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Posts Tagged ‘Carbon Taxes’

If Global Warming Is Killing Us, Why Is Global Life Expectancy Increasing? | Mises Wire

Posted by M. C. on November 16, 2019

According to data compiled by the World Bank, life expectancy continues to grow fastest in Africa. During the ten-year period from 2007 to 2016, the largest gains were realized in Zimbabwe, Eswatini (formerly Swaziland), Botswana, Malawi, and South Africa. The gains in years ranged from 13 years over the period in Zimbabwe to nearly 10 years in South Africa. Wealthy and mid-level countries saw gains during this period as well, including Switzerland and Mexico, where life expectancy increased 1.1 years and 1.4 years, respectively.

Those who want to rein in economic activity in the name of climate-improvement would be destroying the very thing that’s improved the quality of life for billions already. Second, the anti-climate-change research would have to show that carbon taxes and similar policies will both reduce climate-change and increase access to better medical care, housing, and clean water. This has certainly not been done.

https://mises.org/wire/if-global-warming-killing-us-why-global-life-expectancy-increasing

According to a recent report from the Centers for Disease Control (“Mortality in the United States, 2017“), “Life expectancy for the U.S. population declined to 78.6 years in 2017,” largely due to obesity and drug addiction.

The American life expectancy trend does not reflect global trends, however.

Worldwide, the evidence continues to point toward rising life expectancy in most of the world, with the biggest gains in the poorest countries.

According to data compiled by the World Bank, life expectancy continues to grow fastest in Africa. During the ten-year period from 2007 to 2016, the largest gains were realized in Zimbabwe, Eswatini (formerly Swaziland), Botswana, Malawi, and South Africa. The gains in years ranged from 13 years over the period in Zimbabwe to nearly 10 years in South Africa. Wealthy and mid-level countries saw gains during this period as well, including Switzerland and Mexico, where life expectancy increased 1.1 years and 1.4 years, respectively.

Indeed, the continued gains should surprise no one who keeps up with global trends in health. Globally, access to sanitation and clean water has improved substantially while extreme poverty, malnourishment, and child mortality have all declined. This has especially been the case in Sub-Saharan Africa and Southern Asia, where some of the worst poverty can be found.

Why the Climate-Change Panic?

Oddly, however, you won’t hear much about this in the context of the climate change debate.

For years — as life expectancy numbers have continued to rise — pundits and researchers have repeatedly attempted to claim that climate change has led to — or will soon lead to — declines in overall life and health.

For example, The New Republic announced in 2015 that climate change “devastates food security, nutrition, and water safety.” Yet, the data shows that none of these things have been in any way “devastated” over the past decade. In fact, the indicators are all better now than where they were ten years ago.1

Meanwhile, The Lancet predicted (in a report released in November of last year) “continued progress in improving life expectancy.” The biggest gains are to be found in poorer countries. The report also predicts continued life-expectancy growth through the year 2040:…

The Lancet itself report also notes that natural-disaster related deaths are unlikely to be relevant to life expectancy predictions:

Predicted impacts in other studies on extreme weather-related deaths and heat wave deaths are not large enough to have much impact on global life expectancy.

So, while journalists like to talk about how many people climate change will supposedly kill this year, the fact remains that the net gains in life expectancy continue to be positive.  Those who want to rein in economic activity in the name of climate-improvement would be destroying the very thing that’s improved the quality of life for billions already. Second, the anti-climate-change research would have to show that carbon taxes and similar policies will both reduce climate-change and increase access to better medical care, housing, and clean water. This has certainly not been done. In fact, as Robert Murphy has noted, we have every reason to believe the costs of implementation of anti-climate change regimes will be very high.

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Carbon Tax - is it a key policy in the fight against climate change?

 

 

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Why a Prominent Economist Abandoned His Support for Carbon Taxes | Mises Wire

Posted by M. C. on September 11, 2019

https://mises.org/wire/why-prominent-economist-abandoned-his-support-carbon-taxes

David R. Henderson is a research fellow with the Hoover Institution and was a professor at the Naval Postgraduate School in Monterey, California who taught courses on energy economics. He originally endorsed the standard view among economists that if some physical scientists are right that greenhouse gas emissions will lead to substantial warming, and if the government must “do something,” then the best policy response is a tax on carbon.

