Friday, October 24, 2008

Additional note, about carbon pricing

Looking at the post below, you get an idea of how difficult it is to a) calculate the ecological impact of spending behavior, and b) actually follow through on adhering to an optimum spending behavior once you figure out what it is. At the end of the day, it's very convoluted and difficult to keep track of, and all sort of hopeless because people, by and large, are not going to exert the effort required to eat sustainably--and if 90% of the people aren't on board, then what's the point of trying?

This is why carbon pricing--i.e., factoring the ecological cost of products into their price via a tax--is such a beautiful idea. What you do is target a few key carbon producers way "upstream" in the chain of production, so that the increased cost of carbon filters down into the price of everything. For example, say you were to slap a carbon tax on barrels of oil sold. This would result in higher prices--and less demand--not just for gasoline, but, say, for a toy manufacturer that transports stuffed dolls halfway around the world in a fuel-ineffecient fleet of boats and trucks. If you slapped a carbon tax on energy, then suddenly everyone's electricity bills would rise and you would see alternative energy sources like solar, wind, gas, and nuclear start to become competitive with coal. Competition in the free market--rather than arbitrary government grants and subsidies--would then determine which alternative energy source becomes dominant. Shopping at the market, you would have to look no further than the price tag to compare the ecological impact of different foods; if a food is very carbon intensive, then this will naturally be reflected in a higher price.

As it is right now, the costs of climate change end up being socialized, because it is tax-payer backed governments that fix (or in the future will fix) the damage. These costs should not remain external to the market, but should instead be internalized into the market, via a carbon tax, so that the costs are distributed proportionately to those who are causing the problem.

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