Cost of climate change and air pollution: Michael Greenstone on Big Brains podcast

Show Notes

As climate change continues to stir concern and debate around the world, Prof. Michael Greenstone knows the importance of using his research to better explain the connection between the environment, health and global energy. The challenge for he and his colleagues at the Energy Policy Institute at the University of Chicago (EPIC) is waiting for others to put that information into action.

“I’m in charge of my research, and I’m not in charge of the world,” Greenstone said of Big Brains. “What we can do as scientists is make sure that the information is being articulated as clearly and in an accessible way as possible. It’s ultimately up to societies to judge what they’re going to do with it.”

Greenstone’s work has already had global impact. He and his EPIC colleagues developed a new pollution index that found air pollution cuts the global life expectancy by nearly two years. The Air Quality Life Index establishes air particulate pollution as the single greatest threat to human health globally.

On this episode of Big Brains, the environmental economist discusses how the global energy challenge is one of society’s most important problems and something he calls “the social cost of carbon”—the most important number you’ve never heard of when it comes to climate change.

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Transcript

NARRATOR: From the University of Chicago, this is Big Brains with Paul M. Rand, conversations with pioneering thinkers that will change the way you see the world.

PAUL RAND: If you're like me, thinking about climate change can get pretty overwhelming, pretty quickly. But economist Michael Greenstone is trying to change that using his research to better explain to the public the connection between the environment, health, and global energy. I learned a lot from Michael including something called the social cost of carbon, which he calls the most important number you've never heard of when it comes to climate change.

RAND: As helpless as I sometimes feel when thinking about the future of our planet, I think you'll come away from our conversation as hopeful as I did. And remember, if you liked this episode, please rate and review Big Brains wherever you listen to podcasts.

RAND: Folks, we are delighted today to have with us Michael Greenstone, who I've met on a few different occasions. I've always enjoyed when you speak because you're really talking about environmental economics and the implications of climate change. Is that a major driver of your work?

MICHAEL GREENSTONE: Climate change is central to what I do. I have a-- leading a big team called the Climate Impact Lab where we're trying to estimate what the cost of climate change will be. My starting point is it's not very useful to say the planet's going to warm by two degrees Celsius. For many reasons, most Americans are stuck on Fahrenheit. I certainly have a hard time going between Fahrenheit and Celsius.

RAND: Right.

GREENSTONE: But that doesn't say anything about how their lives are going to change.

RAND: OK.

GREENSTONE: And so what we're trying to document and measure and project is what will be the impacts on the number of very hot days. What will be the impacts on mortality rates, on crop yields, on labor productivity, even violence, a whole variety of outcomes? And the aim is to wrap all that up and develop a new measure of what the cost of climate change will be, which inside my little cell of environmental economists, we like to call the social cost of carbon.

GREENSTONE: As I like to say, the social cost of carbon is the most important number that you've never heard of. And the reason is because it tells you how expensive releasing an extra ton of CO2 will be in terms of the damages that it will do today and tomorrow. It gives you a bright line on how much society should be willing to pay to get rid of that extra time.

RAND: Talk to me about what EPIC is.

GREENSTONE: So the Energy Policy Institute at Chicago is a group of researchers, which I directed, but it's a group of researchers who-- the faculty in the Booth School, and the economics department, and the Harris School, and the law school, and some from the sciences as well, all of whom I think believe that the global energy challenge-- they might all define it slightly different than I have-- but they believe that the global energy challenge is one of society's most important problems, if not the most important. And we've tried to create this tent where people want to be inside it, and at the heart of that is the thing that every faculty member wakes up every single day hoping that they're going to do, which is uncover something new about the world.

GREENSTONE: And so we're all trying to do that. And then what I'm really insistent on is that we try to make sure that those ideas get communicated outside of our little circle. I think there are so many great ideas being created inside academia that are stuck in small groups of 20 people talking about them, and you can see why it happens. Like, we're not chosen for our ability to communicate out to the broader world. We're chosen for our ability to actually communicate inside that little group of 20 people.

RAND: Right.

GREENSTONE: So we have put together, I think, teams where the explicit aim is to, without compromising the integrity of the research and make sure it's communicated accurately, also make sure it's communicated in an accessible way.

RAND: What are the things that tend to resonate the most? Because everybody seems to really understand there's a problem, but deciding to act on it becomes a very different animal.