However, as Henderson explains in a recent article, he has since changed his mind, and no longer thinks a carbon tax is “a slam dunk.” Even if we stipulate the basic framework of the “market failure” argument, it’s not at all clear that academics and policy wonks should be agitating for a carbon tax. There might be much better solutions available, rather than having the government penalize carbon dioxide emissions.

In the present post I’ll review Henderson’s reasons for his change, and I’ll also address some of the objections that his critics raised against his essay.

Henderson on the Phrase “Price on Carbon”

Before diving into his more substantive points, let me relay Henderson’s discussion of the odd phrase “price on carbon” which you frequently hear in these debates:

Let’s first dispose of … the idea that taxing carbon is the same thing as “pricing carbon.” Carbon is already priced. Natural gas, oil, and coal all have prices and their prices are somewhat related to the amount of carbon they contain. To be sure, adding a tax to carbon would raise the prices of all those fuels, just as adding a tax to alcohol would make your tipple more expensive. But just as setting a tax on alcohol does not “price alcohol,” setting a tax on carbon does not “price carbon.” In my more cynical moments, I wonder if advocates of a carbon tax sometimes call such a tax a price to mislead people into thinking that a carbon tax is a market solution rather than a tax solution. [Bold added.]

Henderson here hits the nail on the head. Besides just being wrong, to equate a carbon tax with a “price on carbon” would sound ludicrous in the context of any other tax.

Henderson Changes His Mind on a Carbon Tax

After summarizing the textbook case for using a Pigovian (named after A.C. Pigou) tax as the least-cost, decentralized way to correct the “negative externality” of human carbon dioxide emissions — an approach that is endorsed by even conservative/libertarian Republican economists such as Greg Mankiw, George Shultz, and John Cochrane — Henderson explains why he now has serious doubts:

[E]conomists who advocate Pigovian taxes take as given that the most-efficient way to forestall global warming is to reduce the amount of carbon used. But what if their assumption is incorrect?

There are at least three important reasons to conclude that the assumption is wrong. First, cow farts. … A far more potent greenhouse gas than carbon dioxide is methane. Methane … warms the planet much more quickly than carbon dioxide before decaying to carbon dioxide. …To be sure, the CO2 lasts much, much longer than methane, but the fact of methane’s huge short-run potency surely suggests that a tax on carbon may not be the cheapest way to forestall global warming.

Second, one important technological development over the last decade has been “geo-engineering.” The idea here is to change other things in the atmosphere that are easier to change than the amount of carbon used …

Is such a technology feasible right now? Maybe not. But if it were, it would be incredibly cheap. Myhrvold’s organization, Intellectual Ventures, estimated that it could be set up in two years for $20 million and an annual operating cost of about $10 million.

…The third low-cost way to rein in global warming is by planting trees. Trees absorb and store CO2 emissions. You could call the tree-planting strategy geo-engineering, but it would count as such in a very low-tech form. According to a July 4, 2019 article in The Guardian, planting one trillion trees would be much cheaper than a carbon tax and much more effective. At an estimated cost of 30 cents per additional tree, the overall cost would be $300 billion. That’s large, but it’s a one-time cost. [Bold added.]

To summarize, the specific change in Henderson’s thinking is that he has come to realize that even if we thought the government should “do something” about climate change, it’s not obvious that the correct policy is to induce businesses and households to reduce their carbon dioxide emissions. That mentality is usually taken for granted in the Pigovian framing of the climate change debate, but — as Henderson explains — there are several reasons he now thinks that perhaps this assumption is itself wrong. To repeat, even if one stipulates (if only for the sake of argument) that the government should do something to avert the climate change that human activity will cause (if left unchecked), there might be more sensible policies than to tackle carbon dioxide emissions directly.

