Tim Harford writes to me:
Polluters in Europe currently have to pay about euros10 per tonne of carbon dioxide as part of Europe’s efforts to meet its obligations under the Kyoto agreement. That is less than one penny per kg of carbon dioxide. Perhaps that price, in a volatile market, is too low. A Government Economic Service paper on the social cost of carbon emissions recommends a cost closer to euros25 a tonne of carbon dioxide. Even that is less than 10p for a kilogram of mange-tout, or a penny for a 100g packet. If consumers were forced to meet those costs – as in principle they should be – the sum would barely register. There are good environmental reasons to tax airline fuel, but such taxes are not likely to make food imports substantially more expensive.
Here is the link, and Tim notes there are typos in the article, the text is correct as above. When it comes to the social cost of food, one estimate is that congestion and accidents account for two-thirds of that sum. So maybe you should walk or bike more, but eat what you want, from where you want. Here is, again, my review of Michael Pollan’s The Omnivore’s Dilemma.
By the way, for a more skeptical view of a carbon tax, here is Robert Samuelson’s piece from today’s WP.
Addendum: The Economist (MMM?) refers me to a new "AntiPigou" and "Anti-Mankiw" blog, which I have yet to read.
Robert Samuelson doesn’t actually come up with an argument against a carbon tax; he merely states it won’t happen, because at present consumers don’t seem to take account of carbon emissions and poor countries are growing. These are the reasons that climate change is seen as the greatest market failure.
Nor does he address Stern’s conclusions about the cost of mitigating change which are far more substansive than comparing the cost of solar power and coal fired stations.
In fact Tim Harford’s point about the low cost of including the cost of carbon in food imports makes the point nicely – it doesn’t have to cost much to take account of the environment, if it is done properly.
We also need more open debate. Let’s start by asking if global warming is good or bad.
Reducing CO2 emissions by 90% could not be done by a democracy. It could only be done by a ferociously controlling – and actually functioning – global dictatorship. Even Chinese or North Korean-style dictatorships wouldn’t be enough – they’re too corrupt.
If that’s what’s needed, I’d rather take my chances with global warming, which is still highly questionable, before I sacrifice my freedom for the sake of the great global ecocracy.
There are also good environmental reasons to blast more aerosol into the atmosphere to shrink global warming, but we wouldn’t want to do it, because of the side-effects.
The same goes for aeroplanes, we wouldn’t want to restict air travel, because it would mean more cars, more trains and less trade. All-in-all this would worsen the situation.
As to the CO2-tax, it is worthless, because enterprises would pass it onto the consumer, instead of changing their productions (except the tax were really steep). Also, high environmental taxes on something that is necessarily needed doesn’t affect the use of it much. Best example is the car in Germany,w hich is heavily taxed (Kfz-tax, renewable energies-tax, green-tax etc.) and not only directly, but also indirectly (via gasonline).
But the consequence is a reduction in consumption, but not a reduction in using cars…
And we have an international element – if one county were to impose a series of green taxes that internalised all external costs, airlines would go elsewhere for their fuel etc.
There needs to be international cooperation on this issue. Unfortunatly I think we might have another commons on our hands here.
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