GREENSTONE: This group that I'm co-leading, the Climate Impact Lab, our thesis is, one, that we need to develop a rigorous and reliable estimate of the social cost of carbon. But two, I think climate change and its impacts have been articulated in ways that don't resonate with people very well.

RAND: OK.

GREENSTONE: So a second aim is trying to provide hyper-localized estimates of what climate change will mean in communities around the world. And so we've divided the entire planet into 25,000 regions, which effectively like a US county. And we're developing estimates of what the impacts will be on mortality rates. So when there's very hot days, there's higher rates of mortality, on sea level rise, and storm surge, and what that will mean for property values.

GREENSTONE: And what we want to do is to provide this information at the level of Cook County, where we're sitting. And my belief is that that will energize people and get them to think harder about climate change, A. And B, it will also just plain help local communities start to prepare and adapt. We are climate-- the climate is changing, and this will help people figure out what's the best way to protect themselves against the changes that are coming.

RAND: When we look and say that the world is expecting to need another 40% increase in energy over what it's using today over the next two decades, that's a pretty big deal, especially given the state of the world. Is that of concern to you?

GREENSTONE: No, it's not a concern. I think we should celebrate that the world is going to use a lot more energy. And the reason we should celebrate is there's lots of places in the world that are surviving on, and certainly not thriving on, very low levels of energy. Sometimes you get numbers in your head that you can't forget about, and the number that I can't forget about is per capita electricity consumption in Bihar, India, which is home to about 100 million people, is 140 kilowatt hours per year. To put that in context in the United States, it's about 13,000. So they're off not by one zero, but they're off by two zeros. And living at 140 kilowatt hours per year, all kinds of nasty things come along with that.

RAND: Such as?

GREENSTONE: Well there's no heating and cooling. There's effectively no heating and cooling that comes with it, and Bihar is a hot place. The mechanization that has driven our economy and allowed for high levels of living standards in the United States and many other countries, a lot of that just doesn't exist in Bihar. And I think what they would really benefit, the 100 million people who live there and in other parts of the world that face similar circumstances, are large increases in energy consumption.

GREENSTONE: Focusing on places like Bihar is very tempting to only think about that. It's very tempting to, with a different part of your brain, to only think about climate change, and it's very tempting with a third part of your brain to primarily think about environmental problems like pollution and health consequences. And I think the theme that I'm trying to communicate with my research is that if you take each of those problems separately, well society will never be able to address them effectively. And the reason is that they're deeply intertwined. So while Bihar needs a lot more energy consumption, market forces pushed-- are pushing them and everywhere else in the world to primarily rely on fossil fuels. And the reason is those fossil fuels are very inexpensive--

RAND: OK.

GREENSTONE: --coal, oil, and natural gas, but they are all expensive in a private sense. They come bundled with all kinds of undesirable forms of air pollution that causes people to lead shorter and sicker lives, and they also increase the odds of disruptive climate change. What I see is that the global energy challenge is a way to try and focus on all three of those goals at once, and it will necessarily involve trade offs. That's the painful part.

GREENSTONE: It's not hard to think of policies that would increase access to energy for everyone, but that might also have health and pollution and climate problems associated, or you know, the best way we could get rid of climate change would be to ban all fossil fuels around the world, but you'd be missing all the damage you'd be doing to people's well-being by raising their cost of energy. So what I think I can contribute is help elucidate and articulate what some of those trade are between achieving-- trying to make progress on all three of those goals, noting that you can't do all three-- it's very rare that they'll be circumstantial. You can-- one policy would make progress on all three of them.

RAND: And they're going to shift over time, aren't they?

GREENSTONE: Yeah, they're going to shift over time. And you know as societies get richer, I think their judgments about how to make trade offs against air pollution and economic growth and energy consumption will change. And keeping a sharp light on what those trade offs are and how they vary around the world, I think that's something that I can offer.

RAND: It sounds like what you're trying to do is to figure out how to give the world and its people the energy it needs, but do so in a way that is not only affordable but the least detrimental if not positive even for the environment.

GREENSTONE: Yeah. I think that is what I like to think of as the global energy challenge. How do we balance the need for access to inexpensive and reliable sources of energy while also limiting the health consequences of pollution associated with energy consumption and mitigating the odds of disruptive climate change?

RAND: If we're talking to folks that are listening to this podcast right now, and again the question of well what do they do with this information? If I walked out of here and I said, well I'm better informed, but I'm not sure what to do with it.

