Climate Change Applications of Supply and Demand (Objectives) Examine applications of the supply and demand model. Climate change, human health, and adaptation (Nordhaus Ch. 8). Demand for non-market goods and valuing damages from losses to species (Nordhaus Ch. 11).
Application #1: Climate Change, Human Health, and Mitigation Nordhaus (p. 96): "The numbers in Table 3 are likely to overestimate the health impacts because they do not take into account technological improvements in health along with rising incomes." "A story of the dramatic growth in the use of air conditioning in India pointed to the growth of electricity demand and CO2 emissions resulting from powering the air conditioners." "At the same time, we should not forget that air conditioning promotes human welfare - it cools the homes of people in the hot regions of rapidly growing countries like India and China, making them healthier and happier."
Application #1: Climate Change, Human Health, and Mitigation $ Q of Air Cond Q1 Q2 S1 D1 P1 P2 Higher incomes. Increase the willingness to pay for air conditioning. Shifts demand to the right. What determines the magnitude of the quantity increase? D2 Case 1: Inelastic supply
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