In Praise of a Carbon Tax

climate_change

I have invited myself to do some writing over at Aeon Ideas. My first piece addresses the question of what I would be willing to sacrifice in order to combat climate change. An excerpt:

I am perfectly willing to sacrifice something to combat climate change. I am willing to sacrifice tax money. I invite policymakers to enact a carbon tax that will be designed to reduce carbon emissions in order to slow–and hopefully, reverse–the process of global warming. I invite pundits to advocate the enactment of such a tax, and to give our governing class the political cover necessary to implement a carbon tax. And I invite the electorate to reward politicians who call for a carbon tax by electing and re-electing them to positions of public trust, and to punish those who do not by denying them election to those positions. Back in 2007, I argued for the enactment of a carbon tax that would “be pegged to the three-year average change in global tropical temperatures.” My concern back then was to measure the degree to which human activity might be contributing to global warming, and I signed on to the economist Ross McKitrick’s plan to tie any carbon tax to the three year moving average temperature in the tropical troposphere. If it were found that human activity is contributing to global warming, then we could increase such a tax until any increase in carbon emissions could be halted and reduced.

[. . .]

But here is the thing: I don’t think that the implementation of a carbon tax should constitute a “sacrifice” of any real kind. Indeed, short of geo-engineering, a carbon tax is as close as we are ever likely to get to using a silver bullet to reverse climate change. Not all solutions to climate change need to involve pain, and just because a solution involves pain, that does not mean that the solution will be powerful or consequential.

Longtime blog readers of mine are, of course, quite familiar with my stance on the desirability of carbon taxes. But whether or not you are a longtime reader, check out the rest of the piece.

(Photo Credit.)

Comments

  1. If we knew that CO2 emissions produced a large net negative externality, a carbon tax along the lines you suggest might well be the best way of dealing with the problem.

    We don’t know that. Most of the attention has been focused on the question of whether temperature is trending up and whether humans are the main cause. But the weak part of the argument is the claim that temperature increases of the scale projected by the IPCC would have large net negative externalities. The effects are both positive and negative, uncertain and spread over a long period of time, making it hard to estimate even the sign of the sum. That’s the same argument I made some forty years ago in the context of population, where there was a similar claim of large net negative externalities without, so far as I could tell, any good reason to believe it.

    The current climate was not designed for us nor we for it, and humans currently prosper across a range of climates much larger than the projected change—raising Minnesota to the temperature of Iowa seems unlikely to produce catastrophe.

    A priori, there are at least three reasons to expect the net externality to be positive. One is that AGW, for well understood physical reasons, tends to increase temperatures more in cold times and places than in hot, hence more when it is a good thing than a bad. Another is that human habitation is currently limited mostly by cold, not heat—the equator is populated, the poles are not. An increase in global temperature will shift temperature contours towards the poles, increasing the amount of land suitable for human use—an effect orders of magnitude larger than the loss of land due to sea level rise. A third is that CO2 is an input to photosynthesis, hence increased CO2 tends to increase agricultural productivity.

    There is only one a priori argument I can see on the other side—the fact that we are currently optimized against the current environment, hence any change will force us to write off some sunk costs. That would be a serious argument against rapid change. But we are talking about warming on the order of tenths of a degree per decade, sea level rise on the order of millimeters a year. By the time local climate has changed enough to affect the optimal choice of crops, farmers will in any case have changed varieties several times over for other reasons. The argument might be stronger for non-human species, but I have not seen a convincing argument that the consequences would be catastrophic or anything close.

    For some evidence of how hard it is to make the case for catastrophically large negative externalities and of the way in which the public presentation is biased, see:

    http://daviddfriedman.blogspot.com/2014/03/acts-vs-words-case-of-nordhaus.html

    and the piece it links to.

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