Mythbusters
Five reasons why even global warming skeptics should support a carbon tax

Many friends and colleagues of mine who share my libertarian views are aghast at my organization's policy proposal of the carbon tax to combat global warming. Most of these perturbed individuals are self-styled global warming "skeptics" who are much more persuaded by the scientific evidence doubting the seriousness (or even existence) of anthropogenic climate change than the evidence confirming it.

This article is an attempt to reach out to my free-market friends with five reasons why the carbon tax still is the best option for American policy - even if they're right about global warming.

1. It's just the facts

Most objections to climate change legislation, not surprisingly, object to any supposed scientific consensus that really confirms the existence of anthropogenic climate change. Undoubtedly, despite the claims of The Governator [] to the contrary, this scientific knowledge is not entirely settled.

But the way to figure out the actual scientific consensus isn't for idiot non-climatologists like myself or my opponents to blather endlessly about something we know nothing about, citing studies in a field that we have no expertise. Nor is it for politicians to make their own egocentric assumptions of climatalogical omniscience.

The way to answer whether there is a scientific consensus about the effects of man on the climate is to seek the expert opinions of as many climatologists and economists as possible. (Think the AP and Coaches' polls in college football.) The experts should vote on their informed judgment on the social cost - positive, negative or zero - of one ton of CO2 emitted, their expert calculations should be averaged, and that consensus calculation should be then charged to all emitters of CO2 via a carbon tax. Then no one can complain about the facts - from either side.

2. Too Coase for comfort?

Nobel Laureate Ronald Coase famously proved that the social cost of a pollutant is not always the cost that is most efficient for a polluter to pay, because the market can sometimes negotiate a solution for less.

In the case of global warming, the Coasian market-based solution is called carbon offsetting. Carbon offsets are services which plant trees or other "carbon sinks" to counteract the greenhouse effects of greenhouse gas emissions. The offsets are priced at the market value for the service rendered - namely, slowing greenhouse gas emissions. Carbon offsets currently sell for less than the estimated "social cost of carbon," (about $5-10 per ton) and thus would be superior methods of combatting global warming according to the Coase Theorem.

This organization proposes that when the market price for carbon offsets is less than the "social cost of carbon" (as it is now), that the tax should be set at the carbon offset market rate. To the relief of conservatives everywhere, this feature allows our carbon tax to automatically implement the most cost-effective way of combatting global warming possible. A separate advantage of this feature is that it prevents alarmist scientists - who have an unavoidable financial incentive to preach doom and apocalypse - from driving the economy into the ground.

If the American government were to embrace the Coasian method of regulation, rather than EPA's current command-and-control-style mandates, it would do wonders to make American environmental policy more rational and market-friendly - a true victory, indeed.

3. Be prepared, like the Boy Scouts

As the UN's IPCC report has warned us, some of the negative impacts from climate change are inevitable, no matter what the human policy response. Or, in the words of Jerry Taylor of the Cato Institute, "there is greater than zero chance that greenhouse gas emission cuts will produce no economic gains at all." So in the very likely event that human efforts to reduce greenhouse gas emissions are insignificant, or otherwise still fail to prevent global warming, the carbon tax still helps America in the long-run.

The first purpose for carbon tax revenues, according to our proposal, should be used for adaptation to the documented effects of climate change, such as building sea walls and levees to prepare for rising sea levels, and building more efficient water distribution systems to deal with droughts and decreased snowpack. While this prepatory effort will have the auxiliary benefit of avoiding massive government failures such as the aftermath of Hurricane Katrina, it also is the smartest approach to global warming. Not only does it recognize the uncertain impact of man on the climate, but it takes intelligent action to protect our environment anyway.

4. Read my lips

Because advance preparation is cheaper than reactive spending, and because most of the noticeable effects of climate change won't begin taking place until the second half of this century, fortunately, intelligent preparation for climate change shouldn't cost that much. Either way, the carbon tax should be accompanied by a comprehensive across-the-board tax cut, to ensure the economy can handle adjusting to the true cost of greenhouse gas emissions.

