Will we adapt to climate change?
As natural resources become more scarce and their prices rise higher, some companies will profit from catering to the desperate
We need guinea pigs to try out new ideas and to experiment. Those who stumble upon a good idea will teach lessons to the rest of us. A Los Angeles couple has built a a very green home. Note that they are from Germany; a place with high electricity and water prices. Do they expect that Los Angeles electricity prices and water prices will soon soar? I don't know but I do know that such experiments serve a useful purpose of alerting others about new design possibilities and to encourage "green developers" to consider alternative ways of building housing. The article notes that their water consumption will be 50% lower than typical homes. This type of demand response helps to bring "supply and demand" back into balance if climate change will increase water supply risk. Pessimists ignore the power of imagination and breaking free from our old ways of living. We can change our game even those of us not named Dirk.
Again, here is the dance step of what will unfold.
Climate change will cause shocks that affect "demand curves" and "supply curves" for various commodities ranging from water to electricity to safe housing, etc. --- these shifts in the "econ 101" curves will change relative prices. Some forward looking firms will foresee these patterns and will make investments to allow them to "seize the day" when the Homer Simpsons are suffering and desperate. These "self interested" firms will grow quite rich catering to the needy in our hotter future. Some of these firms will fail but enough will be trying such that by a law of large numbers some great new adaptation ideas will emerge. The key here is to promote experimentation and to allow free market prices to reflect true scarcity of natural resources and other commodities as climate change plays out.
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