Andy Stone: Welcome to the Energy Policy Now podcast from the Kleinman Center for Energy Policy at the University of Pennsylvania. I'm Andy Stone. Climate change is one of the monumental challenges of our day, but the reality of climate change is nothing new. In recent decades, scientific advances have expanded our understanding of prehistory and brought into ever sharper focus the connection between historic variations in climate and the development of humanity and society. On today's podcast, we'll travel back through time to learn how climate change may have forced our primate ancestors down the road of evolution, contributed to the fall of empires, and more recently, helped to spur great migrations of people, including those that led to the building of the United States. By taking a look at the history of climate change, we might see more clearly why today's warming is so different from periods of change that came before. And we'll take a look at how climate change might amplify economic and societal pressures that are already in place.
My guest is Jesús Fernández-Villaverde, an economist here at the University of Pennsylvania who has researched the history of energy and now its corollary, climate change itself. Jesus, welcome back to the podcast.
Jesús Fernández-Villaverde: Thank you for having me back.
Stone: Now you're an economics professor. How did you become interested in the history of climate change?
Fernández-Villaverde: As you mentioned before, one of my main areas of research is in economic history. I did a lot of work, for instance, on the economic history of energy, which I talked about in a previous episode. One of the priorities or the focus of my research has always been to place economic developments within their global contexts. If you want to think about issues in global contexts, you end up looking at comparisons and searching for common patterns. One thing that struck me very early in my research is how prominent the fact was that we see clustering of crises across the globe in certain moments of history.
So let me give you a very complete example. I am originally from Spain, as probably you can tell from my name. One of the basic dates that people know from the history of Spain is 1640. In 1640 we have something called the Catalan Revolt, where Cataluña revolts and a civil war starts. And it's also when Portugal breaks from what, at the time, was known as the "Iberian Union." And that is why now the Iberian Peninsula is divided between Spain and Portugal. So it's a very, very big year.
Okay, so 1640 -- and then you start reading about other countries and ask yourself, "What are other countries of the world doing more or less at the same time?" And then you realize that in 1639, roughly at the same moment, you have the beginning of what is known as "The War of the Three Kingdoms," in England, Ireland, and Scotland. And you go, "Hmm, kind of interesting. Also a civil war over there." But then you learn that in 1644, there is the fall of the Ming Dynasty in China, and you're like, "That's interesting." And then you learn that in 1630, the Bamana, which is a people from what is more or less modern-day Mali, starts their war against the Mali Empire. And you're like, "Wow. You have all these different, big fundamental changes in Western Europe, in China, in Africa in a space of like, what -- five, six years? How can that be the case?
And these are not the only examples. The collapse of the Roman Empire is more or less at the same time of the collapse of the Han Empire and the Parthian Empire in late antiquity, and you see dozens of similar examples. So you could always argue, "Well, maybe it was just random chance?" And that may be the case. In fact, for instance, during the 1640s, some parts of the planet, like the Mughal Empire, are doing very well in India. But at the same time, it just seems to match for a random event that you have so many dramatic changes at the same time. And then you start reading a little bit more of the detail of these collapses and these civil wars, and something that strikes you also very clearly is that most of these collapses and civil wars are initiated by issues related with agrarian unrest, high food prices due to very bad harvests. And then you say, "Wow, this probably has a lot to do with climate." And that's how I really got into this idea. The fact that you have so much clustering of global crises in so many moments in history, and a lot of people really point out that climate was a very important factor behind most of this.
Stone: Now climate, I assume, as you just alluded to, wasn't the only factor, but it sounds like it was kind of a created tipping point. Is that right?
Fernández-Villaverde: Yes, of course. So you have to think about this in the following way: Life is complex. Societies are full of different factors, and maybe a society is already not doing very well. Let me go back -- I was talking before about the fall of the Ming Dynasty in 1644. The Ming Dynasty had a lot of problems. But if you're already having a lot of problems, then suddenly you have this big agrarian unrest because of a series of bad harvests that can be the proverbial last step before the collapse. So in that sense, I don't want to sound as if I'm implying that the climate is the only thing that matters, but certainly it is a very important factor.