5. Win the war on terror

Perhaps the greatest advantage of the carbon tax is its geopolitical impact. First, it is the easiest for developing nations to adopt in their own - and ultimately indispensable - policy responses to climate change. The carbon tax raises government revenue, is easy to implement, and is easily adjustable.

Most importantly, the carbon tax creates a universal market-based incentive for the development of alternative fuels, which conveniently helps reduce America's dangerously inconvenient dependence on Middle Eastern oil. Such a welcome shift in energy consumption would help reduce the economic threat from terrorism, as well helping to starve the massive petrowealth of brutal Islamist dictators. It would also improve human health, ensure a more enjoyable human environment, and eventually reduce energy costs for all Americans. Even if you believe global warming is a hoax, you probably still agree that alternative fuels are in this nation's best interest.

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Justin said:

So let me paraphrase your argument: 1. You're all too stupid to know what you're talking about, so let the experts vote. Don't worry about how we decide who the "experts" are. And you're not allowed to complain after the fact either; the scientists will be our new dictators. 2. If you're a conservative, you'll be relieved to know that we're going to solve this pretend problem by selling indulgences at market rates. Never mind that we're accepting a silly premise. 3. The precautionary principle, which is inherently destructive and responsible for the deaths of millions since the dawn of the ecotard movement, is a good idea. If we're lucky, our bogus boondoggles will have some kind of side benefit. 4. Even though we're spending the money generated on public works projects to solve a nonexistent problem, we'll cut taxes to lessen the burden, and pretend this is why, even though taxes should be cut anyway. 5. Creating false markets via new taxes is now to be known as a "market-based" incentive. It will somehow starve the income of oil producers, all of whom are evil, even though they produce the only cheap, effective source of energy other than nuclear. It would magically make the world better (just don't ask how). And even if you think this whole thing's a crock, you must agree that oil is evil and everything else is better (don't ask why). Did I get the gist of it?

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February 23, 2008
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Danny Shahar said:

It's been my impression that most libertarian solutions to problems involve either thinking of new ways for voluntary actions to solve problems, or looking to correct injustice resulting from inadequate respect for rights. It doesn't seem like the policy you propose has any of the core features of the former approach, so I assume you take it that a emissions tax would correct injustice resulting from climate change? If that's the case, then you need to make that argument more explicitly. If you do, I think you may find that "paying social costs" doesn't really conform to the way you ordinarily think about remedying rights violations.

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March 12, 2008 | url
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Danny Shahar said:

	(oops...an emissions tax! )
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March 12, 2008 | url
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Matt Harrison said:

Mr. Shahar - You correctly identify our purpose: to correct injustice from inadequate property rights. Of course our approach does not conform to the "ordinary" conception - because the ordinary conception is incapable of solving the problem posed by global warming. (Infinite transaction costs, uncertain harm, and indistinguishability between injurers and victims). Read below - perhaps the objections to the other post will aid your understanding.

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March 14, 2008 | url
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Matt Harrison said:

