Introduction to the Handbook on the Economics of Climate Change

Abstract

This Handbook comes to light at a time when economic sciences start to recognize the inevitable emergence of climate change as the defining topic of our time. Economic thinking is evolving in front of our eyes, calling for reflection and reconsideration. The chapters contain ideas and policies to support and accelerate the change. We now know that climate change embodies and forecasts the future of human civilization and therefore its economic organization. It is the purpose of the Handbook to contribute to the transformation of economics in the midst of this momentous evolution. The importance of climate change in economics should be no surprise. It is natural and to be expected because, as the traditional definition goes, economics is about the production, use, and distribution of resources, a definition that was famously proposed by T. Koopmans in the middle of the 20th century. Resources are at the core of economics, this much is clear. What is perhaps less clear is the transformation that has occurred in our perception of resources. Now, for the first time, we have 7.3 billion humans who have come to dominate the planet creating a new geological period that has replaced the Holocene and which geologists now call the Anthropocene. Only now that we dominate the geology of the planet have we come to recognize that the most important resources for human societies are the atmosphere of the planet, its bodies of waters and its biodiversity, namely the global environment. The definition of economics proposed by T. Koopmans has not changed: it is our understanding of resources that has fundamentally changed. To achieve its goal the book is divided into three sections that cover critical new areas and ideas about economics and climate change: The political economy of climate change and climate policy, integrated assessment modelling, and climate change and sustainability. For the convenience of the reader and using abstracts provided by the authors, the content is summarized in the following.