Stone: Now in preparing for this podcast, you gave me some homework to do in the form of a couple of books that you recommended that I read. One is a new book called Origins: How Earth's History Shaped Human History, and it's by the English science author Lewis Dartnell. And a second book which dates back about 20 years is called The Little Ice Age: How Climate Made History, by the archeologist Brian Fagan. And what struck me as I read both of the books is the extent to which Earth's climate has always been in flux. It has really never been very stable for very long, and at times, it has changed noticeably within the span of a single human lifetime. Can you tell us a little bit about the instability of climate, especially because we tend to think about it as something very constant?
Fernández-Villaverde: Yes. So the history of climate change has been a very, very intense area of research within the last few decades. During those decades, we have learned that climate has changed frequently, and as you were mentioning before, often at a tremendous, tremendous speed. But let me frame this in the following way: You want to think about climate change at different frequencies, so on one hand, we have changes to climate that last thousands or even millions of years. Perhaps later we can talk about some of them. In particular, the Earth has been cooling down for the last 55 million years, and you know, 55 million years is a long time. We have seen the amazing fluctuations during the so-called glacial periods in the current era, in the current Quaternary Era -- the last 2.6 million years that everyone knows about -- even if you ask about what's in cartoons about the Ice Age.
On the other hand, we also have changes that occur in much shorter spans such as centuries -- two, three, four centuries. And those were the ones you mentioned before, about the Little Ice Age. Sometimes the changes are very, very fast, so around the year 300 more or less, that was the end of what was known as the "Roman Climactic Optimum." Europe became much colder, very fast. You can tell that Romans in England had to retreat to the cultivation of vineyards, of wine production, and that really happened in the lifetime of people. People were saying things like, "Oh, when I was a young kid, you could grow wine in this villa, on this property. And now that I'm old, I cannot grow wine anymore." So you really see some of those changes in a lifespan.
And then, of course, you have events like -- another great book is a very famous book called A Year Without a Summer, about the gigantic 1815 eruption of the Mount Tambora, where basically you had this gigantic volcano that pushes so many ashes on the atmosphere that 1816 is one of the coldest summers on record in Western Europe and pretty much across the globe. So if we were going to experience a really truly gigantic volcanic explosion next year, or even this year, we could see amazing changes in the climate in just a few months.
Stone: That year without a summer, I believe, you said was 1816. I think there was snow falling in New England in the United States during that June. So it got really, really cold, just from that volcano.
Fernández-Villaverde: Yes, exactly. And again, it's one of those things coming back to the clustering of a crisis. If you read books about history written many generations ago, they will talk about big revolts in Spain in 1816 and 1817, and in England and in Germany. You will never be able to put all those things together until you realize there was a very important common factor, which was this generalized failure of harvests because of the terrible volcanic eruption.
Stone: That brings up something I wanted to ask you about. Today we often think about carbon dioxide as being the driver of global warming. Over the last 150 years, global concentrations of carbon dioxide have increased as we've burned fossil fuels, causing the warming. But historically, carbon dioxide has not been the driver. It has actually often been an after-effect, where you've seen a rise in carbon dioxide concentrations. We've talked right now about volcanoes, but what have been generally, over the course of history, the primary causes of climate change itself?
Fernández-Villaverde: Okay, before I give you an answer, I want to make a caveat to your listeners. We have made a lot of progress in our understanding of climate and its history over the last few million years. There are still a lot of things we don't really understand very well. There are a lot of details that need to be filled in. So I am going to try to tell you what my best reading of existing evidence is, but we should be cautious. This is not like on some other occasions where I'm a little bit more sure of myself. But having said that, and just trying to be very, very careful, I will say that there is quite compelling evidence supporting two main mechanisms. The first is that the orbit of Earth around the sun varies over time, due to the gravitational effects of other planets -- mainly Jupiter, which is the largest object in the solar system after the sun. The details are a little bit complex to explain here in an interview. I would need a little bit of geometry and probably a whiteboard to explain to the audience. But basically Earth -- the way that Earth rotates around the sun on the axis, and how it does it changes -- a little bit. And those changes have huge consequences. We all know one very clear example, which is the axial tilt of Earth -- and that's the reason why we have summers and winters -- changes over time. So sometimes the axis is a little bit more pronounced. Sometimes the tilt is a little bit more pronounced; sometimes the tilt is a little bit less pronounced.
