tag:blogger.com,1999:blog-4900303239154048192.post7569998251928166053..comments2024-03-06T06:34:42.881-05:00Comments on EconoSpeak: Central Points On the Tax Versus Cap And Trade Issue In The Paris Climate AgreementUnknownnoreply@blogger.comBlogger8125tag:blogger.com,1999:blog-4900303239154048192.post-77649712745608927082015-12-17T13:10:21.385-05:002015-12-17T13:10:21.385-05:00Myrtle,
I have said nothing about what the develo...Myrtle,<br /><br />I have said nothing about what the development banks say, and I do not care what they say. I shall also say that there were a lot of people in Paris, both in the streets and in the negotiation rooms who are aware of the seriousness of the situation. That there is such widespread awareness is why they finally managed to pull off getting a truly international agreement signed, inadequate as it is, with 195 nations signing, and 186 offering initial plans of action, which clearly need to be further tightened over time.<br /><br />Only the Republicans in the US fail to recognize how serious this is, and we need to use multiple policies to get at this, not just hone in on one in particular, as a particular climate scientist has said we much or else the entire negoatiations were a fraud. But I shall not again name this scientist, even though many of his fellow scientists are dissing him hard for his latest paper that has not passed peer review, but he has been publicly trumpeting its results inappropriately.rosserjb@jmu.eduhttps://www.blogger.com/profile/09300046915843554101noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-10593197694161518382015-12-17T06:02:36.173-05:002015-12-17T06:02:36.173-05:00The possible solutions are being presented without...The possible solutions are being presented without a true awareness of our predicament. And what the 'development banks' want (or demand) is now - and should have always been - irrelevant.<br /><br />There's no way to describe the precipice we now confront. There is (as Hunter S Thompson said) "no honest way to explain it because the only people who really know where it is are the ones who have gone over.” Economists are not there yet. They've never been the stewards of life on earth, after all. We're about to lose our home.<br /><br />For the little time we may have why don't we try using money to feed and clothe ourselves. We could help widows and orphans and provide for our real needs. Some very respectable economists have long said it's a fraud to apply money for other purposes.<br /><br />Myrtle Blackwoodhttps://www.blogger.com/profile/07427043367624101075noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-53377075671556140762015-12-16T16:42:37.896-05:002015-12-16T16:42:37.896-05:00This strikes me as one of those moments where econ...This strikes me as one of those moments where economics brings a forest to the discussion that was previously in an open field. Thus the debates ensue about the arrangement of the trees and the missing of the forest. And no one notices the failure that was once sitting exposed in an open field. <br /><br />Go back a step, before all the stuff about caps and taxes and Coase. Would a physicist opine about the evolution of frogs? And if he did, would an observer of below average intelligence (eg a reporter) notice a problem?<br /><br />No and yes. <br /><br />What makes economics different? <br /><br />The answer, I suspect, goes to the heart of the soul sickness that afflicts the entire endeavor. Thornton Hallhttps://www.blogger.com/profile/11402495641975262697noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-9193210261679135992015-12-16T16:02:16.182-05:002015-12-16T16:02:16.182-05:00There are people pushing the so-called "fee a...There are people pushing the so-called "fee and dividend" system, which many of my local climate activists like, which does something like this, especially for trade at national borders. This may be what Hansen is really supporting, based on some off the cuff remarks in some of his interviews, but I am not sure he even knows what on earth he is talking about precisely.<br /><br />This sounds nice when people present it, but it seems not to have been remotely on the table at Paris, with it probably facing greater political resistance than either of the other two systems, although that may mean it really is preferable. It certainly sounds nice in some presentations.rosserjb@jmu.eduhttps://www.blogger.com/profile/09300046915843554101noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-42502623576839710152015-12-16T15:37:54.407-05:002015-12-16T15:37:54.407-05:00Barkley and Ruth, isn't the feasibility/state ...Barkley and Ruth, isn't the feasibility/state capacity problem a function of downstream regulation? What if, unlike ETS for instance, you had a perfectly upstream system, either taxes or permits, right at the entry point of fossil fuels? If the country has mines or wells, get them at the minehead or wellhead. If they have pipelines or LNG or oil tankers or whatever, get them at the ports. I realize you will miss the odd artisinal coal mine, but we can live with that.<br /><br />The problem is that, largely for political economic reasons, these systems are introduced at the sectoral level, which commits you to many more agents as well as the need to assess gaseous emissions rather than the fuels themselves.Peter Dormanhttps://www.blogger.com/profile/00093399591393648071noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-38282640627538388592015-12-16T14:43:12.103-05:002015-12-16T14:43:12.103-05:00Thanks, Peter, completely agree.
