Carrots and sticks - the key to combating climate change
Following on from last week’s notes on decarbonisation which referred to the need for regulatory changes to facilitate alternative/additional technologies to decarbonise the construction industry is a further take on regulation. Writing on Project Syndicate, Monica Schnitzer and Gernot Wagner draw examples between law changes which have and haven’t worked, where the benefit can be seen and felt upfront, rather than being cast into the future.
It is well known that people aren’t great at thinking long-term, so in the best traditions on Mary Poppins and using sugar helping the medicine go down, any efforts to regulate climate-friendly building (from materials to heat pumps, to solar panels and insulation) is going to need to rely as much on the carrot as anything else.
The same thinking can be seen in the more mundane contracting arrangements - if you are a landowner wanting to ensure that your reputation and legacy is preserved by encouraging strong design and environmental thinking from your development partners, you may need to ensure that your advice considers what carrots can be agreed with the developers. Similarly, if you are sitting on the other side of the table, how might you persuade a landowner (or house-buyer) that your proposal isn’t all stick?
Economists have long insisted that the only way to cut emissions of carbon dioxide and other greenhouse gases rapidly and at scale is to put a price on them. But while that is true, the key to a successful, politically sustainable climate policy is to ensure that the benefits precede the costs.