The first person who pointed this out was a very famous Serbian scientist called Milankovitch. And this is why this is sometimes called the "Milankovitch Cycles." The first thing we need to understand is the orbit of Earth around the sun causes more changes from time to time. This has very, very large consequences. The second aspect which is actually quite important is the movement of tectonic plates. So you want to think about Earth as a gigantic orange. We have like the different pieces of the peel of the orange, that we have taken out from the orange and put it back. But since we've peeled them out already, they are not exactly where they were supposed to be, and they move over time. When you have those tectonic plates moving, that's going to affect in a dramatic way the climate of Earth.
The best example is the Indian plate. That is the example I'm always explaining in class. So in what is today the sub-continent, it used to be a part of a gigantic continent called Gondwana. That included today's South America, Africa, and Australia, as well as India. And that chunk of India detached itself from Gondwana around 100 million years ago, and it started moving north. It actually moves north really, really quickly. And then it hits -- it collides -- with Eurasia, which is what constitutes today Eurasia. And from that gigantic collision, you have the Himalayas -- and that's why the Himalayas are the tallest mountains on Earth, and you also have the Tibetan Plateau. The creation of the Himalayas and the Tibetan Plateau is going to induce a very powerful monsoon over Southeast Asia, and it's going to dry East Africa. And that's going to have tremendous implications for human evolution. So just to summarize very quickly -- changes of the orbit of the Earth around the sun, and the movement of the tectonic plates of the Earth.
Stone: That's fascinating. I never thought about plate tectonics actually changing our climate, but it sounds like it really has.
Fernández-Villaverde: Oh, yes. It's absolutely fundamental. You really need to understand. Let me give you an example: Have you noticed how many earthquakes happen very close to very large cities? And you will say, "Well, this is bad luck." Not really, because the problem is when you have earthquakes, it's because you have tectonic plates interacting with each other, but that also usually generates things like more water springs, more rivers, more mountains and valleys, and more minerals, more lakes. And that's the type of reasons why humans settled on those regions [?]. So it's not that humans said, "Oh, there is going to be an earthquake over here. Let's settle down." It was that precisely because you had the geological conditions for an earthquake, there were also many other reasons that induced humans to settle over there. And that's why so many earthquakes are so devastating.
Stone: Let's go back a little bit in time -- a little bit -- let's say 55 million years ago. That was a time when the world warmed dramatically. Oceans at that point were about 1,000 feet higher than they are today, which I find absolutely hard to believe, and there were dense forests at the North and South Poles, and very little, if any ice anywhere on Earth. Now, there's reason to believe that the earliest roots of human development date to that time of dramatic warming. What happened?
Fernández-Villaverde: Okay, around 55 million years ago, as you were pointing out, we had what is sometimes called the "Paleocene-Eocene Thermal Maximum," which is a big maximum of temperature on Earth. And since then, we have experienced what is known as the Cenozoic cooling. And again, the details are still being worked out by scientists, but to the best of my understanding, the main reason was probably again the condition of the Indian plate with Eurasia. You have all these rocks that are up-raised, and as they erode, they react with CO2 in the air, and they do like a gigantic sucking up of CO2 in the air. And that caused a quite considerable long-run reduction in the proportion of greenhouse gases in the atmosphere.
Stone: And this was following that warm period, is that right?
