GLOBAL warming could have the same economic effect as the Great Depression
Pastor Dale Morgan
GLOBAL warming could have the same economic effect as the Great Depression*
By Denis Peters
May 06, 2008 08:20am
Article from: AAP
GLOBAL warming could have the same economic effect as the Great
Depression if handled poorly, the Government's top climate change
adviser says.
Professor Ross Garnaut has written an article saying that poor design or
slowness in implementing climate change-easing policies could spell the
end of what he calls the Platinum Age.
The economist's article, published in the Australian National
University's biannual Asian-Pacific Economic Literature, says the shock
of unexpectedly large climate change impacts on fragile political
systems could bring about sharp downturns in economies.
The effects of the 1890s depression in eastern Australia, the global
Great Depression of the 1930s and the financial crisis in Indonesia in
1997 were examples of what could happen if climate change impacts hit
hard, he said.
"The Platinum Age could be disrupted also by poorly thought out
approaches to climate change mitigation," Prof Garnaut said.
"The costs of climate change mitigation in practice would ... depend on
the nature of the policies applied to it and the manner of their
implementation."
He said costs would be minimised within steady policies which, over long
periods, provided incentives that placed the full external costs and
benefits of their decisions with private citizens or businesses.
Such policy approaches would allow private decisions to shape the
processes of change efficiently within market contexts, Prof Garnaut said.
"Poor design, or tardiness in implementation, would increase the costs
of mitigation immensely and compromise the mitigation effort," he said.
"Progress that is judged later to be inadequate is likely to be
associated with policy panic, instability and belated concentration of
adjustment into disruptively short periods."
He said interference by powerful interest groups purely for their own
benefit was a potential problem.
"There is also the ever-present danger of mitigation policies - with
their potential to have large effects on the distribution of incomes -
being encrusted with the usual political economy of rent-seeking
behaviour by vested interests and becoming intertwined with the familiar
distortions in public policies related to trade and investment," he said.
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