Natural Resource Economics Archives - Page 4 of 17 - An Economic View of the Environment

The Dean of Wine Economists Talks About the Impacts of Climate Change

The most climate sensitive sector of virtually any economy is agriculture, and of the many agricultural crops, surely one of the most sensitive to the climate is grape production for premium wines. The impacts will be different for different wine-producing regions, ranging from Bordeaux to the Napa Valley, and it will be good news for some regions, such as the United Kingdom, with its burgeoning production of excellent sparkling wines.

There is simply no one better in the world to talk about these impacts and what they mean for the wine industry than Orley Ashenfelter, the Joseph Douglas Green 1895 Professor of Economics at Princeton University, who virtually launched rigorous economic analysis of wine production and consumption. You can listen to our conversation in the latest episode of my podcast, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.” Our full conversation is here.

In these podcasts, I converse with leading experts from academia, government, industry, and NGOs. Orley Ashenfelter fits perfectly in this group. Beyond his Princeton professorship, he has served as president of the American Economic Association, the American Law and Economics Association, and the Society of Labor Economics, and was the long-time Editor of the American Economic Review (for 16 years!). He is a Member of the National Academy of Sciences, and a Distinguished Fellow of the American Economic Association, the American Academy of Arts and Sciences, and the Econometric Society.

Although he is very well known for his extensive research and writing in labor economics, econometrics, and law and economics, for those of us who are wine aficionados, he is celebrated for his pioneering work on the economics of wine. So, in addition to all of the positions I mentioned above, for purposes of this blog essay, it may be more important to note that he is the current president of the American Association of Wine Economists and my fellow Co-Editor of the Journal of Wine Economics.

When we discuss the relationship between global climate change, grape growing, and wine production, Ashenfelter remarks that there are already some “quite remarkable things happening,” because some grapes are adaptable to extreme weather. For example, he cites the Marquette and Frontenac grapes which have been hybridized to withstand the cold winters of Minnesota!

Ashenfelter also references his research on French grapes, some of which have actually benefitted from global warming.

“After 1980, there’s literally not a year in which temperatures dropped back into the levels they were in the summers of the 1960s and 70s,” he says. “The primary effect in Bordeaux has been much warmer summers, and the primary effect of that has been much better wines.”

Ashenfelter also notes that some of the grapes grown in northern Italy, which are sensitive to cooler summers, are performing better in recent years.

“You can see the prosperity [in that region]. They’re getting more wine at high quality,” he says. “Now the problem of course is that some places are already too hot, and you can see the adaptation going on … in Greece, where what people are trying to do is to grow grapes at higher elevations. Higher elevations get you a little cooler.”

“In Spain, there’s deep concern about it,” he continues. “The Torres family has bought a lot of property in the mountains of Catalonia, preparing for the possibility that they may have to grow grapes at much higher elevations if they want to keep growing the same grapes they have grown. What you do see is a little incursion of some of these hybridized grapes.”

Adaptation also brings its challenges, Ashenfelter emphasizes, particularly for European winemakers.

“The ability to be able to adapt is in some places going to be restricted by government regulations, and it may just be that over time, there’ll have to be some relaxation of those regulations as there has been for example, in Italy. It may just be necessary. The Americans are … more loose about this. We use place names, but we don’t have any requirement that a certain grape be grown in a certain place.”

Temporary heat spikes or extreme cold snaps also pose a threat to grape growers, because they are highly unpredictable, and their effects can be severe.

“Grapes do not do well above 95 degrees, and they don’t do well below 55 degrees. These 105-degree heat spikes, unless you just throw water at the plant, the plant will actually suck the juice right out of the grapes and leave you with nothing,” Ashenfelter explains.

“A vine takes five years to mature,” he continues. “It’s extremely costly when you get these giant, super cold spells. And we’ve seen them happen in places where no one really would’ve expected them in the past. I don’t know how much that is climate change or how much it is something else.”

