The microeconomics of adaptation. A tradeoff: $20 billion upfront investment lowers liability risk associated with fires.
PG&E to Bury Power Lines in Fire-Prone Areas wsj.com/articles/pg-e-…
PG&E to Bury Power Lines in Fire-Prone Areas wsj.com/articles/pg-e-…
A key point here is "who is at the margin". There is a menu of adaptation steps that people and firms can take. In this case, PGE can submerge its power wires. If one takes such steps then "the damage function" caused by climate change is flattened. (1/2)
A key point is that our menu of adaptation strategies increases every day due to innovation and new markets. This accelerates the pace of climate change adaptation. Prof. Nordhaus and the modern macro climate scholars abstract from all of this. I don't.
amazon.com/gp/product/B08…
amazon.com/gp/product/B08…
As I discuss in my book, we will soon see entire new occupations emerge where young people focus their human capital in learning how to solve climate change adaptation problems. Since climate change is scary, this will be profitable. The ideas of Lucas and Romer matter!
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