A new Cato study, by Indur Goklany, suggests that instead of carbon taxes we should spend money on better water policy, drought prevention, anti-malarials, sea level protection, and so on. In general we should make the world as wealthy as possible. Here is the link, the piece is intelligent throughout and well worth reading.
Two questions suggest themselves. First, is the choice either/or? I don’t see arguments against a revenue-neutral carbon tax. Second, is there really enthusiasm for the proposed measures or is the real intent to do little or nothing on carbon? Since this is both a Goklany piece and a Cato piece, an interesting question arises: who exactly is now obliged to push for anti-malarial foreign aid? Cato? Goklany? Either/or? Both? Or is it enough to just make the comparison once and leave it at that?
Given that temperatures peaked in 1998 and have stalled out since then, at what point are you going to question whether the AGW hypothesis was correct?
Climate has always changed in the past and will continue to change in the future, but that does not indicate that CO2 emissions are responsible for those changes. . .
Given increasing marginal costs of most measures, it probably makes sense to work on all margins simultaneously.
That said, I would worry that many of the effects of climate change are unpredictable. Thus, we might want to put more effort into revenue neutral carbon taxes (at least to the pigovian level), as an insurance policy against some unknown catastrophe that might not be addressable with things like water policy.
Are there “low hanging fruit” in GW response? A revenue neutral carbon tax seems like one example. And libertarians should favor a synchronized unwinding of all energy subsidies. The carbon tax is simple, efficient, and it should be enough to open the door to truly viable alternatives.
A carbon tax should also encourage energy efficiency and good design. We could probably do some simple things there as well … though we might lose libertarian support. How many areas have minimum insulation standards in building codes?
When I hear people discussing the issues of a carbon-tax with respect to the AGW hypothesis, it would seem that their numbers tend to be off. If the IPCC’s AGW hypothesis is correct, the amount of carbon reduction required for any kind of real climate payoff is utterly enormous. You can’t simply talk about ‘increasing efficiency’ as if this is something that can be achieved indefinitely. The laws of thermodynamics prevent this. Energy production processes have theoretical efficiencies, and there are already natural incentives in place to try to achieve those. Some common energy production processes simply don’t have enough distance between where they are now and maximum theoretical efficiencies. The only way to reduce carbon meaningfully in those instances is to use significantly less energy – not through efficiency savings, but through lower consumption, and presumably, lower utility. Internal combustion engines are extremely good at what they do, the way to make cars produce less carbon is to make them smaller, lighter, and less powerful – thereby reducing their utility. The bottom line is that it is quite impossible to reduce our carbon output through efficiency gains in any meaningful way with respect to the AGW hypothesis without either swearing off carbon based energy sources entirely, or reverting to depression era levels (or, say, rural Indian levels) of energy consumption and standard of living.
If you want to talk about shifting energy production away from carbon based sources, towards nuclear for instance – which, at this point, is really the only technologically viable option to produce the amount of energy we need, then there is a real possibility there to reduce carbon emissions.
Carbon sequestration technology may or may not be up to handling the task, I don’t understand enough about it to comment.
Not sure I follow the offsetting question above. The revenue neutral plans I’ve heard of cut social security or other taxes and use a carbon tax for (interim) funding.
The other question above was about how long carbon taxes can last … I think we all hope for viable energy alternatives. If we don’t get those we’re in trouble anyway.
With cheap solar and electric SUVs we might need to start paying social security again
, but that would be success, wouldn’t it?
CO2 isn’t the only negative externality to come from burning fossile fuels. However I think most people here are arguing that while a carbon tax may be undesirable, it is more desirable than draconian pay roll taxes.
If you are hesitant to accept the AGW science, please watch Ralph Cicerone, president of the National Academy of Science, discussing global warming.
I think the video captures the recent accumulation of knowledge …
Wake me up when Americans like higher energy bills, then we can discuss what to do.
“Wake me up when Americans like higher energy bills”
It’s true that they don’t like them. They lobby congress for lower gasoline prices and shallow congressmen pander. But, the revenue neutral thing is supposed to buy them off … noting that they like lower taxes too.
I don’t view current debt and deficit patterns to be sustainable. I think something will have to give … but I could be wrong.
I hold a little hope that “getting real” will allow us to drop stupid subsidy and incentive programs, as we shift tax revenues.
On the whole energy thing I’ve complained that we are all carrot and no stick. We hose everybody down with cash. Anybody who buys a hybrid, promises clean coal, or distills ethanol gets a reward … but we do nothing that would take the feed bag away from energy consumers.
This is really degenerate democracy, when we borrow from the future to bribe ourselves to do the right thing now.
If global warming is a problem and if CO2 is a significant cause of it, then a carbon tax should increase economic efficiency. Since other taxes are understood to result in a deadweight loss, a revenue-neutral carbon tax should have positive economic effects — a free lunch.
Ben:
Lomborg is a social scientist, not an economist.
Vinay Gupta:
“Nanosolar is producing solar panels which produce electricity for a fraction of the price of coal fired power plants,”
but “price of coal” = _current_ price, not accounting even for the entry of solar power itself into the market, inter alia.
I think you miss the central point of this paper: AGW just isn’t expected to be that bad. The benefits of massive abatement don’t justify the costs (in the expected or pdf risk-adjusted cases). As a second point, there are some cost-justified actions that can be taken under the heading of ‘adaptation’.
What this doesn’t address is the non-quantifiable chance of a truly ‘out-of-pdf’ catastrophe. This is the basis of Wetzman’s much more sophisticated argument for emissions reductions, research, adaptation and so forth.
If anybody’s interested, there is an ealier MR post reacting to my paper crticizing Weitzman’s analysis. For what it’s worth, you can see my reaction to the reaction in the comment string.
http://www.marginalrevolution.com/marginalrevolution/2008/01/06/index.html
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