a
C L I M AT E
fo r g r o w t h
ENVIRONMENTAL ECONOMIST ARIASTER CHIMELI
TAKES A FRESH LOOK AT THE RELATIONSHIP
BETWEEN CLIMATE CHANGE AND GLOBAL
ECONOMIC DEVELOPMENT
ENVIRONMENTAL
ECONOMICS
.12 ILLUSTRATION: ALIX NORTHRUP
by MARY REED “When there is a prohibition—say, alcohol—you
know there is going to be an illegal market, but
a
you hope there is going to be a greater cost to
production,” Chimeli says, giving a few examples
of these costs: potential jail time, fines, bribes,
violence. Policymakers intend that these additional
costs eventually will increase prices and lead to
less consumption of the illegal goods.
“There is another side of the coin,” he continues,
“which is that when you prohibit a market, those
who go underground don’t have to pay taxes, they
s Ohio University environmental economist Ariaster Chimeli sits down don’t have to pay attention to quality control, they
to discuss his work, it’s the final day of the United Nations Climate don’t have to pay attention to safety.”
But in the case of most illegal markets, like
Change Conference in Copenhagen. While world leaders try to hash out illegal drug markets, economists simply don’t
an agreement that will encourage developed and developing nations to have the data to accurately measure the effects
of prohibition. Brazilian mahogany, however, gave
reduce their greenhouse gas emissions, economists such as Chimeli all
Chimeli a rare opportunity.
over the globe inform the debate through their research. In data from a Brazilian government website
that collects export figures, he was able to find
what economists refer to as a structural break—a
“Climate systems are so complex, we don’t “We cannot look at a cross-section of countries major change in a time series caused by an
understand them that well, and we’re talking about at one point in time and say we can recover external factor.
very long time spans,” Chimeli says, reflecting on the relationship between economic growth and In March 1999, the Brazilian government
the conference. “It makes sense to understand environmental quality,” Chimeli says, adding that canceled 85 percent of all mahogany licenses in
what’s happening right now.” his papers are an invitation to another generation the country—that’s the abrupt external factor.
Chimeli is doing just that through his research of empirical research. Within five months, exports of “other tropical
on the linkages between economic growth and Theoretical economics helps move the broader species” had increased 1,800 percent. “It goes
environmental quality in developing nations. field forward in ways that empirical evidence from zero to volumes that were comparable with
Much of his contributions to the field surround cannot. “The world cannot be described by a previous productions of mahogany,” Chimeli says.
theoretical papers he has written connecting simple set of mathematical equations,” he says, It turns out that prohibition did not reduce the
environmental quality and economic growth. “but if you have a very good theory, the world amount of mahogany being cut and exported (it
For example, in the early 1990s, new empirical behaves as if guided by that theory.” was simply renamed), and it was now not even
evidence showed that pollution increases as Chimeli’s empirical work is adding to the subject to regulation. Price and quantity before
income per capita (a measure of economic literature on economics and development as well. prohibition and after prohibition suggest lower
development) rises. The pollution peaks and Much of his work focuses on his native Brazil, cost to the loggers for illegally extracting the
then—for some pollutants such as sulfur dioxide— where Chimeli was a student in the late 1980s and species. “A successful policy would have resulted
actually starts to decrease. Sulfur dioxide is one early 1990s. “Everybody was studying inflation in a price increase,” Chimeli notes.
of the key ingredients in acid rain. In the 1990s, and macroeconomics because the country was In an earlier study, Chimeli examined the
pollution was increasing. going through inflation,” he says. “I wanted to do correlation between climate variability and
“That’s when people started paying attention to something different.” economic impacts. Specifically, climate scientists
solutions coming from economics,” Chimeli says. Working for a cousin’s consulting firm inspired have become more adept at predicting climate
“That’s when we had the cap and trade system him to study economics and development, and he patterns related to ocean temperatures and
apply to (sulfur dioxide) emissions.” eventually wrote an undergraduate thesis on water currents, like that of northeast Brazil—El Niño
Some people jumped into the debate, arguing pollution in a Brazilian state. The thesis won a years are correlated with drought in a region
that the best way to deal with pollution is to state and a national prize, which set Chimeli on his that produces corn. Based on the climate
let economies grow. Not so fast, Chimeli says, path to a Ph.D. in economics and a postdoctoral data, Chimeli explains, “we were able to do
because this assumes that every economy is appointment at Columbia University’s International a reasonable job of doing predictions on the
the same. Studies on countries where there Research Institute on Climate and Society. market for rain-fed corn in Brazil.”
is reliable, long-term data—the United States, His latest work as an associate professor This, in turn, was highly correlated with
Germany, and Japan—suggest that when income of economics at Ohio University is a paper in monetary transfers from the federal government to
grows, pollution eventually decreases for some the journal Land Economics. It looks at what the state for aid to farmers. “The government was
pollutants, but analysis of other countries shows happened to the mahogany market in Brazil after responding after the fact,” Chimeli says. “Whenever
that this isn’t always the case. Chimeli’s research the government reduced and then prohibited the that happens, there is room for wasting (and) room
tries to explain these findings by examining the extraction of mahogany, the highly valued wood for corruption.” Chimeli says that if the government
specific issues in each nation. tree that is at risk of extinction. could use climate predictions to budget payments
to the state proactively instead of reactively, some
corruption and waste could be avoided.
In the end, when it comes to the environment
and economic development, as with climate
“We cannot look at a cross-section of countries at one change and carbon emissions (“That is exactly
point in time and say we can recover the relationship the tragedy of the commons because the
atmosphere belongs to everyone and no one,”
between economic growth and environmental quality.” he notes.), economists generally do not make
policy, but they inform it.
ARIASTER CHIMELI “Sometimes our policies have good intentions,”
associate professor of economics Chimeli says, but “good intentions can be
counterproductive.”
.13