The Futurist Interviews Matthew Kahn, author of Climatopolis

It’s a given that more global warming will occur later this century, says UCLA ecologist Matthew Kahn. But he’s hopeful that the consequences—fiercer storms, prolonged droughts, rising sea tides, etc.—might be manageable. This will depend on what cities and towns across the globe do now to adapt to the changing climate conditions.

In his book Climatopolis, he spells out how demographics and urban construction might shift as a result of climate change. Kahn spoke with FUTURIST magazine staff editor Rick Docksai about Climatopolis and his findings.

THE FUTURIST: In Climatopolis, you point out ways that people might adapt to climate change. So to what extent are you optimistic that climate change will not be as destructive as a lot of experts warn?

Matthew Kahn: Some critics point out that I’m an economist, not a climate scientist. They say I’m overly optimistic, that there are much worse scenarios that could happen. But I would say that’s always true of anything—the earth could be hit by an asteroid.

The difference between us and monkeys is our ability to take action to protect ourselves in the present against potential ugly scenarios. I don’t want the argument to be that since we can adapt we don’t need to mitigate. I think they go hand in hand. Since I’m a realist, I argue that we need to go about meeting the adaptation challenge.

THE FUTURIST: You noted in Climatopolis that some cities in the United States are better prepared for climate change than are others. Salt Lake City, Utah, is an example of the climate-safe metropolises. If climate change becomes more severe, and the less-prepared cities want to adapt before it’s too late, what types of help would they need to hire between then and now?

Matthew Kahn: There are two types of cities. In New York City, Mayor Bloomberg is being proactive with his 2030 Plan, which anticipates how climate change will affect the city. In Salt Lake City, it’s more a matter of geographical determinism. There is nothing explicit they have done. I put them on the list because of their physical location, due to my concern about sea level rise.

A city can adapt due to natural advantages. But the first step to not having a problem is to acknowledge that you could have a problem under the status quo. Bloomberg is stepping up to the plate. I would be worried about a Homer Simpson city living on the coast and everyone under the false belief that they are in no danger. They will be up for a big comeuppance.

The insurance industry loses profitability if they under-predict risks. I talk about how even in a Republican city that opposes taking action on climate change, the insurance industry could send a message by raising prices for risky areas.

THE FUTURIST: Are we seeing insurers preparing for climate change now?

Matthew Kahn: I’ve been in discussions with the insurance industry, and some are working with climate scientists. They think they could make more money if climate change happens because of the increased risks. I’ve found documents on plans they're making to protect themselves against climate risks. Insurance companies in hurricane areas of Florida, for example, are seeking scientists’ advice on how they should price their premiums.

Suppose I want flood insurance and the premium is $40, and it’s based on the flood risk being 4%. If because of climate change the risk goes up to 10%, basic algebra tells me my insurance policy should go up to $100, because the risk increased from 4% to 10%.

Will the law allow insurance prices to rise to reflect that climate change has increased the risk of flooding? If the answer is no, then these insurance companies will go broke and government will end up being the last-resort insurer.

I could imagine some liberal politicians accusing the insurers of price gouging, in this case, and passing laws to keep insurance premiums low. But as I talk about in the book, we need politicians to pre-commit and to allow capitalist markets to work. Government has to let free markets work by sending signals to people about what’s at risk and what’s scarcer due to climate change.

THE FUTURIST: If some cities in the world suffer more than others, we will probably see a phenomenally larger scale of migration and population displacements. This could lead to cultural clashes as new waves of immigrants converge on the few safe cities. How ready are U.S. cities to accommodate all these new groups? What would the cities need to come up with in the way of support services, education outreach, culturally appropriate media, etc.?

Matthew Kahn: I talk about Detroit as an example. The New York Times recently bemoaned the slow death of Detroit, with all its abandoned homes. A point I make in Climatopolis is cities like Detroit could make a comeback. If Los Angeles goes to hell because of climate change it could be the case that many of its residents would move to Detroit or another northern latitude city, like Fargo.

We'll have to build all this new infrastructure. When you have growth you need new infrastructure. It's harder to take an old building and retrofit it than it is to build a new building in accordance with energy efficiency and green design.

A big point in Climatopolis is the competition among cities. Just as Coke competes with Pepsi, cities compete with other cities. Those cities that suffer because of climate change will lose their more skilled residents and grow more slowly.

Even a Republican mayor that doesn't believe in climate change will see incentives to act to keep the skilled professionals in the city.