For this and much more, I hope you will listen to my compete conversation with Orley Ashenfelter, the 34^th episode in the Environmental Insights series, with future episodes scheduled to drop each month. You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program. Previous episodes have featured conversations with:

Gina McCarthy, former Administrator of the U.S. Environmental Protection Agency
Nick Stern of the London School of Economics discussing his career, British politics, and efforts to combat climate change
Andrei Marcu, founder and executive director of the European Roundtable on Climate Change and Sustainable Transition
Paul Watkinson, Chair of the Subsidiary Body for Scientific and Technological Advice (SBSTA) within the United Nations Framework Convention on Climate Change
Jos Delbeke, professor at the European University Institute in Florence and at the KU Leuven in Belgium, and formerly Director-General of the European Commission’s DG Climate Action
David Keith, professor at Harvard and a leading authority on geoengineering
Joe Aldy, professor of the practice of public policy at Harvard Kennedy School, with considerable experience working on climate change policy issues in the U.S. government
Scott Barrett, professor of natural resource economics at Columbia University, and an authority on infectious disease policy
Rebecca Henderson, John and Natty McArthur University Professor at Harvard University, and founding co-director of the Business and Environment Initiative at Harvard Business School.
Sue Biniaz, who was the lead climate lawyer and a lead climate negotiator for the United States from 1989 until early 2017.
Richard Schmalensee, the Howard W. Johnson Professor of Management, and Professor of Economics Emeritus at the Massachusetts Institute of Technology.
Kelley Kizier, Associate Vice President for International Climate at the Environmental Defense Fund.
David Hone, Chief Climate Change Adviser, Shell International.
Vicky Bailey, 30 years of experience in corporate and government positions in the energy sector.
David Victor, professor of international relations at the University of California, San Diego.
Lisa Friedman, reporter on the climate desk at the The New York Times.
Coral Davenport, who covers energy and environmental policy for The New York Times from Washington.
Spencer Dale, BP Group Chief Economist.
Richard Revesz, professor at the NYU School of Law.
Daniel Esty, Hillhouse Professor of Environment and Law at Yale University.
William Hogan, Raymond Plank Research Professor of Global Energy Policy at Harvard.
Jody Freeman, Archibald Cox Professor of Law at Harvard Law School.
John Graham, Dean Emeritus, Paul O’Neill School of Public and Environmental Affairs, Indiana University.
Gernot Wagner, Clinical Associate Professor at New York University.
John Holdren, Research Professor, Harvard Kennedy School.
Larry Goulder, Shuzo Nishihara Professor of Environmental and Resource Economics, Stanford University.
Suzi Kerr, Chief Economist, Environmental Defense Fund.
Sheila Olmstead, Professor of Public Affairs, LBJ School of Public Affairs, University of Texas, Austin.
Robert Pindyck, Bank of Tokyo-Mitsubishi Professor of Economics and Finance, MIT Sloan School of Management.
Gilbert Metcalf, Professor of Economics, Tufts University.
Navroz Dubash, Professor, Centre for Policy Research, New Delhi.
Paul Joskow, Elizabeth and James Killian Professor of Economics emeritus, MIT.
Maureen Cropper, Distinguished University Professor, University of Maryland.

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.

U.S. Climate Change Policy in an Era of Political Polarization

Political polarization has reached alarming levels in the United States, with few moderates remaining in either the Republican or Democratic party who are capable of bridging the partisan divide on many, indeed most issues. Climate change – and more broadly, environment – is one such issue. I’m pleased to say that in the most recent webinar in our series, Conversations on Climate Change and Energy Policy, sponsored by the Harvard Project on Climate Agreements (HPCA), we featured a conversation with Congressman Garret Graves, a Republican from Louisiana’s 6^th Congressional district, who serves as the Ranking Member of the House Select Committee on the Climate Crisis. A video recording (and transcript) of the entire webinar is available here.

As many readers of this blog know, in this webinar series I feature leading authorities on climate change policy, whether from academia, the private sector, NGOs, or government. In this most recent Conversation, I was fortunate to engage with someone who has had solid and important experience in government.