Fernández-Villaverde: Exactly. So basically you have all this CO2 being taken out of the atmosphere. And there is also a second effect that probably was also quite important, which again now has to do with South America. So just look at the map, and I think that every kid in primary school, the first time they look at a world map, they notice that Brazil seems to fit nearly perfectly with West Africa, like in the South Atlantic. And of course it does, because they used to be together, and they broke apart. So as South America moves, it kind of goes to the west and eventually attaches itself to North America in the Isthmus of Panama. And that changes the streams, particularly the Humboldt and the Gulf Stream. And that's going to cool the Arctic. And as you cool the Arctic, more and more ice is accumulated every year. The summer is not hot enough to eliminate this ice, and you basically generate a continuous cooling of Earth. So you have those two very terrific forces again, with the tectonic plates hitting in India against Eurasia, and the movements of South America and its connection with North America. And that really highlights how incredibly important the tectonic plates' movements are for the history of climate.
Stone: Now I also understand that during that 55 million year-ago warming period, I guess the precursors to modern humans -- the very distant precursors first appeared -- the first primates, also the first grasses that eventually became wheat and different cereals that we cultivate today. Tell us a little bit more about that warm period, because it sounds like it was really important for what we see in the world today.
Fernández-Villaverde: Yes, so as I was mentioning before, if you recall, I explain that when Southeast Asia collides with Eurasia, you have a very powerful monsoon. And the very powerful monsoon is going to suck up a lot of moisture from the Indian Ocean and take it towards India. And that's going to make East Africa much drier than West Africa. The way I show this to my students is I go to our webpage, where they have photographs of national parks, and I show them photographs of national parks in West Africa. And you will see your typical image of a rainforest with very large vegetation. And then you will have photographs of national forests in maybe Kenya or Tanzania, which are typical savanna, grasses -- not a lot of trees.
Our ancestors living at that time in East Africa found themselves in an environment where they
could not really live most of their time in trees. They had to start adapting to this much more grassland/savanna environment. Evolutionary biologists and paleontologists believe that that induced very strong forces for change from an evolutionary perspective. There was also another contributing factor, which is the East Africa Rift. So at this moment, Africa, geologically speaking, is dividing itself into parts. The East of Africa is slowly separating from the rest of Africa. So think about an imaginary line between Djibouti, North Ethiopia, until Mozambique. And then to the east of that -- that's separating. And that has generated what is known as the "East Africa Rift," which is kind of a series of valleys with high ledges, with ridges on both sides. And the presence of the East Africa Rift had consequences, both in terms of rains -- and again, as I was mentioning before by limiting the amount of rain that you can get in East Africa and within the rift, and also creating a lot of micro environments in a very, very volatile, extremely volatile climate. And that probably generated a very strong evolutionary incentive for intelligence. So imagine suddenly that you live in an area where seasons change a lot from one year to the other, or maybe one decade to the other, where you have a much more difficult time to live, just living in the forest, in the rainforest. Who is going to survive?
Well, the primate, and later the hominid that is going to survive are the ones who are a little bit smarter, who can figure it out how to hunt, how to obtain protein, et cetera. And that's why many researchers believe that this was absolutely key for human evolution. In some sense, I don't think it's too crazy to say that humans are the product of climate change, are the product of the evolutionary forces induced by climate change and how that selected traits such as intelligence and adaptability to new situations.
Stone: So what you're saying is in East Africa, which as I understand, is kind of the cradle of modern mankind, the climate changed relatively quickly and frequently over a period of time -- faster than evolutionary changes could happen to our bodies to adapt us.
Stone: But intelligence took over as the tool that our forebears could use to adapt to these rapidly changing physical environments in which they were -- and figure out how to survive.
Fernández-Villaverde: Exactly. That's a wonderful way to put it, much more eloquently than I did. Yes, so basically what I'm saying is, "Look, you don't have time to develop new physical traits, but you have a brain, and you know how to create a tool that will help you to hunt in the new environment." So our ancestor who had that brain to develop that tool survived. Our ancestor, or the other relative that did not have that ability to develop a new tool to adapt to climate change, didn't survive. It's as simple as that.