I have written on some of these themes here at IER, for example when I explained geo-engineering options to college students who wanted humanity to “do something” about the threat of climate change, and when I recently used the new tree-planting study to illustrate Ronald Coase’s famous critique of the entire Pigovian tax framework for fixing ostensible “market failures.” Note too that a huge advantage of planting trees is that they are a “geo-engineering” approach that has few of the downsides of more radical proposals; it would be hard for critics to object that planting trees will hurt the environment in some other, perhaps unpredictable, way.

To help make sense of Henderson’s point about methane, here is a quick chemistry refresher: Carbon dioxide (CO2) is a molecule consisting of one carbon atom and two oxygen atoms, while a molecule of methane (CH4) consists of one carbon atom and four hydrogen atoms. Standard estimates conclude that a ton of methane is eighty-four times as potent in “global warming potential” as a ton of carbon dioxide over a 20-year horizon, and that perhaps one-fourth of humanity’s contribution to global warming to date has come from methane emissions.

Rather than restate the arguments that Henderson and I have made, it might illuminate the issues better if I now tackle two of the particular objections that critics raised in the comments section of the popular blog EconLog where Henderson posted his article.

Objection #1: “Tax Carbon Dioxide or Methane: Why Not Both?”

Objection #2: “So Let’s Subsidize Trees and Tax Carbon!”

Conclusion

Economist David R. Henderson used to believe that if the government were going to “do something” about climate change, then a carbon tax seemed to be the obvious policy tool to use. Yet now he has had serious doubts. This isn’t because he’s a “science denier” but rather because he’s thought through some of the limitations of the Pigovian tax framework for dealing with alleged negative externalities. Especially for activists who genuinely believe the world faces catastrophe, they should give serious consideration to Henderson’s reasons for thinking a carbon tax might be a false “solution” to climate change after all.

Originally published at the Institute for Energy Research

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Precautionary Principle | Sacred Cow Chips

 

 

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In New “Mind-Blowing” Study, Planting Trees Reduces Carbon Better Than Carbon Taxes | Mises Wire

Posted by M. C. on August 25, 2019

https://mises.org/wire/new-mind-blowing-study-planting-trees-reduces-carbon-better-carbon-taxes

recent article in the Guardian trumpeted the findings of a new study published in Science that found massive tree planting would be — by far — the cheapest and most effective approach to mitigating climate change. Ironically, the new thinking shows the pitfalls of political approaches to combating so-called “negative externalities.” The good news about tree planting disrupts the familiar narrative about carbon taxes that even professional economists have been feeding the public for years. The whole episode is an example of what Ronald Coase warned about, in his classic 1960 article showing the danger in the traditional approach of using taxes to fix alleged market failures.

Ronald Coase vs. A. C. Pigou on “Externalities”

Coase’s “The Problem of Social Cost” is one of the most frequently cited economics articles of all time, but it can be difficult for a newcomer to absorb its lessons. In this revolutionary piece, Coase challenged the standard approach to externalities that had been developed by economist A. C. Pigou.

According to Pigou, the market economy works fine in allocating resources efficiently under most circumstances. However, when third parties experience benefits or harms because of particular market transactions, the Invisible Hand fails. For example, if a factory dumps waste into a river as a by-product of making TVs, then the factory owner is making “too many” TVs because the owner isn’t taking into account the harm his business is imposing on the people living downstream. The profit-and-loss system presumes that consumers and firms are receiving feedback from the impact of their actions, and so (Pigou argued) a case of pollution leads to inefficiency.

Pigou suggested that in a case like this, the government should impose a tax on the TV factory, corresponding to the harm that additional output causes to the people living downstream. The tax would then lead the owner of the factory to scale back production, to the point at which the “marginal” TV produced would bestow roughly equal benefits and costs to society, taking everything into account. (Without the Pigovian tax, the factory owner would produce additional TV sets for which their marginal cost to society exceeded their marginal benefit, meaning society would be worse off because of these additional units.)

For the purpose of this post, I’ll have to be brief, but here is the quick and dirty version of how Ronald Coase came along and completely upended this traditional Pigovian analysis: First, Coase told his readers to stop thinking of these situations in terms of the good guys and bad guys. In my hypothetical TV factory case — which is my example, not Coase’s — we shouldn’t view the factory owner as someone violating the downstream homeowners. Rather, Coase urged his readers to consider, what he called, the “reciprocal nature” of the problem.