While stating that climate change is a “huge problem” in need of innovative solutions, Congressman Graves makes the case for bridging political divides by aligning environmental sustainability with economic sustainability.

It is significant that Graves represents a district that has been and will be seriously affected by climate change. The region has lost more than 2,000 square miles of coastline to subsidence and rising sea levels, an area larger than the state of Rhode Island. “This is a huge personal issue for us…South Louisiana is a state that doesn’t have a large margin of error in regard to sea level rise.” he says.

Yet Congressman Graves also acknowledges that the political divides in Washington make it very difficult to agree on climate policies, noting that politics has become “a blood sport, with party first, and the country after that.” And he remarks that things don’t seem to be getting any better at the moment.

“I don’t see a trend in the right direction,” he says. “I think people are taking things that people used to be able to rally around, like kittens and dogs and apple pies, and found ways to make them partisan.”

Climate change is certainly one of those issues, the Congressman states, because the discussion has become more emotional than science- and data-driven. But he also notes that if politicians begin speaking about the issue with an eye toward the economic benefits of creating a more diverse energy portfolio, the issue may begin to gain traction among people in both political parties.

“If you bring up climate change and global warming, you’re going to have pretty different views among Democrats and Republicans. However, we have found that if you begin slicing it up into different components [you can achieve some consensus],” he says. “I can be in a room with some liberal folks and talk about the protection of communities and the resilience of ecosystems; it resonates, absolutely. And I can be in rooms with conservative folks talking about how we’ve funded these [climate-related] disasters over and over…and there are all sorts of studies…that have clearly shown how making investments in the front end in resilience or hazard mitigation more than pays for itself in the longer term.”

While Graves expresses his ambivalence toward instituting a national carbon pricing system, he speaks passionately in favor of investing in technological solutions that balance environmental with economic sustainability, including investments in wind, solar, and geothermal. The challenge, he says, is in understanding where the best returns-on-investments will be.

“We’ve got to do a better job now helping decision makers know where and how to most effectively use the tools available to where you get affordable energy, where you get resilience performance, and where you get lower emissions over the long run.”

Congressman Garret Graves also argues that small innovative businesses could play a significant role in helping mitigate the climate crisis in the coming years.

“That is exactly where the problem is going to be solved,” he remarks. “We are going to innovate our way out of this…[because] innovators have the opportunity to come in and disrupt.”

All of this and much more can be seen and heard in our full Conversation here. I hope you will check it out.

Previous episodes in this series – Conversations on Climate Change and Energy Policy – have featured Meghan O’Sullivan’s thoughts on Geopolitics and Upheaval in Oil Markets, Jake Werksman’s assessment of the European Union’s Green New Deal, Rachel Kyte’s examination of “Using the Pandemic Recovery to Spur the Clean Transition,” Joseph Stiglitz’s reflections on “Carbon Pricing, the COVID-19 Pandemic, and Green Economic Recovery,” Joe Aldy describing “Lessons from Experience for Greening an Economic Stimulus,” Jason Bordoff commenting on “Prospects for Energy and Climate Change Policy under the New U.S. Administration,” Ottmar Edenhofer talking about “The Future of European Climate Change Policy,” Nathaniel Keohane reflecting on “The Path Ahead for Climate Change Policy,” Valerie Karplus talking about “The Future of China’s National Carbon Market,” and Laurence Tubiana reflecting on “A European Perspective on COP26.”

Watch for an announcement about our next webinar. You will be able to register in advance for the event on the website of the Harvard Project on Climate Agreements.

A Particularly Valuable Perspective from Europe on COP26

In an essay following my return from COP26 in Glasgow, Scotland, and more recently in a Q&A in the Harvard Gazette, I offered my views on what happened (and what did not happen) at COP26 last month in Glasgow. But given the leadership of the European Union on climate change policy, a European perspective is exceptionally important. Fortunately, in the most recent webinar in our series, Conversations on Climate Change and Energy Policy, sponsored by the Harvard Project on Climate Agreements (HPCA), we featured a conversation with Dr. Laurence Tubiana, the well-known French economist who was France’s climate ambassador at the time of the negotiations that led up to the signing of the Paris Agreement in 2015. A video recording (and transcript) of the entire webinar is available here.