Justin - "1. You're all too stupid to know what you're talking about, so let the experts vote. Don't worry about how we decide who the "experts" are. And you're not allowed to complain after the fact either; the scientists will be our new dictators." Yes, experts know more than you or I do about the science of climate change. This should not surprise you. Second, merely because the selection process isn't outlined in detail in this op-ed doesn't mean it's irrelevant. But to assume scientists have a monolithic political viewpoint is ignorant, a weak excuse to disregard science, and an argument belied by the facts. (Ever heard of Ronald Bailey or Pat Michaels?) Third, the "dictator" power of the experts is intentionally limited by a) the presence of other rational expert voices who can challenge the data, including the dozens (perhaps even hundreds) of expert skeptics, and b) the fact that when the market price of offsets are lower, the market price sets the rate. Your "dictator" hysteria is thus laughable. "2. If you're a conservative, you'll be relieved to know that we're going to solve this pretend problem by selling indulgences at market rates. Never mind that we're accepting a silly premise." For assurance that the premise is not silly, please consult the following work of a Nobel Laureate in economics: Ronald Coase, "The Problem of Social Cost." http://www.sfu.ca/~allen/CoaseJLE1960.pdf Summary: the negotiation of externalities (defined as harms occurring to those outside a given transaction) should include negotiation, allowing the most cost-effective method of preventing harm. Our proposal achieves this, to the greatest extent possible. Given nearly infinite transaction costs in the case of global warming, compensating directly for harm is clearly impossible. Who do you think you can sue for global warming? The whole world? The inventor of the internal combustion engine? "3. The precautionary principle, which is inherently destructive and responsible for the deaths of millions since the dawn of the ecotard movement, is a good idea. If we're lucky, our bogus boondoggles will have some kind of side benefit." Nothing is inherently destructive about the precautionary principle - it is only destructive when it is applied in an economically inefficient manner. What's funny is we agree with you in opposition to the "ecotards." But just because environmentalists have harmed the economy in order to achieve their goals in the past doesn't mean that every policy that protects against environmental harm will do so. It is common sense: when harm is occurring, it is best to stop it. The legal principle of "intent" includes acting with "knowledge of a substantial certainty that harm will occur." If we continue to allow emissions without the recognition of the documented climatological trends, we are intentionally complicit in the harm to the earth. There's nothing intelligent about that.

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March 14, 2008 | url
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Matt Harrison said:

Continued - "4. Even though we're spending the money generated on public works projects to solve a nonexistent problem, we'll cut taxes to lessen the burden, and pretend this is why, even though taxes should be cut anyway." No claim is made that taxes should be only cut to fund the carbon tax. If you had read our other work, you would know this. The attempt is to make sure the policy encourages economic growth and adaptation, which as the Cato Institute noted, is the most efficient policy approach to global warming. As for the "nonexistent problem" part, you're on the wrong side of the science on that one. Even Pat Michaels of Cato, the leading skeptic, admitted in a recent climate change conference that "global warming is real, and we're causing it." What he wants - what all of us libertarians want - is to make sure the policy approach to global warming is driven by science and not unduly burdensome to the economy. It's amusing - you accuse us of being destructive, but then when we design a policy to avoid economic destruction, you accuse us of disingenuous motives. It would be more helpful for you to recognize the policy for what it is - the first market-friendly exercise of the precautionary principle in combatting global warming. "5. Creating false markets via new taxes is now to be known as a "market-based" incentive. It will somehow starve the income of oil producers, all of whom are evil, even though they produce the only cheap, effective source of energy other than nuclear. It would magically make the world better (just don't ask how). And even if you think this whole thing's a crock, you must agree that oil is evil and everything else is better (don't ask why)." First, the carbon tax will make alternative fuels cheaper relative to fossil fuels. This is called an economic incentive. Those who understand markets also know that incentives work - but certainly not "magically." Second, no claim was ever made that oil is intrinsically evil. If you knew what kind of car I drove, you'd understand that. We understand that it is easier for you to create straw men - pretending your opponent is a neosocialist - rather than recognize the intelligent and innovative arguments of us libertarians. However, you embarrass yourself. Burning fossil fuels, however, has clear negative externalities, and you don't even need to be an expert to know that. Furthermore, even the most pro-market advocates can recognize that markets can occasionally fail. This is the recognition of Coase and other intelligent economists. The externalities of pollution is a classic (perhaps even textbook) case of market failure. The only question is how the government can help facilitate the creation of markets (read: NOT command-and-control regulation) to help address these real social problems. We made an effort to do so - and given your irrelevant objections, we will continue to congratulate ourselves in our success.