Stone: So let's jump forward in time, then, to about 12,000 years ago. That's when the last ice age came to an end. And again, I take all of this out of the books that you sent me to go read. And we entered the current warm interglacial period that we're in right now. And it's interesting that the last 10,000 or 12,000 years have been the warmest, most consistently warm period on Earth for the last half million years. And it also really marks the beginning of social and cultural development of now modern humans. What changes started to happen about 12,000 years ago that got us the last yards of where we are today?
Fernández-Villaverde: This has a very clear and simple answer: agriculture. Sometimes it's called the Neolithic Revolution, but in some sense, this is the more consequential change that humans as a species have ever had. The idea that instead of being hunter/gatherers, as we have been for around 90 to 95% of our lives as a species, we started to cultivate the land, and we started to keep herds of animals. Exactly why we transitioned to agriculture is still debated. I think there is widespread consensus that it had to do a lot with climate. Sadly, how the details of that relationship between climate change and the transition to agriculture happened -- as I was mentioning before, this is still a very active area of research -- but agriculture is the big before and after of humankind.
Even if you think about it today, we are a hunter/gatherer living in an agricultural society. By an "agricultural society," I don't mean that 99% of Americans work in agriculture, but that 99% of Americans live out of the food produced by agriculture. And what do I mean that we are "hunter/gatherers" living in an agricultural society? Well, you know, when we are at work at 11:55 -- and this is in normal times -- when you can go to the cafeteria. You're always saying, "I really want the salad. I want to lose weight. I want to be healthy." And then you go to the cafeteria, and you see that big, fat burger with the French fries, and you end up with the French fries and the burger. Well, that's your hunter/gatherer saying, "We just had something. Who knows when is the next time we are going to be able to gather protein and fat? Eat as much as you can." However, our agricultural society is able to provide us with so many calories that we end up being obese. We end up having high cholesterol. And this tension is constant in our lives.
Agricultural societies also created certain communities that are the beginning of cities. And the beginning of cities is also the beginning of viruses spreading through humanity very, very fast -- because we are in large contact. Now we are going through the health crisis of COVID-19. Agriculture also means living close to animals, so a lot of microbes can jump from animals. Agriculture means the appearance of the division of labor, probably also the appearance of a lot of gender division of labor -- so a lot of the gender tensions that exist in our society probably can be traced back to that time. And also hierarchies, because once you have agriculture, you are going to have a surplus of food. Before you realize, you are going to have something that we are going to call a "state." That state is going to have a king or a priest and armies. And before you realize it, you have something that we call "civilization." Whether or not this was good for humankind as a whole is still open to debate. A very famous researcher, Jared Diamond, has called agriculture the "biggest mistake of humanity." I'm not so sure if that's the case or not. But nevertheless, agriculture is such a fundamental change in humanity that it's hard to overemphasize it.
Stone: And it seems like that warming, again, that happened 10,000 or 12,000 years ago really allowed us to go from chasing mastodons for dinner to actually settling in one place because then everything was warmer. Things would grow. We could evolve into an agricultural society, it sounds like.
Fernández-Villaverde: Yes, exactly. Let me just make a small nuance about that. What is not clear is if there was kind of a pull factor. As you were saying, now it's a bit warmer, so it's easier to grow stuff. Or it's a push factor, in the sense that we don't have mastodons anymore to hunt for dinner, so we are forced to grow some wheat. That's the field where there is a little bit of a discussion among researchers.
Stone: Now more recently, and you mentioned this earlier on in our discussion, was the period from about the year 1300 to 1850, which has become known as the "Little Ice Age." And it was, in fact, the period of climate instability and great variability, rather than pure cold. What were its hallmarks and its lasting effects?
Fernández-Villaverde: The Little Ice Age had tremendous impact on Western history -- probably also on ancient history, and as I will argue in a second, in the Americas. And then, through the consequences it is going to have in the Americas, in Africa. So the Little Ice Age is going to make the 14th century and the early 15th century extremely hot in Europe. This is going to interact also with the Black Death, which may actually have been created in part by the Little Age, by changing the way in which rats behave. And Europe is going to become an enormous area of conflict. People may have heard about the War of the Roses, but there were many, many other conflicts during that time.
