A growing chorus of U.S. economists warns that high inflation and rising oil prices, plus global instability, could reverse recent economic growth. But a Santa Rosa conference expert from UC Berkeley gave a more positive outlook for the Californian economy Thursday. But he also warned that environmental decline is a greater threat.
California is recession-proof and our local economy isn’t going to tank, said David RolandHolst, Ph.D. at a Sonoma County Economic Development Board Conference at the Luther Burbank Center for the Arts.
The conference theme was “Climate Change and Its Impact on Our Economy”. Roland-Holst, a professor in Agriculture and Resources Economics and a leading authority in economic forecasting and its relationship with the environment, is the keynote speaker.
He told the 170 community, civic, and business leaders that he was bullish about the Sonoma County economy. Good news is that I don’t see an economic downturn and signs don’t point to one here due to the wars in Eastern Europe. However, the Federal Reserve isn’t going to let interest rates rise too much and has already begun to slow down the (inflationary) accelerator with a series if quarter point increases this fiscal year.
He said that the Fed is still expected expand the money supply and that California has an untapped government budget surplus. This is due in large part to the numerous initial public offerings (IPOs) of stock that led the state to a tech boom during the COVID crises.
Some national forecasters are following the New York Fed President William Dudley’s lead. He called a recession almost inevitable, but the majority of economists think it unlikely over the next one year, according the Associated Press. Experts believe that a hot job market is essential to halting the economy’s slide. They also recommend strong corporate profits, large savings, and low personal loans. One hallmark of recessions is high unemployment.
Roland-Holst explained that California must be aware of the risks associated with using fossil fuels to disrupt the delicate chemical balance in our atmosphere. He noted that more than 80% of greenhouse gas emissions are caused by conventional energy sources such as electricity production and transportation.
His presentation included an assessment on climate risk, how and where we are now, and where we are going.
Roland-Holst claimed that global fossil carbon emissions have increased by billions of tonnes per year since 1950s. This is a result of the presence of petroleum in the atmosphere. This graph shows a remarkable hockey-stick shape, with the graph increasing from 2 billion metric tonnes in 1950 to more than 9 million metric tonnes by 2000. The trend of rising global temperatures is continuing today, as evidenced by the marked increase in historical temperature up-and down cycles.
Climate change: Projected effects According to CaliforniaThese can have a negative impact on the food supply, water, ecosystems, and could lead to extreme weather events, such as rising storm intensity, forest fires or droughts, flooding, heat waves, and rising sea level.
Roland-Holst provided this example of such impacts: The average sea level in San Francisco Bay rose at an annual rate of 1% from 1900 to 2000. This acceleration rate is alarming. One meter of sea rise would flood large areas of San Francisco International Airport.
Another alarming factor is the frequency and severity of California wildfires and drought areas.
Globalization has brought rapid growth, which has been good for material living standards. Roland-Holst stated that as incomes rise, so does the intensity of resource use, which challenges our assumptions about sustainability. This means that we are facing significant risks from climate change. However, this can also be viewed as an opportunity to stimulate the economy.
He suggested several mitigation options to reverse these trends in California.
- Transfer from electric power to renewables (30% reduction in GHG emissions).
- Electrify transport (40%).
- Electrify buildings (15%)
- Convert industry into electricity and hydrogen (10%)
- Reduce waste and recycle biomass (5%).
Sonoma County policymakers should be looking at adaptations, including investments in energy efficiency, water resilience, and people.
These mitigation steps will not stop global warming but they can create jobs and improve air quality.
Roland-Holst’s research focuses primarily on international trade, agriculture and development. He is the author of six books and more than 100 articles.