Environmental Crises: Past, Present and Future

Environmental crises are distinguished by rapid and largely unexpected changes in environmental quality that are di¢ cult if not impossible to reverse. Examples would be major extinctions and signi…cant degradations of an ecosystem. I argue there are three preconditions for crisis: failures in governance, an ecological system exhibiting a tipping point, and an economy/environment interaction with positive feedbacks. I develop a simple model to illustrate how a crisis may arise, and draw on our knowledge of past and present crises to highlight the mechanisms involved. I then speculate as to whether climate change is indeed a crisis in the making. 1 I am grateful for excellent research assistance from Jevan Cherniwchan and Juan Moreno Cruz. I received helpful comments from too many colleagues to thank, as well as seminar participants at the University of Basel, the 2009 Canadian Economics Association Meeting in Toronto, and the 2009 European Association of Environmental and Resource Economists Conference in Amsterdam. A version of this paper will appear as the Innis Lecture in the November 2009 issue of the Canadian Journal of Economics. I am also a¢ liated with the NBER. Funding for this research was provided by the SSHRC. Email: [email protected]. Phone: 403-220-8912