March 8, 2008
The Undercover Economist: Meltdown economics
So much hot air has been spouted over climate change it is a wonder the ice caps haven’t melted already. At first the debate was whether climate change was happening, and if so whether it was humanity’s fault. Far too late for the tastes of most economists, the debate then started to encompass other important questions, such as whether the costs of responding to the threat outweighed the benefits.
Perhaps I should withdraw my jibe about hot air. This is such an uncertain business, and the stakes are so high, it is no surprise that the debate on both questions continues. Still, that should not distract us from asking a different kind of question: given that climate change is going to need a policy response, what kind of institutions are best suited to implement it?
Continue reading Tim Harford’s column here. Please post comments below.
Long term tax rises in the US on gasoline would be a good thing - they might even pay for a health service. But will anyone really “bell the cat”? When are we going to hear Barack say “Yes we can raise gas taxes to save the planet and the health of our poorest people”
Posted by: Alistair Kelman | March 8th, 2008 at 9:18 am | Report this commentIn London we have a congestion charge which will soon rise to £25 a day for SUVs - something similar for US cities might be a more acceptable solution.
I fear that oil is not going to rise much above $100 per barrel - the Saudis will not let it happen because high crude oil prices make alternatives, such as Canadian oil shale recovery, economic.
Monetary disincentives as an economic tool effectively curbs consumption, yes.
But without all revenue invested towards alternatives, of what use are they except to assuage our egos and to fund government waste in other areas?
Talk about “costs of ‘responding’ to the threat outweighing–nay, without–the benefits”.
Posted by: HKLivingston, 26, investment banker | March 11th, 2008 at 4:07 am | Report this commentI thought climate change already had a policy response: Kyoto protocol, EU carbon emissions trading scheme, increased public investment in R&D in energy efficiency and alternative energies, even repositioning/rebranding by oil companies.
Democratic governments have the mandate to do more: make binding agreements with other nations, set up regulatory frameworks like ‘cap and trade’, invest in producing new technologies, lead public opinion and introduce consumption taxes (balanced by reduced income tax for the poorest, for whom energy represents a larger percentage of overall spending)…
Monetary disincentives to consume are also incentives to innovate - with or without public spending…
Posted by: Dave | March 11th, 2008 at 11:56 am | Report this commentDave,
NEWS FROM THE REAL WORLD I:
The very country where the Kyoto Protocol was inked, though eager to brandish its ‘climate credentials’, has yet to agree on actual caps.
So far, all that the Japanese industrial giants have done is travel to remote countries to bulk-purchase allotments to make up for no reductions in one’s own emissions–the modern environmental equivalent of whipping boys.
NEWS FROM THE REAL WORLD II:
“The road to environmental hell is paved with good intentions and corrupted incentives.”, among which is government exploting environmentalism as an excuse for more revenue-raising without public investment in alternatives–the modern environmental equivalent of indulgences sold for fund-raising.
NEWS FROM THE REAL WORLD III:
Posted by: HKLivingston, 26, investment banker | March 11th, 2008 at 1:22 pm | Report this comment1 Fuel efficiency standards and
2 rising fuel costs
alone–without improvements in public transport–do not get us too far. THINK: Japanese mini-cars run on 30km per litre (vs 7 for standard European/North American models) and petrol has risen from to $108 a barrel (vs $20 pre-MRC2003)–yet there is still much wailing and gnashing of teeth over impending environmental doom and how little progress we have managed so far.