GREENSTONE: So now we're going to enter the dreamland where economists don't just measure things and analyze them. We'll talk about what you might do with that information. I think the first and most important thing to do would be to create a level playing field for different energy sources. The price of buying electricity that was produced from coal would reflect-- would be higher, and it would be higher to reflect the social cost of carbon and the health damage associated with air pollution. Same with natural gas. By comparison, the renewable or low-carbon energy sources including nuclear would not face the same penalty, and that would level the playing field, and I think we would end up making different choices.

RAND: OK.

GREENSTONE: And the important point I want to make, though, is that that would alter the sources that we buy, but I think people get somewhat sanguine about the current situation. It's not that we're not paying those prices right now. We are paying them. We're just paying them in a very opaque way. We're paying them by getting sick earlier, our children getting sick, or dying at an earlier age due to air pollution, or paying them in the future through the consequences of climate change.

RAND: Right.

GREENSTONE: Another one, I think there's lots of room for innovation in policy that gives us better tuned policies. I'm conducting-- I've conducted some work hand-in-hand with governments around the world and throughout the United States trying to devise new ways to enforce environmental regulations in a more efficient and effective way.

RAND: If you think about the world's receptivity to the need to do more, and I think one of the challenges you hear people talk about is feeling as if that what they can do individually is inconsequential to something that seems like an overwhelming problem. How do you see that needle moving in terms of paying attention to this in the right ways?

GREENSTONE: At the end of the day, we really do get the government we demand, and I think it's up to people to say that, yes, I care about leveling the playing field, or I don't. There's a very important example of that actually from a setting that many people might be a little surprised by, which I've recently done some work on. If you think back five or six years ago, China was single-mindedly focused on economic growth.

GREENSTONE: And then something happened. People there got very concerned about air pollution and the health consequences of that. I think there were several things that helped set it off. The reporting of the air pollution concentrations on top of the U.S. embassy certainly and then that got on Twitter and the Chinese equivalent of that. I also published a paper that demonstrated what the loss of life expectancy in China was due to air pollution. The finding of the paper was that people who live in northern parts of China where there's higher levels of air pollution live five years less than people who live in the southern part--

RAND: You can get your arms around that can't you?

GREENSTONE: Yes. The five-year people can relate to that.

RAND: Yes.

GREENSTONE: I've had students, Chinese undergraduates, come to my office and say, you know my mother said I had to meet the five-year guy. I don't want to pretend that an academic study drove the leaders of China all by itself, but maybe it played some small part. Then it was really kind of amazing what happened. They declared a war on pollution, and now we're five years later, and they've had I think country-wide about a 25% reduction air pollution. If you want to benchmark that, which I tried to do, if you look at the beginning of the Clean Air Act in the United States, it took about 12 or 13 years of enforcement of the Clean Air Act to get a 25% reduction in pollution, and that included two vicious recessions--

RAND: Right.

GREENSTONE: --during that period which obviously played some role in the reduction of pollution. And China did all that while continuing to grow and in just five years.

RAND: If you were the guy making the rules for the world, whatever position that would entail, and you said, you know this is how I propose we level the playing field. What would that look like?

GREENSTONE: You know, I'm in charge of my research, and I'm not in charge of the world. But I think-- I really do think that what we can do as scientists is make sure that the information is being articulated as clearly and in an accessible way as possible, and then you know it's ultimately it's going to be up to societies to judge--

RAND: What they're going to do with it.

GREENSTONE: --what they're going to do with it. So I think, you know, and societies my judge it as something we don't want to do. And I may agree with that. I might disagree with that, but that's not my job.

RAND: Understood.

GREENSTONE: My job is to uncover what's going on and communicate that. And I think you know sometimes people can bleed into thinking that their job is more than that but, what I'm good at is-- or what I try to be good at is uncovering what's true and then communicating. Societal judgments? That's what we hold elections for.

RAND: You're one of the unusual folks probably here on campus that actually was born and raised in Hyde Park. Is that correct?

GREENSTONE: Yes. So actually I grew up-- let me just confess. I'm a third-generation faculty member at the University. My grandmother was a World War II escapee from Germany who got her PhD in the very last days that it was safe to be in Germany as a Jew, and came to the United States, and got a faculty position, eventually tenure, and the whole deal.

RAND: Here at the University?