Part of the consequences of those conflicts is going to be enormous, intense competition within different European estates to gather more resources. You know, remember the old saying that the three things you need to fight a war are money, money, and money. So countries like Portugal or Spain, searching for new sources of revenue, are going to embark in the Age of Exploration, and Europeans are going to arrive to the Americas. This is going to have an incredible demographic effect in the Americas, as the arrival of European technology, weapons, and microbes is going to induce a collapse of the American population. And that's going to also imply that Europeans, looking for sources of labor, are going to start importing slaves from Africa, which is going to have tremendous consequences both for the Americas -- because suddenly you are going to have huge populations that are settled here against their will -- but also for Africa, because that's going to induce a lot of very negative reactions within Africa itself.
It is hard to see that without the Little Age, some of these advances will have occurred so, so quickly. It is also the case that the Little Ice Age is going to change and have a huge effect on the Americas itself, and the big reduction in population in the Americas is going to lead to a lot of reforestation. Remember, this is the collapse of population -- I'm talking here about the 16th century. I'm not talking here later, when more European and African humans arrive to the Americas.
Stone: This would be South America primarily?
Fernández-Villaverde: Yes, South America, but also North America. So a lot of the Native American tribes are going to see a collapse of their population, due to interaction with Europeans, both in terms of violence and conflict and due to microbes. And that's going to lead to a lot of reforestation, even in North America. Again, think about this around 1550, 1560, 1570.
Stone: So what you're saying is as North and South America both depopulated due to war, disease that came with the settlers that came over, where there was a lack of population, then forests regenerated?
Fernández-Villaverde: Exactly. And that's going to suck a lot of CO2 from the atmosphere, which is going to reinforce the Little Age. And that's why probably the peak of the Little Age is around 1640, which goes back to my discussion at the very beginning of these clusters of big global changes related to the year 1640, plus or minus 10 years.
The climate in North America is also very affected by the Little Ice Age, and the shape of the Little Ice Age is also going to have quite a lot of impact on the way Europeans settle. And not only the way Europeans settle, but the differences in the way Europeans settle. So let me give you an example. I teach a class in the spring semester here at Penn called "The Political Economy of Early America." One of my very first lectures highlights the difference between Virginia and Massachusetts. What I try to tell the students is, "Look at the map, even today, of Massachusetts, and a map of Virginia." The thing you realize about Massachusetts is that Massachusetts is a state very heavily centered around Boston. In fact, some of the historical conflicts in Massachusetts had to do with people more to the west of the state resenting how important and central Boston was. In comparison, Virginia doesn't have a very, very large city that comes to mind right away. It's a much more far-dispersed settlement.
And what I highlight is that has tons to do with climate. Massachusetts is a region of poor soil, long and cold winters, and relatively short summers. That led to agriculture not being particularly productive. That led to urban settlements that had to emphasize trade, fishing, early manufacturing, et cetera.
In comparison, Virginia, because of the climate of the time, is a great area to grow tobacco, which leads to very decentralized plantations and a very different political economy. And then I ask the students, "Well, who were the first two presidents of the United States?" George Washington and John Adams. And I say, "Well, let's think about their lives." George Washington was a plantation owner in Virginia in Mount Vernon, which was far away from any major city. And he was trying to take advantage of tobacco, and later on in his life, he tried to move to wheat and other cereals. He was a slave-owner and lived the life of a big slave-owner in Northern Virginia at the time. He was the elite of the elite of Virginia. John Adams was a lawyer. He was a lawyer in Boston. He had the farm, but you know, it was not very different from the way many of us may have a house now in Lancaster County here in Pennsylvania to go to and spend a few days over there. And he thought of himself as a lawyer. He was an urban person with urban, very city-oriented, thinking about the world and about the political economy of the U.S.
