Wednesday, February 27, 2008

ECON 260: Jeff Sachs on Global Cooperation in R&D

Economist Jeffery Sachs makes an argument for significantly larger investments in R&D. I encourage you to think about the assumptions in his argument. Here's a teaser:

We are used to thinking about global cooperation in fields such as monetary policy, disease control, or nuclear weapons proliferation. We are less accustomed to thinking of global cooperation to promote new technologies, such as clean energy, a malaria vaccine, or drought-resistant crops to help poor African farmers. By and large, we regard new technologies as something to be developed by businesses for the marketplace, not as opportunities for global problem solving.

Yet, given the enormous global pressures that we face, including vastly unequal incomes and massive environmental damage, we must find new technological solutions to our problems. There is no way, for example, to continue expanding the global use of energy safely unless we drastically alter how we produce electricity, power automobiles, and heat and cool our buildings. Current reliance on coal, natural gas, and petroleum, without regard for carbon-dioxide emissions, is now simply too dangerous, because it is leading to climate changes that will spread diseases, destroy crops, produce more droughts and floods, and perhaps dramatically raise sea levels, thereby inundating coastal regions.

The National Academy of Engineering identified some possible answers. We can harness safe nuclear energy, lower the cost of solar power, or capture and safely store the carbon dioxide produced from burning fossil fuels. Yet the technologies are not yet ready, and we can't simply wait for the market to deliver them, because they require complex changes in public policy to ensure that they are safe, reliable, and acceptable to the broad public. Moreover, there are no market incentives in place to induce private businesses to invest adequately in developing them.

The need for R&D is abundantly clear but the time it will take in order to develop such technology will lag behind the progression of global warming thus leaving a conflict. It seems that in the case of solar power, a technology that has already been developed, that it could be used to power more than the small margin that it is today. This could be possible by having the government help cover the costs of consumers by subsidizing the price. It seems that in the context of solar power for individual homes is not used commonly due to the aesthetic value of normal rooftops thus developing a more pleasing appearance might also help stimulate investment.
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