Environmental Economics

Has McCain added an environmental economist to his writing staff?

Sounds like it:

"For all of the last century, the profit motive basically led in one direction - toward machines, methods and industries that used oil and gas," said McCain. "Enormous good came from that industrial growth, and we are all the beneficiaries of the national prosperity it built. But there were costs we weren't counting, and often hardly noticed. And these terrible costs have added up now, in the atmosphere, in the oceans and all across the natural world."

Nothing new here, just a different tone.

I'm more reasonable than the cap & trade fear-mongers

From Terra Rossa (where conservatives consider a new energy future):

One of the most common concerns raised by opponents of cap & trade is it will cost a lot of Americans their jobs. Given folks’ anxiety about the state of our economy today those concerns, whether true or not, have an impact.

Cap-and-trade down under

From Oikos:

The interim report of the Garnaut Climate Change Review is now out and is required reading if you're interested in what an Australian emissions trading scheme will look like.

Commonly Tragic Love

Common Tragedies liked my quote on cap and trade.  I think.  Then again I often choose quotes of the day for their general stupidity.  Now I'm paranoid.

My V-day gift to you

From the inbox:

CONGRESSIONAL BUDGET OFFICE
The following has been added to CBO's Web site (www.cbo.gov):

Policy Options for Reducing CO2 Emissions
http://www.cbo.gov/ftpdoc.cfm?index=8934

And yes, if you are wondering, I'm in weekly email contact with the CBO via the prestigious CBO listserver.

Battleground Ohio

  Ohio isn't always the best place to live.  Crappy economy, crappy winter weather.  But there are some positives.  1) The state pays me to live here, 2) Ohio seems to be a hotbed for national politics*.  Case in point (From the WSJ Environmental Capital Blog via Google Reader from John C Whitehead):

Watch Ohio. The bellwether state holds its primary March 4, and has become a crucial battleground after Sen. Obama’s Potomac sweep. It’s also quintessential coal country, and not likely to cotton to the Illinois senator’s increasingly strident calls for quick and drastic action on climate change.

Read on...

Torn between two lovers

Mankiw: Carbon tax vs cap-and-trade.

Where have I seen that headline before? But seriously, the mainstream economics blogs are hitting the climate change policy issue very hard. And it seems like we hit it really hard in 2007. Every time I read a mainstream blog dealing with climate policy I feel like diving in and repeating myself but then I end up typing something totally silly instead ...

Here is my bottom line: a carbon tax or a cap-and-trade policy is a big improvement over the status quo. Cap-and-trade is politically feasible [look at this too]. A carbon tax is not (as far as my political instincts can tell). I pragmatically, and unapologetically, support cap-and-trade. Other economists are strongly in favor of a carbon tax and seem not to support cap-and-trade over the status quo. I find this a curious position. These supporters are either (a) economic purists and anything other than maximum efficiency is unacceptable or (b) actually in favor of the status quo and therefore willing to push something politically infeasible (or likely infeasible) or (c) torn between two lovers, feelin' like a fool, lovin' both of you is breakin' all the rules [complete lyrics].

If you are a carbon taxer or bust, please supply the reason [a, b, c or some combo] in the comments section.

Carbon-trading reality?

From ENN.com:

Many of Canada provinces are pursuing a carbon-trading plan to fight climate change, saying on Tuesday it was inevitable the country would adopt a such system, even if the current federal government is cool to the idea.

British Columbia, Ontario, Quebec and Manitoba have been discussing adopting carbon trading, or emissions credit trading, in conjunction with the Western Climate Initiative (WCI) in the United States, an idea championed by California Gov. Arnold Schwarzenegger.

Establishing a broad scale carbon trading system is difficult.  An effective system requires universal coverage, otherwise those not subject to the cap would receive what effectively amounts to a free input into production.  That's why a federalist approach to carbon cap and trade is unlikely to be very successful.  Case in point...

From the Answer Desk: Monitoring Cap and Trade

Reader Jason Welker received the following question from a high school student:

It’s very interesting how this whole marketing pollution rights works. In this way the “commons” in the tragedy of the commons becomes privatized, and companies are forced to take responsibility for their pollution which is being dumped into the atmosphere.
I do have one question, though, and that is how does one regulate the amount of pollution a factory dispenses into the air? How can the government be sure that a firm is not violating the law by dumping more than its licensed amount?

My question:  Why do Jason's high school students ask better questions than my PhD students? 

Anyway, I'm getting ready for a lecture on the EPA's Acid Rain Program and I happened across this answer...

Quote of the Day

From the NYTimes on Bali:

“The best we hoped for was that the U.S. would not hobble the rest of the world from moving forward,” said Kevin Knobloch, president of the Union of Concerned Scientists, a non-profit American organization. “Our delegation here from the States has not been able to meet that low level of expectation.”