As hundreds of thousands of families are still struggling in the aftermath of Hurricane Sandy -- which roared ashore nearly three weeks ago -- it's difficult to ignore the economic and environmental impacts of our changing climate. Experts say property damage from this one storm could top $50 billion.
Californians also face increasing threats from climate change. Our future depends on how we place our bets today. California is anticipating an economic boom from transitioning to a clean, efficient economy through voter-supported Assembly Bill 32, the state's clean energy and climate law.
As an economist and climate scientist, I believe we can have both a strong economy and a healthy environment, and I support how the state is placing its bet on the success of policies like AB 32.
I recently published a series of research papers about the threats of wildfires to California and the American West as our climate warms. We're already seeing an increase in the frequency of large, damaging wildfires. Snow is melting earlier in the year, and we're getting much longer fire seasons.
Like hurricanes, wildfires are costly natural disasters. Putting them out costs more than $1 billion each year -- not to mention the cost to replace businesses and homes destroyed. Fortunately, California is already taking steps to address these threats, while simultaneously strengthening the economy.
For too long, polluters have been spewing greenhouse gases into our air without any limits or restrictions. California is now holding them accountable.
No company should be given property rights in the public commons. Clean, healthy air belongs to you and me, and all Californians. The state has put safeguards in place through AB 32, to ensure polluters are responsible for monitoring, reporting and reducing their emissions.
Despite industry attacks on AB 32 and its carbon trading program, which held its first auction for pollution permits this week, it is actually a simple mechanism. Not to mention, it was first developed and implemented during the pro-business Reagan Administration as a means of addressing acid rain.
The basic premise is this: companies are given a pollution limit, but it is up to them to figure out how to meet the standard. The program provides maximum flexibility, but creates an incentive for efficiency, innovation and technology.
AB 32 is just the latest evidence of California's legacy of leadership, which has propelled us to the position of the world's ninth largest economy and established the state as a laboratory for innovation. There is well-established evidence that market incentives drive innovation and attract investment to California -- $2.8 billion in clean-tech investment, more than all other states combined.
A carbon market will provide financial incentives for polluters to reduce emissions and will let California's most inventive, best-managed firms reap the benefits. Carbon markets can help transform the way we make, use and conserve energy by putting a price on inefficiency. They help shift spending away from polluting goods and services to clean ones.
This week's carbon auction marks an important step toward a clean, efficient economy.