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March 14, 2008 | url
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Danny Shahar said:

Well let me point out four issues of contention that you don't seem to be explicitly taking into account, which might lead people to oppose your argument. First, a policy of climate change mitigation will result in people living different lifestyles, traveling to different places, meeting different people, and conceiving their children at different times. The result will be that a policy of mitigating climate change will bring it about that a different group of people come to populate the Earth than would have if we had let climate change occur unopposed. Accordingly, the people who will be negatively impacted by climate change will be made no worse off than they could otherwise have been, because preventing climate change from occurring would also have prevented their existence. This is referred to as "The Non-Identity Problem," and it was introduced by Derek Parfit in Chapter 16 of his book, Reasons and Persons. Generally, when we talk about social "costs," what we mean is that people are harmed by certain things, and that we need to compensated them for that harm. In light of the Non-Identity Problem, however, we need an alternative way to talk about these kinds of things. For more on this, you might be interested in Steve Vanderheiden's essay, "Conservation, Foresight, and the Future Generations Problem," James Woodward's essay, "The Non-Identity Problem," and John Broome's book, Counting the Cost of Global Warming. Second, the costs of climate change will be realized far into the future. In typical cost-benefit analyses, which underpin discussions of social costs, discounting is used to compare future costs to those realized today. The issue of what discount rate is appropriate is a matter of considerable debate. Some economists take discounting as obvious; see, for example, Richard Newell's and William Pizer's essay, "Uncertain Discount Rates in Climate Policy Analysis," and Jerry Taylor's article, "Nordhaus vs. Stern." On the other hand, a number of philosophers argue that discounting is unjust, as it treats future people's interests as if they matter less than existing interests. See, for example, Kristian Ekeli's essay, "Environmental Risk, Uncertainty and Intergenerational Ethics," and John Broome's book mentioned above. While I come down on the latter side of the issue, I don't think it's fair to simply ignore the issue. You might also want to check out Michael Toman's essay, "Values in the Economics of Climate Change." Third, social costs resulting from climate change will result from a combination of the physical consequences themselves and future individuals' vulnerability to those physical consequences. To what extent people are responsible for others' vulnerability is somewhat unclear in light of the amount of time people have to adjust their lifestyles or prepare for the impacts. If an individual knows that climate change is coming, and does nothing about it, should we really be held responsible for all the bad things that happen to her? For more on this issue, you might be interested in P.M. Kelly's and W. Neil Adger's essay, "Theory and Practice in Assessing Vulnerability to Climate Change and Facilitating Adaptation," and chapter 4 of Robert Nozick's book, Anarchy, State, and Utopia. Fourth, some of the impacts of climate change will take the form of extreme weather events like floods, droughts, and heat waves. By changing the physical nature of the atmosphere, we will not be causing additional events of these kinds, but rather we will be causing there to be an entirely different set of climate events which we predict to be worse in terms of frequency, severity, and longevity than what would otherwise have occurred. As a result, there is a sense in which it will both be the case that no individual event can be attributed to climate change and all individual events can be attributed to climate change. Accordingly, it will be difficult to say exactly what costs should be considered "climate change costs". For more on this, you might check out the aforementioned chapter in Nozick's book, chapter 1 of Broome's aforementioned book, and Paul Baer's chapter, "Adaptation: Who Pays Whom?" in W. Neil Adger's, Jouni Paavola's, Saleemul Huq's, and M. J. Mace's collection, Fairness in Adaptation to Climate Change. Of course, the difficulties don't end there, but your discussion here just strikes me as too simplistic, as if you hadn't actually looked into what other people had said before you. I apologize if I got the wrong idea, but hopefully some of the above mentioned resources will be new to you anyway, and will prove helpful as you continue to work on this issue. Good luck!

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March 17, 2008 | url
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Matt Harrison said:

Aside from your opening metaphysical arcana, you spend a lot of energy typing and citing articles to pursue a rather simple point, viz., the difficulty in ascertaining an economically and scientifically accurate rate for carbon emissions. Nowhere is this difficulty ignored, however, so I think you perhaps overestimate the weight of your complaints. Coase hit it well before most of the writers you cite. However, one does not effectively advocate a position by dedicating oneself to its difficulties, so I think you can excuse the relative paucity of such concessions on our site. You are perhaps technically correct, but without fatally harming the more persuasive case for the carbon tax, using tort principles - the requirement to take proportionate precautions to mitigate foreseeable harm - to logically explain the necessity, despite the messy policy reality.

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August 03, 2008
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