And of course there is free will and no human is a photocopy of each other, but one cannot but be amazed at how important the way George Washington versus John Adams looked at the world is influenced by the climate and environment in which they grow. And that is of very, very much consequence of the way Europeans arrived to North America. And that was highly mediated through the Little Age. So I don't want to -- you see, when I'm making this explanation sometimes, there's always a student that asks me, "That sounds a little bit like determinism." And I want to be a little bit careful. I'm not saying that climate is everything, okay? I'm just saying that climate is a very important factor. So let me use an example that I love. It's going to be a sports analogy, but I hope that most listeners can follow it.
Imagine that you are thinking about a soccer game, and I'm telling you that since I'm from Spain, let me pick Spain. You are Andrew -- that's a very Scottish name. So let's assume that Spain is playing Scotland tomorrow. And of course the outcome of a Spain versus Scotland soccer game is not predetermined. Anything can happen. That's why soccer is fun. On the other hand, you know that Spain is a very large country with a very powerful soccer league. Scotland is a smaller country. Their soccer league is not that important. And if you're a betting man, and not knowing much, you know the chances are that Spain will probably win. Again, that doesn't tell you that the game tomorrow is always going to be a Spanish victory. A lot of things can happen, okay? The Scottish can have a great day, and the Spanish may screw up. The Spanish coach may make a lot of silly decisions. I'm just saying that on average, if you have 100 games of Spain against Scotland, Spain is probably going to win -- I don't know -- two-thirds of them.
And that's the way I like to think about climate. It's not saying that you're always going to have the same outcome and that everything is predetermined and that we may as well go home. It's just saying that it is constraining our choices in such ways that some outcomes are going to become much more likely than others.
Stone: Let me ask you about where we are today with climate. If we look at climate today, we see a warming trend that's now 150 years old, and that warming trend has persisted much longer than anything that took place during the Little Ice Age. There was not so much consistency in the climate at any point during that ice age, or the Little Ice Age. Where does our acknowledgement and understanding of climate change, which earlier generations did not have -- where does it leave us today?
Fernández-Villaverde: Okay, I think it gives us two ideas. Idea one: Climate change can have momentous consequences. This is something you need to take seriously. This is not, "Oh, Sunday was a little bit warmer than Saturday, so I pick up a jacket instead of a t-shirt. Many of those consequences are unforeseen. Societies have very complex, dynamic systems, and what may happen if we warm Earth another couple of degrees may be something that no one -- not even the best scientists -- can forecast at that moment, in terms of society dynamics.
So if you are just being a little bit careful, you should be very worried about it. No one likes unknowns. Just think about yourself as an investor, okay? And I'm telling you, "Hey, I have this great investment opportunity, but there is a lot of uncertainty about it." You're going to be like, "Eh, I don't like that." So think about climate in the same way. It's going to be an investment that is going to have very uncertain outcomes if we don't do something about it. And most people are not going to like it.
Second, I think it gives us awareness that there are a lot of things that we can do now. We cannot do anything about the tectonic plates. We cannot do anything about the orbit of the Earth. But we can do a lot about CO2. And we think and we believe that CO2 is of the first order of magnitude for our experience over the last 150 years, and in particular over the last 30 years. And there is really something that we can do about it.
So if you put together that if we don't do something, a lot of stuff can happen -- some of which can be really bad -- with, "We can actually do something to try to prevent that," I think it leads us to saying, "Well, let's do something about it." And I think that's the real lesson from this history of climate, saying, "Look, climate changes -- the consequences are large. We want to be careful about it, and we want to try to manage it in a smart way." And that goes back a little bit to my point about determinism. There is stuff we can do about it. The Little Ice Age destroyed the Spanish monarchy and the Ming Dynasty because they didn't have good institutions to deal with it. But the Little Ice Age did not hurt the Dutch Republic, the United Provinces of the Netherlands that March, because they had great institutions. So maybe precisely because we are going to face this climate change, we need to have good institutions. We need to have good research centers, and the Kleinman Center is a wonderful example of that. And we need to have good policies. And I think that what I have learned after all these years reading about this issue is that good policies are now more important than ever. This is not --
It's a little like COVID, you know? Having someone incompetent running the Ministry of Health or the Department of Health when everything is fine -- you know, it's not ideal, but it's not a big deal. Having someone incompetent running the Ministry of Health of your country has very, very bad consequences. And that's something that people need to take seriously.