Specifically, Coase would say in our example that the real problem is one of scarcity and competing uses for the river water. The factory owner would like to use the river as a place to dump his waste after producing TVs, while the homeowners would like to use the river for their kids to play in or to wash their clothes. The two uses are incompatible, and the issue is: To which party should the use of the river be allocated? Coase warns us that if the government installs a TV tax on the factory, the politicians are simply assuming that the most efficient solution to the conflict is for the factory to scale back TV production.

But we can imagine better outcomes, depending on the specifics. Suppose, for example, that there are only a few households who live downstream from the factory, and are harmed by its waste products. In this situation, rather than the owner greatly scaling back TV production — and depriving consumers around the country of having cheap TVs — maybe the least-cost solution is for the factory owner to buy the properties from the few families and pay them to move somewhere else. Note that we are talking about voluntary exchanges here; the people aren’t being evicted by the sheriff. Rather, just suppose for the sake of argument that for (say) $2 million, the factory owner could buy out the families living downstream, and everybody would be much happier than the outcome that would result under a TV tax.

Now that we’ve worked through this hypothetical example to illustrate the out-of-the-box thinking Coase developed in his 1960 paper, I’ll demonstrate its relevance to the new study about trees and climate change.

Tree Option Might Greatly Reduce the “Social Cost of Carbon”

As the Guardian piece explains, the new study is far more optimistic about the scale of tree planting available on Earth than had been earlier believed. This is why the scientists involved in the study think a massive campaign of planting trees is now the single best approach to mitigating climate change. Here are some key excerpts from the Guardian article:

Planting billions of trees across the world is by far the biggest and cheapest way to tackle the climate crisis, according to scientists, who have made the first calculation of how many more trees could be planted without encroaching on crop land or urban areas.

As trees grow, they absorb and store the carbon dioxide emissions that are driving global heating. New research estimates that a worldwide planting programme could remove two-thirds of all the emissions that have been pumped into the atmosphere by human activities, a figure the scientists describe as “mind-blowing”.

“This new quantitative evaluation shows [forest] restoration isn’t just one of our climate change solutions, it is overwhelmingly the top one,” said Prof Tom Crowther at the Swiss university ETH Zurich, who led the research. “What blows my mind is the scale. I thought restoration would be in the top 10, but it is overwhelmingly more powerful than all of the other climate change solutions proposed.”

Citing a figure that planting a new tree costs roughly 30 cents, Prof. Crowther remarked that we could plant the target of 1 trillion trees by spending about $300 billion. Sure, that’s a big number, but its nowhere close to the economic cost of imposing a worldwide carbon tax, the “solution” that many economists have been promoting for years as a no-brainer. (William Nordhaus’s model in its 2007 calibration estimated that even his modest carbon tax would cause several trillion dollars [in today’s dollars] in economic compliance costs, while the more aggressive proposals would cause more than $20 trillion in economic costs.)

This episode is a specific example of the type of problem Ronald Coase warned about. Specifically, the carbon tax logic assumed that the problem was, “People are emitting too much carbon dioxide and we need to coerce them into scaling back.” But what if instead the problem was, “People aren’t planting enough trees, and we need to coax them into planting more”?

To give some quick numbers: By some estimates, a single healthy tree can sequester up to a ton of carbon dioxide by the time it reaches 40 years old, and we also read that a silver maple tree will absorb 400 pounds of carbon dioxide by the time it reaches 25 years old…

Conclusion

New developments in the scientific literature show that tree-planting might be the single best way to reduce the human contribution to carbon dioxide in the atmosphere. The whole episode shows the folly of top-down political solutions to social challenges. Even if we stipulate the standard framework of “market failure,” it does not follow that a carbon tax set to the “social cost of carbon” is the way to restore efficiency. The case for a carbon tax is much weaker than the so-called experts have been assuring us.

Originally published at the Institute for Energy Research

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Al Gore: The World’s First 'Carbon Billionaire' by ...

 

 

 

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