Environmental concerns and economic growth: holding governments accountable

Nobel Laureate Bengt Holmström calls it the movement of a generation and compares it to protests against the Vietnam war and the Russian occupation of Czechoslovakia. “I think it had a powerful impact on how the society was changing at the time,” he says. “A single person can have an enormous impact.”

Greta Thunberg’s Fridays for Future movement is proof that her generation is speaking out against injustice en masse. However, as millions march to keep their governments accountable, those governments still need to respond with definitive action.

Huge pledges, according to Holmström, sometimes do very little to move the needle. “I would like to start small and show that something works. Do something that is visibly working and actually then can be scaled up.”

He says he’d like to see Europe and the U.S. especially come up with an actual plan, rather than just making vague commitments. “Yes, we can have the goals — 2050, it should be neutral,” he says, “but I very much fear that somehow you set it far out and then people say, ‘OK. So that will take care of itself because now we have said it.’”

Carbon pricing is blocked by politics, not by complexity, argues fellow Laureate Jean Tirole. “The problem is in part political because we know to solve it — because we have solved other environmental problems in the past very well. You just price things.”

The burden of taking action also has to be shared proportionally, says Michael Kremer, who won the Nobel for his work on alleviating global poverty. “We’re already seeing climate change — some of that’s inevitable, and we have to help people deal with it. And those of us in the rich world have all sorts of ways to deal with it. They’re not perfect, but we have some protection. In the developing world, there’s often very little.”

He argues for using individual power and wealth to hold governments accountable. Many people in the developing world don’t have that kind of power but suffer disproportionately from the effects of climate change.

Education, says Tirole, is key. “A democracy can’t function unless there is some kind of knowledge. And that’s why we also have a duty to share our knowledge not only with experts but also with the people in general.”

Right now, says Tirole, “we are selfish with respect to future generations. They don’t vote. So they don’t count. And that’s terrible. The Paris agreement in 2015. If you read it, it’s very similar to what was written in Rio in 1992. We have been knowing about that for a long time and we are doing nothing.”

Leading economists agree that the state of the world makes it difficult to move ahead with greater commitment to action. “We have rising nationalism,” says Michael Spence. “That doesn’t mean I don’t think we’ll get the job done, but it’s slowing us down. I think of this as a race between economic growth and changing the growth model enough to reduce the carbon stock. Right now, I don’t think we’re exactly winning the race.”

Democracy is vital to solving the climate crisis. Politicians making vague promises and commitments need to be held accountable by their citizens. Citizens who care about the planet’s future need to elect officials that are going to move the needle on climate change, rather than deny it, says Tirole. “Hopefully, we’ll get more reasonable regimes who actually want to do something about the climate.”

Holmström says that the climate movement is shifting things in the right direction, “The young people are going to play a big role because they can put their energy into it. It’s their future.”

Norwegian economist Finn Kydland notes that depending solely on governments to fix the issue isn’t realistic. “I’m not that optimistic about the politicians,” he says. Still, he doesn’t discredit that something can be done, citing the example of his home country. Even though Norway has a domestic fossil fuel production industry, politicians still chose to incentivize a move away from their use.

The government introduced a subsidy for electric car purchases, and then set up electric car-only lanes in cities. “That combination of cheaper vehicles and the convenience of being able to get faster to your destination turns out to be an incredibly popular measure.”

Nobel Laureate Christopher Pissarides reminds us that ultimately, climate issues can’t be bounded by international borders. Countries must understand, he says, “that when they do something that influences someone else’s air and environment and well-being, they take it into account.” We shouldn’t be too critical, he says, and remains optimistic. “I don’t really subscribe to those that say, ‘earth is finished, forget about it.’”