Rollins College Rollins Scholarship Online Honors Program Theses Spring 2017 Climate Change Crisis: Prescribing Alternative Economic Policy Using An Austrian Framework Elina N. McGill Rollins College, [email protected] Follow this and additional works at: http://scholarship.rollins.edu/honors Part of the Agricultural and Resource Economics Commons, Economic Theory Commons, and the Environmental Studies Commons Recommended Citation McGill, Elina N., "Climate Change Crisis: Prescribing Alternative Economic Policy Using An Austrian Framework" (2017). Honors Program Theses. 47. http://scholarship.rollins.edu/honors/47 This Open Access is brought to you for free and open access by Rollins Scholarship Online. It has been accepted for inclusion in Honors Program Theses by an authorized administrator of Rollins Scholarship Online. For more information, please contact [email protected]. Climate Change Crisis: Prescribing Alternative Economic Policy Using An Austrian Framework Elina N. McGill A Senior Honors Proposal Submitted in Partial Fulfillment of Requirements of the Honors Degree Program Monday, May 1, 2017 Faculty Sponsor: Professor Martina Vidovic Professor Avraham Baranes Advisor: Professor Mike Gunter Rollins College Winter Park, FL i Abstract This paper reviews the literature surrounding climate change adaptation and mitigation to assess the possible contributions and limitations of heterodox economics to climate change policy. Through interdisciplinary research between economics and environmental issues, this paper aims to stress the importance of utilizing heterodox schools of economics to create more pragmatic and dynamic policy. The secondary aim is to use Austrian frameworks to contribute to the construction of feasible, efficient, and equitable climate change policy. This paper used qualitative and textual analysis of the Austrian schools of economics conceptualize possible policy responses to climate change. Research found that the Austrian prescription of privatized climate change policy, though robust in internal validity, fallaciously believes in the power of property rights and tort litigation to feasibly, efficiently, and equitably resolve competing interests regarding the use of natural resources. Further research is needed to implicitly analyze the values hidden within adaptation and mitigation strategies. The limits and values of the social system dictate the limits and values that are carried over into economics and thus, climate change policy. It is necessary to understand and predict how economic systems, social systems, and institutions will evolve as economic stability, social cohesion, and institutional cooperation will affect the limits of climate change policy. Findings suggest that policy should abandon ‘either/or’ solutions in favor of ‘both/and’ solutions to climate change. This paper is useful in understanding environmental economics and institutional structures and evolution. The research provides further insight into heterodox perspectives of environmental economics. Keywords: climate change, adaptation, mitigation, neoclassical economics, Austrian economics, carbon pricing ii Dedication For all those uneasy souls that wander in search of better ways of being human To all those diligently working to ethically steward the planet iii Acknowledgements First and foremost, I would like to thank Professor Avraham Izhar Baranes and Professor Martina Vidovic for their expert advice and charting the course for this difficult project. For sparking interest in alternative economics and laying the academic foundation for this paper, I would like to thank Professor C. Taylor. Thank you for showing me that you truly don’t know what you don’t know. I would like to express my gratitude for the contributions of the Harold Alfond Foundation. Without your generous support, this project and my scholarship at Rollins College would not be possible. I would like to thank Rayshaun Wagner for providing me with an unlimited supply of friendship, support, and encouragement. My gratitude is truly inexpressible. Thank you for being my steady anchor over the past four years. Last and certainly not least, I would like to thank my Mom and Dad for never saying no to buying me a book. Without your love, hard work, and sacrifice, I would not be where I am—or the person I am—today. iv Contents Abstract.......................................................................................................................................... i Dedication .....................................................................................................................................ii Acknowledgements .................................................................................................................... iii Contents ........................................................................................................................................ iv List of Figures.............................................................................................................................. vi List of Tables ............................................................................................................................... vi List of Acronyms ........................................................................................................................ vii Chapter 1 Introduction ..............................................................................................................1 Chapter 2 Methodology..............................................................................................................8 Chapter 3 Literature Review .................................................................................................. 15 Limits and Effects of Human Activity on the Planet ...................................................................... 17 The Ecological Footprint (EF) ......................................................................................................... 17 Carbon Dioxide (CO2) Emissions.................................................................................................... 20 The History of Climate Change Policy .............................................................................................. 23 Reports ............................................................................................................................................... 23 Parties and Party Groupings ........................................................................................................... 26 Policies and Protocols....................................................................................................................... 27 Adaptation Policy ................................................................................................................................. 29 Agreeing on a Precise Definition of Adaptation ........................................................................... 29 Creating Equity in Adaptation Policy ............................................................................................. 30 Mitigation Policy .................................................................................................................................. 33 Carbon Pricing ...................................................................................... 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The Economics of Climate Change .................................................................................................... 39 The Calculated Cost .......................................................................................................................... 40 Austrian Economic Principles ......................................................................................................... 42 Chapter 4 Findings .................................................................................................................... 50 Purpose and Organization .................................................................................................................. 50 Concerning Initiated Climate Change Policy................................................................................... 52 Science ................................................................................................................................................ 52 Adaptation & Mitigation .................................................................................................................. 56 Explain Mainstream Economics’ Sufficiency................................................................................... 61 Analyze Austrian Economics .............................................................................................................. 62 Policy Construction .............................................................................................................................. 63 v Chapter 5 Discussions .............................................................................................................. 65 Neoclassical Economics’ Sufficiency ................................................................................................. 65 Proposed Austrian Environmental Policy ........................................................................................ 69 Chapter 6 Conclusion ............................................................................................................... 78 Works Cited ...............................................................................................................................