Saturday, March 08, 2008

Undercover economist and climate change

Tim Harford, the undercover economist gives his view on the role of institutions in fighting climate change.

He floats the idea of the UK having an independent climate change committee (similar in its independence to the Bank of England and their fight against inflation.

His arguments are fine although of course largely meaningless for the reasons he eventually gets to in the final paragraph. The international nature of the climate change problem means no one country can make a unilateral difference.

Meltdown economics[FT]

So it is tempting to leap to the conclusion that the UK needs an independent environmental authority with sufficient credibility to fight climate change, just as we now have a central bank with the credibility to fight inflation.

There is something in that idea, but the MPC’s Dr Sentance is not so hasty, and rightly so. Climate change is a more complex, uncertain, and international problem than monetary policy; it will need a new kind of institution. Successful institutions do not spring up overnight. They evolve over time. Finding the right institution to fight climate change is going to be a matter of trial and error. It is time to start experimenting.


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