Stone: Let me ask you a final question, taking off of what you just said. What changes -- societal or otherwise -- do you see today as a product of a warming climate, the warming that we've had thus far?
Fernández-Villaverde: Thus far, I don't think we have seen that much yet. I know that there are some people that claim we have. I don't really see a lot of evidence for that. At the same time, climate change is a very highly nonlinear process. What do I mean by "highly nonlinear?" It's a situation where you go from one to two, and nothing happens; two to three, and nothing happens; three to four, and then you have a collapse. And that's what worries me. It's kind of hard to tell people, "Look, we should be really serious because something very bad is about to come during the first moments, because the real consequences are still very minor."
Can I tell you a small anecdote that's more personal?
Stone: Sure, please do.
Fernández-Villaverde: I don't want to make this too much about COVID-19, but I think there is something of an analogy over here. So in early February, I was really worried about COVID. I also write papers about the dynamics of illnesses and epidemics. And epidemics, you know, they have shown up already a couple of times in this episode. So they are also very important. And around February 7th, I was really, really extremely worried. To show it, and I have proof of that, my wife and I were so worried that we bought a 30-day supply of emergency rations, in case we were facing a real problem with food. You know, fortunately we never got to that, but we thought it was prudent.
Most of the people I talked to on February 7th, even as late as February 25th, they felt that COVID was going to be a minor issue. And then on March 7th, the whole of Europe is in a lockdown. Our lives have been completely changed in dramatic ways. And this was like what -- 15 days? That's what worries me about climate change. That fine, now it's a little bit warmer than 10 or 15 years ago, but --
Stone: We don't think much is going to happen?
Fernández-Villaverde: Yes, but what if what is happening in 2020 is just February 27th, and we are going to wake up on March 3rd, and we are really, really in a very terrible situation. Think about this as an investor. Now I am going to put my hat on, when I teach the students at the MBA at Wharton. Think about this as an investor. On my end, we take this seriously, and we fix the problem. And then it will have been the case that nothing too serious will have happened. Well, no big deal. We cleaned the air a little bit. How bad can this be? But if we avoid a very serious problem, we'll really save ourselves a very, very large cost. So I think that even, yes, as a pure business proposition, this makes a lot of sense. So it might end up we have been way better at controlling COVID on February 15th. We had to take this as a planet. And I don't want to single out any country, okay? To avoid any of your listeners thinking that I have any political leaning, let me criticize the Spanish government, which probably most of your listeners have zero opinions about.
The Spanish government did not take the COVID crisis seriously on February 15th. Had the Spanish government taken the crisis seriously on February 15th, the outcome would have been way better. And that's what I'm trying to say. If you take things seriously, and then it was not a big deal, well fine -- you were just careful. If you save yourself from a very, very bad situation, the trade-offs, the pay-offs are yes, absolutely fundamental. And that's what I try to transmit to people. I know it's a little bit of a difficult idea because you are thinking about, "Try to be careful about what we haven't seen yet." But we really need to transmit this idea.
Stone: Jesús, thank you very much for talking.
Fernández-Villaverde: Okay, thanks for having me a second time.
Stone: Today's guest has been Jesús Fernández-Villaverde, a Professor of Economics at the University of Pennsylvania. Today's episode concludes the fourth season of Energy Policy Now. We'll be taking a break through the rest of August, and we'll be back with new episodes of the podcast in September. In the meantime, if you need an Energy Policy fix, check out the Kleinman Center's website, where you can find our archive of nearly 100 podcast episodes, as well as a wealth of research and blogs. You can even keep up to date with the center by subscribing to our Twitter feed. Thanks for listening to Energy Policy Now, and we'll see you in September.