Adapting to Climate Change
Published August 3, 2021
Politicians and bureaucrats continue to favor costly regulations to mitigate the effects of climate change. But there is an alternative approach: human beings adapting to climate change in the face of changing prices. Government policies should focus on clarifying the true costs of climate change, encouraging people to adapt and make decisions based on clear price signals.
- How do price signals help people make informed decisions about the future?
- How do government policies obscure the true costs of climate change?
Debates continue over which policies are best suited to mitigating the effects of climate change.
Not surprisingly, politicians and bureaucrats favor regulations that cost trillions.
But there is a too-often overlooked alternative approach: human beings adapting to climate change in the face of changing prices.
Prices tell us a great deal about how people think the climate will affect their lives.
In other words, prices help us discover where the greatest risks are.
For example, the prices of oceanfront homes should reflect the risk that they may soon be underwater or require expensive technology to protect them.
Farms located in areas that may be prone to future droughts should be less valuable.
Meanwhile, properties in places with lower risks should be in higher demand.
But currently, government policies obscure the true costs of climate change.
Special interests have lobbied governments to subsidize risky purchases.
Governments subsidize flood insurance for ocean front properties and spend taxpayer dollars to keep the water away.
The result is that current prices poorly reflect future risks, leading people to have fewer reasons to change their behavior.
Instead, we need clear price signals that allow people to understand their future in the face of climate change.