Professor Krugman's Mistake

I generally like Krugman and his writing and analysis. I am probably pretty close on the political spectrum to him. However, he makes a fundamental mistake in his piece in the Times on climate change. There is no value proposition in Environmental Economics as such, and as Krugman presents. Perhaps it would be nice if there were a value proposition and if humanity put a higher value on pristine environments and non-acidic oceans, but that is simply not the way to win the argument.

The value proposition is in Energy Economics and in approaching the environment as a piece that generates externalities that must be priced. Furthermore, it is likely, and there is analysis that the reader can find easily, that the costs of pricing the externalities (basically CO2) would be more than paid for over the long term in increased opportunity in the economy. Also, there is a silver bullet in electrification and nuclear power.

The key is to solve the problems of Energy Economics with the constraint of environmental externalities.