. When the return isn’t faster, it makes it unattractive as an investment. That’s why programs of dramatic change aren’t winning any adherence. However, that doesn’t mean we can’t start doing inexpensive things that aren’t a deep sacrifice. And it’s not just Americans.

What is the best solution to capping emissions?

There is no such thing as a silver bullet when it comes to capping emissions. It’s important to start now with things that are relatively cheap for us to do. We should use solar, wind, geo-energy, and hydropower; cap the methane coming out of solid waste facilities; use shale natural gas rather than coal; and we should say yes to nuclear power in more remote areas of the United States. We’re trying to get every possible agent engaged, from every household to every firm. Starting modestly gives us time to change from being a fossil fuel economy to becoming a renewable resource economy. It also gives technology a chance to catch up.

Everybody can live with smaller changes, and it still allows countries to develop.

What can we do as individuals and does it make a difference?

You can look at your own carbon footprint. That’s useful to get a sense of what activities cause the most carbon and see where you can restrict yourself. By doing that you’re making the contribution that you ought to make if the planet was totally organized. In reality, if one person makes a change out of seven billion people it might not matter in the big picture, but it is doing the right thing. You’re leading by example, and the hope is that sooner or later everybody does the right thing.

Do you find that to be an environmental economist you have to be an expert in multiple fields?

Well, to do a very good job you really do have to be a good natural scientist, an economist, and have some political sense. We all have a role to play. Natural scientists link causes and consequences. The economist tells us the cost and benefit of different actions. Policy makers have to sit in the halls of Congress and iron out laws that get us there; negotiate with other countries to figure out what we can do together; and think about the future in a way that doesn’t sacrifice the present.

As a teacher, what still gets you up in the morning?

I love to get students to engage their minds, especially about the environment. Here’s something they care about and they can make a big difference.

I also love research. There’s so much of the world that’s not known and it’s really fun to try to figure out what we can understand about this huge, complex environment and how we can do a better job of managing it.

What do you hope your students will learn?

I’m hoping they take away how to think about these problems. As times change the solutions change, and they can make up their own minds about what are the right solutions. I’m also trying to teach them to keep their hearts connected to their minds, and look at the facts to make reasonable decisions given what they know about this problem.

I’m afraid the planet is caught up in two things: people ignoring this problem and focusing only on the short term; or people talking about completely turning the economy upside down. The truth is somewhere in between. A moderate policy that balances the costs and benefits is what we ought to be seeking.

Do you think it’s important to celebrate Earth Day?

Everyday is an Earth Day if you’re studying the environment. It’s incredibly important to live in the present. If it takes an Earth Day to wake up and say, “I want to see what’s going on in the environment,” then let’s do that. Let’s be aware of our environment. I wish we could have a day like that for everything.

One of the things you learn by evaluating the environment is that people really do care about it a great deal. They are willing to pay to protect it and it is worth making the investments to save the environment.

Mendelsohn is one of many Yale scholars and researchers studying issues of climate change and sustainability. The following is a look at just some of those experts and their discoveries.


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High-wire science: Doctoral student blogging from the forest canopy