Ken Arrow on climate change

1972 Nobel Economist Ken Arrow, whom I met recently at a talk by Tad Homer-Dixon at Stanford, explains why climate change is the quintessential global public good (bad):

Two factors deserve emphasis, factors that differentiate global climate change from other environmental problems. First, emissions of CO2 and other trace gases are almost irreversible; more precisely, their residence time in the atmosphere is measured in centuries. Most environmental insults are mitigated promptly or in fairly short order when the source is cleaned up, as with water pollution, acid rain, or sulfur dioxide emissions. Here, reducing emissions today is very valuable to humanity in the distant future. Second, the scale of the externality is truly global; greenhouse gases travel around the world in a few days. This means that the nation-state and its subsidiaries, the typical loci for internalization of externalities, are limited in their remedial ability. (To be sure, there are other transboundary environmental externalities, as with water pollution in the Rhine Valley or acid rain, but none nearly so far-flung as climate change.) However, since the United States contributes about 25% of the world’s CO2 emissions, its own policy could make a large difference.

In sum: the U.S. can and should act unilaterally on abating GHGs, but global collective action is also necessary.