THE COSTS OF CLIMATE CHANGE

Perhaps the fact I am writing in the midst of an official Excessive Heat Warning between this morning and next Tuesday morning here in the City of Lost Angles, and hoping that the computer screen is not going to go black in the midst of writing this due to a power failure from the heightened usage of so many of us running air conditioning while it is currently 103 degrees here in Encino - usually one of the “cooler” (temp-wise) neighborhoods in the San Fernando Valley - and thanking my lucky stars it is “only 103 since it is hotter not too far away from Le Chateau du Chat, has me thinking today about the cost of climate change.

I suspect that $710 check I wrote to the Department of Water and Power for energy use in June and July has an influence on my outlook. And thank god for having picked up “extra” work the past couple months from a publisher over in England, because I suspect the next bi-monthly payment is going to be that level or worse. I recall when $350 was a lot, back when the tall tree in the back yard of the house on the next street over used to provide direct shade of our large living room window in late summer afternoons (heat of the day) before it got cut down for age and being overrun by termites. Back when the tree in the back yard of the neighbor immediately behind us used to provide shade in the mornings until close to noon - before it too went down the victim of age and termites. Of course, that was also before the 24-hour electricity use for the oxygen machine and the air bed for the bed-bound She Who Must Be Obeyed was a regular expense.

Like me and my DWP payment, we are all paying more because of climate change. And somehow I doubt that increase is going to show up in the Consumer Price Increase data that the Social Security Administration uses to calculate the 9.8% increase in Social Security payments that my Congressman, Brad Sherman, touted in his most recent email newsletter.

Thank god for people still buying books. And subscribing to Substacks.

Climate Change means that economists need to fundamentally change the way they comprehend inflation. Many items in the household budget, like food - and power! - that have been relatively cheap, will become more expensive.

This has absolutely nothing to do with supply and demand in the usual sense, and everything to do with the ravages of climate disruption.

When he discussed inflation and called for higher interest rates at the Jackson Hole Conference last week, Federal Reserve Chairman Jay Powell did not say word one about the impact of climate on prices.

Nor did the usual chorus of inflation hawks in the economics profession.

Exhibit A is the American West I live in, which is in a deepening water catastrophe. Lake Mead is so low, they’re now finding the garbage can “caskets” the Vegas Mob used to stuff hits in before tossing them overboard in the lake.

My father worked for the Bureau of Reclamation - the good folks who transformed The Great American Desert into the agricultural powerhouse it is today, by damming the Colorado River system. Fifty years ago, he pointed out to me that the Colorado River Compact, on which the Colorado River Project is based, the agreement that ended the “water wars” of the late 19th and early 20th centuries in the West when it was done in the 1920s - was based on a 500-year high of water flow in the river system. The only thing he got wrong in predicting that what nature had given it could take away and what the result would be, was he didn’t say “this will happen fifty years from now.”

Right now, we water one day a week, for 10 minutes. The grass was specially chosen to not need lots of water, but with temperatures in the mid-90s for most of the summer (making it “cool” since there have only been ten days over 100 this time - so far) the lawn in front is going yellow and that in back is turning from yellow to brown. Up and down the street in this elderly “Leave It To Beaver” neighborhood (according to the date in the sidewalk out front, that concrete has been there since 1949), the lawns, a symbol of “the American dream” since the GI Bill made housing affordable for the working and middle classes back when the United States controlled 55% of the Planetary Gross Annual Product, are all in a similar state. There yards have been dug up and replanted in “native plants.”

The western water crisis is going to affect a helluva lot more than my suburban lawn. We are looking at a Southwestern drought of the intensity and duration that changed the society of the Anasazi. And our changes are going to be a lot more than they faced.

It is only a matter of time before factory farms in irrigated semi-deserts such as California’s Imperial Valley - which provide much of the nation’s cheap food - cease to be economically viable. These farms were directly responsible for the cheap food we have had for the past 80 years. The traditional family farms serving regional markets such as New England and elsewhere that were driven out of business by this change in agriculture won’t be coming back to fill any gaps, because those farms are now urban residences.

Sustainable farm-to-table agriculture on a regional basis may get a renaissance. But as anyone who loyally buys from the Farmer’s Markets on the weekend or at “natural food” stores like Gelson’s here, that food is far more expensive than the factory food available at Von’s and Ralph’s.

The western water crisis will shut down the disgusting and polluting mass-production hog, chicken, and beef factory operations. But that will also raise prices.

Demand for food is one of those things economists terms “inelastic.”

When prices go up, people don’t stop eating; they just pay more. Recessions don’t lower food prices or consumption.

It’s not just the Western water crisis. There was a story in the New York Times this week that the Greenland glacier is losing enough water now to raise the ocean level ten inches a year.

What will it cost to write off and replace, say, Norfolk or Miami? What kind of seawall will they build off New York City? What sort of dikes will they build around New Orleans and Houston? When the Port of Los Angeles is no longer able to handle 75% of our trade with the Far East, what will we do?

The Office of Management and Budget has issued an estimate for the cost of climate damage at about $2 trillion a year. Even without the more forward-looking climate investments of the Inflation Reduction Act, the cost of dealing with floods, fires, storms, and other weather events keeps rising. The kind of programs that are going to be needed are going to dwarf the IRA’s billions.

Electric cars will be cheaper and more reliable than ones powered by gasoline - except right now and for the immediately-forseeable future, what powers the electricity generating plants that recharge the electric car batteries?

An all-renewable power grid will eventually be cheaper and more sustainable than one powered by oil, gas, or coal. We might even luck into sustainable fusion power, if the experiments I read about in a Pocket article last week prove to be replicable. But if so, there are transition costs in creating such a power network that will involve more than national financial “infrastructure” investments, since such a system would be planet-wide. Right now, that’s still the stuff of science fiction, but as a lifelong science-fiction reader (and sometimes writer) I have noticed that the fiction part becomes factual eventually. You just can’t plan on it till it happens.

Our entire economy has been borrowing from the future, enjoying low prices that fail to factor in true costs. Now that bill has come due, and it will not be cheap.

To understand this shift as "inflation" in the usual sense is to be willfully blind—even more than so much of standard economics.

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