Green policies could prove a tonic for the ailing global economy, according to Nobel economics laureate Joseph Stiglitz.
In a lecture at the Reserve Bank yesterday, the former World Bank chief economist said the need to switch to green technology should be seen as an opportunity and not a burden. “Some of this way of thinking – of focusing on the costs and not the opportunities – has contributed to getting us bogged down,” Stiglitz said.
He was referring to the failure to achieve an international agreement on how to curb greenhouse gas emissions, which are changing climate patterns around the world.
He argued that a switch to green technology would stimulate demand for a range of goods and services, which would have a beneficial impact in the aftermath of the global recession. And he urged policymakers not to be held back by short-term perspectives.
Weak demand has been slowing the recovery from the 2007/08 recession. And he maintained that green policies should be seen as complementary to other measures applied to stimulate economic growth.
Stiglitz is a member of Economic Development Minister Ebrahim Patel’s economic advisory council and he is in South Africa to address a poverty summit tomorrow.
“Climate change is real, it’s big, it’s going to have an enormous effect on everyone all over the world,” he said. “We are probably already seeing manifestations of it, like the floods in Australia.
“The only uncertainties are about the pace – it seems to be happening faster than we expected – and the full economic consequences. But they will be severe.”
Among the consequences will be the need to relocate coastal cities before they are submerged by rising oceans, as the polar ice melts.
He pointed to the success of international efforts to repair the ozone layer when holes were detected decades ago. He described the rescue initiative as “enormously successful” because trade sanctions were applied to countries that did not conform with measures to reverse the process.
But that success was relatively easy to achieve, according to Stiglitz.
“Holes in the ozone layer were caused by a harmful chemical and there were only a few producers responsible. In the case of global warming, some of the most powerful interests are involved: oil companies and coal producers who don’t want to see any change.”
He described global warming as “the best example of externalities”. In other words, the cost involved of contributing to global warming is “external” to those producing the carbon emissions and is borne by others. So measures to slow global warming are often opposed or get only half-hearted support.
“There are no incentives to alter behaviour. People in the US and China don’t see the connection between their behaviour and the fact that there are countries that will be under water in 75 years.”
For this reason, he stressed the need for global agreements and national actions to bring about a big change in global behaviour to achieve a cut of 80 percent in global emissions. And the cut would have to be even bigger in the US, he noted.
Stiglitz said governments had an important role to play – “there are a range of ways in which governments can support the private sector” – as well as the private sector.
“For the last 75 years, business has focused on how to save labour. They have worked hard and been very successful creating innovations to save labour. But there has been little innovation in how to save resources. As a result we have a surplus of labour and a shortage of resources. If we used the same ingenuity to save the atmosphere we will have success.” - Business Report