As you know, in this webinar series we feature leading authorities on climate change policy, whether from academia, the private sector, NGOs, or government. In this most recent Conversation, I was fortunate to engage with someone who has had solid experience in at least three of these sectors – academia, government, and the NGO community.

Laurence Tubiana, who received her PhD in economics from the Sorbonne, and served as France’s Climate Change Ambassador during the 21^stUN Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP21), when the Paris Agreement was signed, is currently CEO of the European Climate Foundation.

In our conversation, Laurence begins by maintaining that while the recent COP26 talks in Glasgow did not produce any breakthrough pacts, those talks represented a real step forward.

“We are making slow progress…130 countries have committed to a target net-zero [emissions] by 2050 or soon after,” she says. “Very few, almost none, are backed or substantiated by any kind of precise pathway to get there, so that is why short-term action is more important than ever.”

One positive development from Glasgow, Dr. Tubiana reports, was the commitment by the signatories to the Paris Agreement to update their Nationally Determined Contributions (NDCs) in time for COP27, scheduled for next year in Egypt (although it should be noted that the United States, the European Union, and the United Kingdom have subsequently indicated that they would not be producing new NDCs with enhanced ambitions one year from now). As I’ve written in my two previous blog posts, countries agreed to accelerate “efforts towards the phase-down of unabated coal power and inefficient fossil fuel subsidies,” and to try to increase their monetary contributions to developing countries to help them cope with the effects of climate change and make the switch to clean energy.

When I ask Laurence for her thoughts about the prospects for the multilateral development banks to contribute significantly to the climate change fight, Tubiana expresses some doubts.

“The international financial system nowadays is not fit for the problem of the climate challenge we face. We are talking about three to four trillion [dollars] a year in additional investment on the global level for this ecological transition and the international financial system is not responding and maybe cannot respond in this actual form,” she says. “So called ‘green finance’ is around two percent of the global financial markets, so with that we cannot respond [adequately] to the challenge.”

Tubiana lauds the dramatic speech delivered at COP-26 by Barbados Prime Minister Mia Mottley, in which she called upon those nations that have contributed most to global emissions to take immediate responsibility for the climate change challenge and to assist those nations most at risk. Mottley stressed that island nations suffering from extreme weather events every few years do not have the economic capacity to rebuild every time and to pay back the debts they would incur if they tried.

At the end of our conversation, when I ask about grassroots youth climate activism, Laurence Tubiana remarks that she understands their anxieties as they face a very uncertain future.

“They feel that their demonstration in the streets isn’t working enough. Governments aren’t responding to what they’re asking for,” she says. “We are failing them, and we are failing them not only because we aren’t active enough on climate change, but because we don’t offer them the political pathways to participate and make their voices hear in the political system.”

All of this and much more can be seen and heard in our full Conversation here. I hope you will check it out.

Previous episodes in this series – Conversations on Climate Change and Energy Policy – have featured Meghan O’Sullivan’s thoughts on Geopolitics and Upheaval in Oil Markets, Jake Werksman’s assessment of the European Union’s Green New Deal, Rachel Kyte’s examination of “Using the Pandemic Recovery to Spur the Clean Transition,” Joseph Stiglitz’s reflections on “Carbon Pricing, the COVID-19 Pandemic, and Green Economic Recovery,” Joe Aldy describing “Lessons from Experience for Greening an Economic Stimulus,” Jason Bordoff commenting on “Prospects for Energy and Climate Change Policy under the New U.S. Administration,” Ottmar Edenhofer talking about “The Future of European Climate Change Policy,” Nathaniel Keohane reflecting on “The Path Ahead for Climate Change Policy,” and Valerie Karplus talking about “The Future of China’s National Carbon Market.”

Watch for an announcement about our next webinar. You will be able to register in advance for the event on the website of the Harvard Project on Climate Agreements.