Friday, July 22, 2011

Consensus: The Economist says that the true cost of CO2 may be $5 or more than $1,000 per tonne; they claim that the number is positive, but they don't explain why

Climate change: It's hot out there | The Economist
When we emit carbon into the atmosphere, we impose a tiny cost on society as a whole in the form of more rapid global warming and a greater intensity of the accompanying social ills. Views of the magnitude of this cost differ. Many studies peg it at somewhere between $5 and $150 per tonne of carbon. Other studies indicate that it could be far higher—perhaps more than $1,000 per tonne. But the cost is positive, [How do we know that?  How, specifically, do we know that a 61 F. world with more plant food is not preferable to a 59 F. world with less plant food?] and a crucial first step to dealing with climate change, therefore, is to charge people for the carbon they emit. If you put a positive price on carbon, this price will be reflected in the cost of transactions, people will internalise the effect of their behaviour on the climate, and emissions will fall.

This is a pretty straightforward policy solution, and it's one that's been embraced by economists and various other wonks for years. And yet it's strikingly difficult to impose a carbon price in practice. ... people in Washington would literally laugh in your face if you presented a carbon tax as a good policy choice to include in a deficit-reduction package.

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