S8 Ep64: A London economic consensus?

Who would be a policymaker right now? The list of economic problems that we need to solve ranges from “very difficult” to “existential”. An ambitious new book collects the ideas of many influential economists on how to approach these challenges. But can it avoid the mistakes of previous attempts to find an economic policy consensus? Andrés Velasco and Tim Besley are two of the editors of The London Consensus. Tim Phillips joined them at The London School of Economics to ask why the book was created, how policymakers can use it, and whether we should be wary of economists bearing paradigms. Download The London Consensus. https://www.lse.ac.uk/school-of-public-policy/research/london-consensus

Economic sanctions are the big geoeconomic bazooka. But what does history tell us about how well they work, and their relevance today. And does the theory match the data? Moritz Schularick of the Kiel Institute for the World Economy and CEPR talks to Tim Phillips about the evidence of the history of sanctions on what they can achieve, whether we expect too much too soon from small sanctions – and whether politicians are prepared to impose the sanctions that bite.

Biodiversity is essential for the wide range of economic activities that our planet needs. Yet, the economic consequences of its global decline are hard to estimate, because most population studies focus on individual species in isolation. Frederik Noack of the University of British Columbia argues that this misses a central insight about biodiversity: a healthy environment depends not just on individual species, but also on the way they work together to keep our natural environment in balance. One especially important aspect of this is the way that birds help keep crops safe from pests and reduce the need for pesticides. He tells Tim Phillips about the long-term decline of bird populations in the US and the knock-on effect on agriculture, and pollution. 

In 2021, at COP26, the International Accounting Standards Board announced it would create a standard for this reporting. It wants to integrate sustainability reporting with traditional IFRS accounting. Should firms be compelled by regulators to disclose their impact on the climate in their corporate reporting? Investors value convergence in sustainability reporting standards, but they are facing stiff opposition both in the US and Europe – even while developing economies embrace the new regime. Lucrezia Reichlin of the London Business School and CEPR talked to Tim Phillips on the progress to sustainability standards, the scope of reporting, who wants it, and who’s objecting to it. 

In Europe and beyond, populist politicians continue to gain ground. What message are voters sending? Are politicians from other parties listening, and explaining their policies in a way that will successfully reach supporters of populist parties? There are one set of policies for which this may be a huge problem soon. What does this mean for that those tricky choices that politicians will have to make when dealing with the consequences of climate change, and sustainability? Sergei Guriev of London Business School and Catherine de Vries of Bocconi University have both examined what is driving support for populism, and the implications of populism in politics for the social contract. They tell Tim Phillips why the planet may have a populism problem.

Our economy is embedded in nature, but nature is in danger. External funding is needed, especially in the Global South, to support the conservation of our natural ecosystems. Markets can play a role, but the way in which voluntary carbon markets do this has low public trust which, from recent news, may be deserved. Estelle Cantillon of Université libre de Bruxelles and CEPR tells Tim Phillips about her proposal for a new market mechanism to channel funds to projects that will conserve or restore our natural environment by paying dividends to those who invest. But how will it avoid greenwashing, and who will buy the shares? Read about this in Chapter 8 of the Paris report: https://cepr.org/system/files/publication-files/257653-policy_insight_145_designing_and_scaling_up_nature_based_markets.pdf

“What is needed is non-marginal, transformative change to shift the economy, technology, and society”. That’s the typically forthright recommendation from Rick van der Ploeg of the University of Oxford and University of Amsterdam for how to ensure that climate policy is effective at changing our habits and behaviour. He argues that the gradual changes in habits that current policies target don’t go far enough, and that we run the risk of backsliding. But what does this mean in practice? Rick spoke to Tim Phillips about what policies to push, when to push them – and how big the push needs to be.

We are familiar with climate policy to reduce emissions. We know about the policies to adapt to climate change. But can we successfully reduce the amount of CO2 in the atmosphere, and how do we create policies and incentives to invest in, and take advantage of, those technologies? Ottmar Edenhofer, Director of the Potsdam Institute for Climate Impact Research and chair of the European Scientific Advisory Board on Climate Change, talks to Tim Phillips about an aspect of climate policy that is becoming increasingly important. 

"The Economics of Biodiversity” was published by the UK Treasury in 2021. It sets out how economic systems value biodiversity and natural capital, and which policies would preserve and restore nature. The project leader was Professor Sir Partha Dasgupta of the University of Cambridge. In the latest of our special episodes recorded at the first Hoffmann Centre / CEPR / ReCIPE Conference continue, he tells Tim Phillips what he learned from hanging out with ecologists, why we need indicators of economic performance that value nature, and why we should worry about the decline of natural capital.  The Economics of Biodiversity: The Dasgupta Review https://www.gov.uk/government/publications/final-report-the-economics-of-biodiversity-the-dasgupta-review

Can COP 30 get the green transition back on track? It’s not a great time for international cooperation right now and, with hindsight, was the period from 2017 to 2022 a “golden moment” the climate transition, and was it an opportunity missed? That’s the argument presented by Livio Stracca, Deputy Director General Financial Stability at the European Central Bank, also the chair of NGFS work on climate scenarios. He talks to Tim Phillips about what we can learn from this golden moment, and what can be done this time around to avoid the dangers of what Livio calls “climate agenda fatigue” among both the public and governments.