Ruth,
A week ag...Thanks, Peter, completely agree.<br /><br />Ruth,<br /><br />A week ago today I had a long discussion in person with Thomas Schelling, one of the first (after Nordhaus) economists to seriously look at global warming as part of a NAS panel and since. He is an advocate of carbon taxes, but not hardline about it.<br /><br />However, in connection with your point he noted to me that many maybe most developing countries are not really able to properly implement either one of these policies very well, so the debate is somewhat moot for them. These have all been implemented to the extent they have in higher income nations.<br /><br />One of the most serious issues is simply information, knowing what emissions are, which is necessary for any of these schemes, including just plain old quantity emissions limits without any trading. I remember hearing that this would be a big deal when took public finance in grad school from Burton Weisbrod, which was where externalities got discussed, back before there were any "environmental economics courses" (I have never taken one, I started the one on my campus that I teach), and this was also just before the main Clear Air and Clean Water Acts were passed. He made a big deal out of it that much impressed me at the time, but since most people seem to just take this for granted.<br /><br />However, even now this is a problem in China, where we just learned that they are burning 17% more coal than we thought they were. One fo the few things that came out of Copenhagen, which Stavins (and I) praised at the time was a commitment to improve data gathering, clearly then a problem for China. And I note that some of the problems for the ETS in Europe has been that when they set it up they did not have accurate information on emissions, which is part of why they set the limit wrong. This is one of the messes that they have been trying to fix ever since. But such issues are just as serious for carbon tax systems as they are for cap and trade systems. If you do not even know what the emssions are, all these schemes are just hot air.rosserjb@jmu.eduhttps://www.blogger.com/profile/09300046915843554101noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-91614730420581175452015-12-16T12:06:39.053-05:002015-12-16T12:06:39.053-05:00Good post, Barkley. I especially like your second...Good post, Barkley. I especially like your second point.<br /><br />Let me add something more to the first, about uncertainty. Whenever you see a textbook demonstration of Pigovian taxes, or just about anything else for that matter, you see supply and demand curves drawn across P/Q space, end to end. Guess what? We have no idea where these curves are located, what their slopes are, or even (incredibly) whether they exist (due to interaction effects through which changes in P and Q can react back on the underlying functions). It's just a heuristic device, folks -- a good one, but little more.<br /><br />What we do know, of course, are elasticities, the effects of small perturbations in the environment of each relationship. If the elasticities are stable we can use them to extrapolate a bit to larger perturbations. But the kinds of changes we are talking about with climate policy, phasing out fossil fuels in the space of a generation or two, are way, way beyond the zone of reasonable extrapolation. We really have no idea (a) what the P-Q relationships are going to look like down the road or (b) how nonconvexities in the underlying cost and preference sets are going to play out in tipping points and discontinuities.<br /><br />This is Barkley's terrain far more than mine, but it needs to be voiced loudly and often. The uncertainty we are dealing with is truly immense.<br /><br />Whether we go the P route (taxes) or the Q route (permits), or some crafty combination of the two, we will have to establish a framework of adaptive management with prompt feedback from the emerging consequences of policy back into recalibration of policy.Peter Dormanhttps://www.blogger.com/profile/00093399591393648071noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-83043355827226449972015-12-16T11:58:57.123-05:002015-12-16T11:58:57.123-05:00Cliff Russell and I wrote about exactly this probl...Cliff Russell and I wrote about exactly this problem, in a couple of venues (Issues in Science & Technology http://issues.org/18-3/greenspan/ (2002) and the Harvard International Review. A short summary is printed below and the arguments apply equally to the push to use economic instruments in service of greenhouse gas reduction:<br />Most nations lack the infrastructure and expertise necessary to implement the market-based strategies being recommended by the international development banks.<br />Most developing countries have long since established laws and formal governmental structures to address their serious environmental problems, but few have been successful in alleviating those problems. The development banks, which control resources desperately needed by the developing countries, are promoting the use of economic incentives and other market-based strategies as the key to more effective environmental protection. However, the donors have rarely asked whether the approaches they are urging, which have recently had some success in Europe and the United States, can be implemented effectively in developing countries with limited resources and little experience with market-based policies of any kind.<br />We worry that these highly sophisticated instruments have been pushed too hard and too fast, and that those who promote them say little about the context and conditions in which they thrive. The targets of this advice should be better informed about everything they would need to do to make market-based instruments work. Otherwise, the cause of environmental protection itself may be dealt a blow when ill-conceived policies divert a country’s energies without producing the desired result. Developing-world regulators, already marginalized in their own countries, will have little to show for their efforts in terms of a cleaner environment.<br />Before imposing a regulatory strategy on the developing world, we should review the experience of the industrialized countries and others that have implemented market-based policies. How extensive is the experience? How successful? What have we learned about the conditions necessary for effective market-based policies? Then we will be ready to consider when and where these policies are likely to work in the developing world.<br />Anonymoushttps://www.blogger.com/profile/11187884325434389540noreply@blogger.com