A Biden Administration Climate Resilience Policy
Suppose that President Biden appoints a chief resilience officer. What should this person do all day long? Here I sketch a wish list.
Given that information is a public good, I would first ask that independent teams of climate scientists offer geographically refined predictions about what risks different parts of the United States face in terms of temperature extremes, rainfall, natural disasters and other indicators of risk.
Using ideas from mechanism design (i.e truth telling), I would try to encourage the climate scientists to be honest about their own uncertainty about their own forecasts. Once this collection of forecasts is created, I would then convene a regular panel of these experts to debate with each other to see if they could reach a consensus on the spatial and temporal distribution of these risks. In English, what I mean is —- for different parts of Southern Florida —- what is highly likely sea level rise and over what time frame? How much disagreement among the experts is there?
I then would nudge the investment community (mortgage lenders, GSEs, hedge funds, ratings agencies) to adopt a standard approach for always accessing these data before any major transaction is done. This information requirement (similar to being made aware in California about whether a home is in a earthquake zone) would reduce Akerlof Lemons concerns that naïve behavioral fools are purchasing risky assets because they haven’t done their homework about their risk exposure.
Given that there are poor cities in the U.S and these cities are exposed to more natural disaster risk, I would introduce an infrastructure subsidy program to encourage these places to borrow money to protect themselves. Such cities would need to have “skin in the game” and contribute their own funds as well. See my 2017 paper and my new co-authored 2020 paper.
A second way to help poor people who live in poor cities that face greater risk is to expand the housing voucher program so that they can move to higher ground. Similar to HUD’s MTO program, I would suggest running a field experiment where voucher recipients are required to move to lower poverty places whose topography is on higher ground and the safety and quality of life of these individuals could be studied ex-post and the treatment group’s well being as compared to the control group’s well being could be quantified.
I will stop here but in my next posting I will continue on this theme of how the federal government can use its tools to build up the population’s climate resilience.