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The "fine" economists ignore the climate

11 November 2019

Economists are failing human civilisation! History will judge our slant hard! The accusation comes from two of Europe's leading economists who discovered that hardly any climate-related research was published in the world's leading economic scientific journals. Is it really that bad? And what does that mean for climate work and for the transition to sustainable shipping?

”Economic forces have largely created the carbon dioxide problem, yet currently our discipline is hardly visible.” In an article in the policy magazine Vox EU, Nicholas Stern and Andrew Oswald attack their own slant's inability to deal with the issue of climate change.
They do this after counting how many articles that have dealt with the issue in the nine main economic journals. In the world's most-cited journal in the field, the Quarterly Journal of Economics, they did not find a single one. In the remaining eight they found 57 articles. Of 77,000!

While economists have left a walkover, nature scientists have done their job, according to Stern and Oswald. But in order to reduce emissions by 40 percent in the next few decades, which scientists have calculated is a requirement if we are to have a chance of limiting warming to 2 degrees, economists must also enter the game. The goal cannot be achieved without laws and financial incentives being put in place - which is hardly the task of the natural scientists. ”It is time for our profession to live up to its responsibilities. If we do not move quickly, we think the discipline will be judged harshly by the humans of the future – including by our own offspring.”

So it is up to the economists whether the world should be saved. Or? Thomas Sterner, a professor of environmental economics at the University of Gothenburg, believes that the absence of environmental research in economics has a certain impact on reality, but that it is primarily a professional problem. Environmental researchers are more or less excluded from the leading economic scientific journals.

”They don't publish our articles. I do not know why. Either we are not as good as others or maybe they think that we who write about environmental issues have an activist attitude and want to solve world problems, which may disqualify us as researchers in their eyes”, Sterner says.

He describes it as a vicious circle. Environmental research is needed and many students are interested. At the same time, it can be difficult to choose a path that is not good for one's career opportunities. Those who want to make an academic career must publish themselves in the right scientific journals.
”Let’s not exaggerate how much politicians listen to scientists, but it is clear that this is not good. In the long run, the field of economics may have a worse reputation and politicians who care may listen more to scientists.”

He mentions last year's Nobel laureate in economics, William Nordhaus, who received the award for a model that shows that it is far too expensive to limit the heating to 2 degrees. Economically the most optimal is 3,5 to 4 degrees.

”It's a strange conclusion, and I've heard several scientists say: "But he's just an economist, albeit a Nobel laureate," Thomas Sterner says and continues:
"Me and several colleagues have written an article using his model DICE to explain why there is such a big difference between his optimum temperature and the Paris agreement. We do not even send it to an economic journal, but to a natural science journal.”

Of these 57 articles related to the climate, Nordhaus has, of course, written a considerable amount. The rest, Thomas Sterner estimates, have been written by a very limited number of researchers.

"The Nobel Prize in economics is a prize in economics and, to a certain extent, behavioral science," Johan Woxenius, professor of shipping economics & logistics at the University of Gothenburg and a member of the Lighthouse program committee, says. Business economists are not included in the selection.

The high-ranking journals are nothing he reads himself, and probably not politicians either, maybe their advisers.
”I don't expect to find anything particularly useful there. It is a small elitist selection of journals where very theoretical, quantitative mathematical or statistical relationships are published according to an Anglo-Saxon ideal.”

Applied research, his own field, can be found in domain-specific journals. And it is also in them that he publishes his own articles, for example in matters relating to shipping and transport.

” There you will find much more economics research on climate and the environment. Those journals have a greater relevance requirement. High-ranking magazines easily create an elitist and conservative group around them. It's like an opera house’s experimental performances that should be a little more artistic and attract a smaller audience, but the opera also needs to play musicals with a wider audience to make the business run. The applied research is like a musical in that sense.”

Like Thomas Sterner, Johan Woxenius thinks that it is a problem that young researchers are more or less forced to follow a template set according to the conservative ideals of a few dominating journals.

”Of course, it consumes a lot of resources, but it is a too far-reaching conclusion to say that all economic science fails because of this. Magazine hysteria itself is a problem in academia and certainly, if everyone runs after publishing themselves in high-ranking journals and these do not change their ideals or set higher relevance requirements - then we will have a huge problem.”

Claes Berglund, responsible for societal and environmental issues at Stena and chairman of the European Community Shipowners' Associations  (ECSA) for the next two years, thinks there is a point in Stern and Oswald's criticism, but that it may apply to other industries more than shipping.

”We have strong global governance in the form of a decision-making body, IMO, which sets up the regulations. Within the IMO, quite a bit of work is being done to reduce carbon dioxide emissions. The goals are set and now we are discussing how to achieve them.”

To make an example of that the regulations are actually he mentions that ships built from 2013 and onwards must meet the requirements of  IMO's EEDI, the Energy Efficiency Design Index.

”These kind of regulations, of course, exists within the automotive industry as well, but these are regional or local regulations.”

But maybe shipping would benefit from thinking more in terms of economics, Claes Berglund says.

”For an example, when it comes to BIMCO's proposal for slow speed to reduce emissions. How does this affect countries that have a long trade distance? What are the advantages and disadvantages? There is very little research done on this.”

Footnote: Lighthouse recently launched a feasibility study "Consequences of speed regulations for shipping" to contribute to the ongoing discussion on how maritime climate goals should be achieved. The study is conducted by IVL Swedish Environmental Institute and the School of Business, Economics and Law at the University of Gothenburg with participation from the shipping industry.
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Read the article in Vox EU here

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