GREENSTONE: Yeah. In the psychology department. Her name was Erika Fromme, and she and my grandfather had one child who went to the Lab School, went to Hyde Park High for high school, and then got her B.A. and her PhD from the University of Chicago, and eventually married my father who was on the faculty of the University of Chicago in the political science department. So my ties and love for the University of Chicago--

RAND: Pretty deep.

GREENSTONE: --are pretty deep.

RAND: Yes they are.

GREENSTONE: And having grown up on the south side of Chicago, the issue that really animated me were kind of issues, questions of race and questions of poverty, and my parents had sent me to the Chicago Public Schools, and that was kind of an outlier among faculty brats, and it was a very eye-opening experience. I'm not sure I was conscious of it, but I think I've been trying to navigate between my two parents my whole life in some way or another, my dad who is an academic who was a deeply committed to research and development of ideas and things like that. And I always admired that. I wondered, well gosh those ideas, how are they interacting with the larger world? And my mom who was-- you would ask her what she believed in, and before you could breathe she would say she believed in social justice.

RAND: OK. [LAUGHTER]

GREENSTONE: I don't know. I had a hard time sometimes figuring out what social justice was, but I could see-- or you know what has-- or what I can now see what was evolving was like an opportunity to try and find the intersection--

RAND: OK.

GREENSTONE: --of those two things. So I went to Princeton which I thought was the best place in the world to study or one of the best places in the world to study labor economics and poverty. And I went about doing all the things you're supposed to do. I learned all the tools of labor economics. And then I could just never find a question that--

RAND: Was big enough for you.

GREENSTONE: --that was big enough, and or that I thought I could gain a lot of traction on.

RAND: OK.

GREENSTONE: And like a lot of graduate students, I was casting about and I just kind of bumped into a series of environmental questions where I felt like there were-- these questions were very-- had large societal impact. I was looking for something that could--

RAND: That you could sink your teeth into.

GREENSTONE: Yeah. Yeah. And it down line might have some-- make the world a better place, as I said in the kind of corny way before. And eventually I just bumped into a bunch of environmental questions. And those questions, it felt to me, were largely, not entirely, largely being answered by people who had a stake in the answer.

RAND: Oh.

GREENSTONE: They were either people who just believed in the environment per se or industry. And the kinds of tools and dispassionate analysis that I thought initially attracted me to labor economics, and characterized labor economics, those were not being applied in the same way. And I just saw like an arbitrage opportunity. Like--

[LAUGHTER]

GREENSTONE: --here is a chance to bring all these tools I learned and apply them to this set of questions where I don't, I think, largely they have not been applied. Other tools had been applied inside environmental economics but these kind of empirical tools had not been applied.

RAND: Well, I think that you've certainly made a commitment to not only doing the research, but to actively figuring out how to communicate that. What kind of value have you found, and what have you learned about that?

GREENSTONE: So a big part of it, as you said, getting and analyzing the data, and the second is trying to find ways to communicate it so that it's not just a conversation between myself and my 20 closest environmental economics friends.

RAND: Right.

GREENSTONE: And in fact, I'll say I am something of a reluctant academic in the sense that I was concerned that going into academia would effectively be a conversation between 20 people. And I enjoy those conversations. I benefit from them. I learn from them. But I think it's also-- or I aspire for this work to also have a broader societal impact and to make people's lives better. Look, this job I have is incredible in the sense that what is my job? It's to go think about things and try and understand the world in a better place. So I think to myself, my goodness, what a rich society we must have where anyone could be employed doing that. Like I am--

RAND: Paid for ideas.

GREENSTONE: Yeah, and I don't think it's unreasonable for society to expect universities to pay back a little bit, and I think one not very difficult way to pay back is that the knowledge and the ideas that are being created can be explained to the outside world in a way that is easily understood. And I think this, my desire for ideas that are created inside the Academy to make it outside, that's not going to be everyone's desire, and that's perfectly fine. And that in no way undermines the contributions of people who are doing fundamental research or who just don't-- this isn't something that they're interested in. It's just that I think it's so-- I think the point I'm trying to make is not everyone needs to do this, but I think people who want to do it should feel that it is a legitimate and important activity.

RAND: Well I will tell you I'm encouraged by this conversation in a lot of ways because the questions that I have going into this is often a feeling of helplessness listening to some of this information. And not only understanding greater, but what the data points are, but the ability of how to start impacting and using it is actually really, really helpful. And I think something that help people understand and to think about what to pay attention to is tremendously valuable. So thank you for sharing that.

GREENSTONE: Great. Thank you.

RAND: Thanks for coming in.