Right now home prices are really high in LA, San Diego and New York City. If these cities suffer losses to quality in life, the homeowners will suffer value loss. But renters can get up and go to cities that are better to live in, like Fargo or Salt Lake City. There will certainly be distribution effects. By being a homeowner in Los Angeles, I've made a bet that this city will continue to be a great place to live. If I bet wrong, I'll lose money.

THE FUTURIST: As you also described in Climatopolis, some major cities are upping their investments in mass transit. Should this trend continue and get repeated in more cities, what sorts of new jobs would it create?

Matthew Kahn: As a city becomes a better place to live, more people live downtown. Crime in big cities has fallen sharply in recent years. And an unintended consequence of less crime is more people living in city centers.

When you get the middle class willing to use mass transit, like in New York City and London, that creates incentives for politicians to provide good mass transit. Because crime is falling, when people live and work downtown, they are more likely to use public transit and people are more likely to live downtown

Right now, Los Angeles has all these single family homes and most people don’t use mass transit. A point I make in Climatopolis is that because of the expected heat wave, more people are going to want to live close to the ocean. If there is that kind of population density, a subway could be effective.

A major trend has been the suburbanization of employment. Many major companies are not downtown. They’ve been building corporate campuses far from center cities. I could image some of these businesses returning to the city centers. Downtowns could re-acquire employment.

Sprawl has been a major twentieth century trend, but under some of the dynamics we've talked about, some of this could be reversed. It won't be for everybody, but it would shrink our carbon footprint if 40% of people were willing to live like that.

If I was the only bald guy on the planet nobody would dream up Rogaine. There are always going to be guys, like the guys who created Google, who are looking for the next big product. If seven billion people are looking for ways to help them adapt to climate change, this is going to create a huge new market for entrepreneurs to come up with new products to help them adapt. Climate change is going to make the Homer Simpsons desperate to adapt. I don't need seven billion entrepreneurs. I just need a couple of hundred entrepreneurs thinking ahead. I need them thinking through what might be the opportunities.

THE FUTURIST: In Climatopolis, you describe many feats of engineering that cities and rural districts could undertake to better manage the water that we have. Among these are water-recycling systems and irrigation networks. Many analysts have expressed concern that there is a dearth of young people with thorough training in engineering and applicable sciences. If this is so, how might we find the requisite cadres of designers and builders to construct all these new infrastructures?

Matthew Kahn: I agree with you. The short answer is were going to take in more highly-skilled immigrants from China and India, but I don’t find that answer satisfactory. There is a scarcity of talented people who are majoring in these fields. As a free-market economist, I would hope the wage demand would rise in these fields. This should trigger more interest.

But you put your finger on a major issue, and it’s that we’re going to need ingenuity. We need these people majoring in these fields.

THE FUTURIST: You describe the potential implications of climate change in U.S. cities very extensively in Climatopolis. But I’m curious what you think the consequences might be for Canada. Its biggest urban centers, Toronto and Montreal among them, are relatively distant from both flood-prone Manhattan and from the melting Arctic Circle. Would they, therefore, be mostly climate-safe? If so, then what might Canada get in terms of new influxes of climate-change refugees?

Kahn: I have a colleague Laurence Smith, who wrote on this topic in 2050. I’ve ceded that territory to him. I’m very sympathetic to his arguments. I think Canada will be helped by climate change.

It would interest me what Vancouver is doing, but I thought Laurence Smith made a number of great general points. I’m not a fan of climate change, but every shock creates new opportunities and I certainly agree with him that there will be unintended consequences.

It raises interesting issues of distribution. Coming back to Detroit today, you could sell one home in Los Angeles and buy a hundred homes in Detroit. A wise economist might want to do that now, given what we know about climate change and Detroit’s future. You want to buy low and sell high.

If we introduce carbon pricing, and it’s more costly to ship by truck or plane, could trains make a comeback? I throw that out as another example of how the capitalist market could adapt.

The starting point of Climatopolis is we’ve been slow to implement climate pricing. I believe in the guinea pig model: Through experimentation we’re going to learn that some of these things are going to work. As years go on, as the reality of climate change dawns on more people, I think even a Rush Limbaugh type could acknowledge that we need carbon pricing. So I see adaptation and mitigation efforts going hand in hand.

This is all assuming that climate change will be gradual. If climate change is abrupt, if we wake up one morning and New York City is underwater, then it will be hard for just about any economist to predict how we might adapt.

But I leave it up to scientists to keep us in the loop about what is likely to occur. Climate scientists play a key role in not being Chicken Little, but educating us about what they know about the risks.