TT's Lost in Tokyo — by TokyoTom

Australian economist John Quiggin (whom I’ve cited previously on climate change costs) has a post up with this title, both at his own blog and at Crooked Timber.  Does anybody care to comment?

My own response to John was as follows:

John, thanks for this piece. As a libertarian who believes that
climate change IS a problem, I share some of your puzzlement and have
done considerable commenting
on this issue. Allow me to offer a few thoughts on various factors at
work in the general libertarian resistance to taking government action
on climate change:

– As Chris Horner noted in your linked
piece, many libertarians see “global warming [as] the bottomless well
of excuses for the relentless growth of Big Government.”  Even those who
agree that is AGW
is a serious problem are worried, for good reason, that government
approaches to climate change will be a train wreck – in other words,
that the government “cure” will be worse than the problem.

–
Libertarians have in general drifted quite far from environmentalists.
Even though they still share a mistrust of big government,
environmentalists generally believe that MORE
government is the answer, while ignoring all of the problems associated
with inefficient bureaucratic management (witness the crashing of many
managed fisheries in the US), the manipulation of such managment to
benefit bureaucratic interests, special interests and insiders
(wildfire fighting budgets, fossil fuel and hard rock mining, etc.) and
the resultant and inescapable politicization of all disputes due to the
absence of private markets. Libertarians see that socialized property
rights regimes can be just as “tragedy of the commons” ruinous as cases
where community or private solutions have not yet developed, and have
concluded that, without privatization, government involvement
inevitably expands. Thus, libertarians often see environmentalists as
simply another group fighting to expand government, and are hostile as
a result.

– Libertarians are as subject to reflexive, partisan
position-taking as any one else. Because they are reflexively opposed
to government action, they find it easier to operate from a position of
skepticism in trying to bat down AGW scientific and economic arguments (and to slam the motives of those arguing that AGW
must be addressed by government) than to open-mindedly review the
evidence. This is a shame( but human), because it blunts the libertarian
message in explaining what libertarians understand very well – that
environmental problems arise when property rights over resources are
not clearly defined or enforceable, and also when governments
(mis)manage resources.

Regards,

Tom

Thank goodness!  Another libertarian/conservative (see my previous posts on Bruce Yandle and Gene Callahan, and see Jon Adler`s 2000 piece) wants to seize the day and promote useful policies in the face of popular/legislative concerns over climate change.

This time, it’s Iain Murray, the CEI policy analyst, polemicist and sharp-tongued scourge of enviros (his book, The Really Inconvenient Truths, and ongoing “Planet Gore” posts at NRO blame enviros for many problems).

While Iain helpfully spells out on his blog a number of areas where deregulation is needed, he also surprising provides quite an extensive (and expensive) list of statist, big-government initiatives.  The statist agenda Murray suggests is certainly worth considering, but where have all the true libertarians – the ones who think that government is best ignored, and not redirected – gone?

Iain’s proposals come from a longer blog post, as part of a dialog with Roger Pielke, Jr.  who has recently made some policy proposals of his own.  Here are Iain`s proposal`s, with a thought or two from me in brackets (and some formatting tweaks to enhance readability):

Here’s what I think a global warming policy acceptable to most conservatives would comprise of. …

Title I: Technology & Mitigation

a) Remove regulatory barriers to innovation and deployment

– remove barriers to new or upgraded facilities that would reduce emissions eg New Source Review

– remove regulatory performance standards that act as a barrier to developing better performance

– remove barriers to developing & introducing biotechnology that could significantly increase food supplies in the developing world and create greater yield per acre in the US, allowing cropland to return to nature

– remove barriers to developing & introducing nanotechnology

[Um, Iain, could you be a little more clear about what barriers you specifically have in mind, so we can examine them more closely and help push on them?  Are these different from allowing accelerated or immediate depreciation, or lowering capital gains taxes?]

b) Reform and expand federal energy R&D program (this would form and should be sold as a major part of the “mitigation effort” of the program)

– replace current federal grant system with a program based on prizes, thereby removing political patronage, obviating the “picking winners” problem and removing what amount to subsidies to established energy firms

[I`m with Iain on this, and it deserves to be said more loudly and with as much support as possible.  We need a spotlight on our Congresscritters and regulators if we want to have any hope of controlling the wasteful, great pork machine.]

– expand energy R&D to $6-7 billion, paid for by budget cuts elsewhere (eg by privatizing Amtrak) and use “matching funds” program to begin to attract private money

[How is this consistent with Iain`s previous point?  Sure, his proposal is careful to offset new programs with cuts from others, but how likely is that?  In any event, why should the government be choosing what energy technologies to favor?]

c) Institute geo-engineering research program separate from energy R&D and climate science research program. Concentrate climate research in areas of improving predictive capacity of models.

[Is Iain implying that the problem is so urgent that geo-engineering is going to be required, and that government should do it?  And why should government, rather than the private sector, be working on improving the predictive capability of models?]

d) Abolish all subsidies to energy companies, reducing emissions quickly without introducing carbon tax

[It would be nice if Iain could clarify what subsidies he has have in mind.  And if the government should do ANYTHING other than deregulate, I have have a hard time understanging why CEI does not simply come out in favor of fully-rebated carbon taxes, like AEI and others]

e) Repeal corn ethanol program in its entirety as likely to increase GHG emissions and contributing to increased hunger; redirect subsidies to new energy R&D program

f) Abolish barriers to sugar ethanol imports

[I agree on the above two]

Title II: Adaptation

a) Institute Adaptation Fund/Program to be based on successful AIDS/communicable disease aid program to fund worthwhile “no regrets” adaptation efforts in developing world; increase contribution to malaria control in the disease project.

[Um, how much money are we talking here, Iain?  Are you conceding that the West somehowhas an obligation to help developing countries – which are expected to bear the brunt of climate change costs, even as they are least prepared to adapt?  Or is providing such help in our self-interest?  And what gives you any confidence that such development assistance will actually make any difference, and not be wasted or siphoned off by elites?]

b) Institute domestic adaptation research program to assess feasibility of projects to stem effects of sea level rise etc

[Why is this a task for government?  Do we think government will handle these programs better than the Army Corps of Engineers handles levees and other moral-hazard generating boodoggles?]

c) Abolish “moral hazard” federal programs like coastal flood insurance etc that create incentives to live in/develop vulnerable areas

[Fine, but see b)]

d) Free up transportation market

– reform Air Traffic Control system to allow ‘free flight’ and ‘green landings,’ saving up to 25% of airline emissions

– remove regulatory barriers to highway construction to reduce congestion and associated “wasted” emissions

[Not sure what barriers you`re referring to, Iain.  How about getting the government out of the road-building and owning businesses completely, and letting private firms build, own and operate them, including levying market-clearing fees that will speed traffic and manage capacity?]

– reform zoning regulations to reduce barriers to telecommuting

[Huh?]

– reduce barriers to construction of heavy rail infrastructure to allow more shipping by rail and reduce highway congestion

[What barriers?  If we simply stopped public subsidies to highway construction we`d likely see great rail demand, but what “barriers” are there that we need government to do anything about?  There are lots of underused rights-of-way already, aren`t there?]

e) Free up electricity market

– remove regulatory barriers to new construction of nuclear plants; allow reprocessing or open Yucca Mountain

[Perhaps we should start by removing the insurance subsidy for nuclear power?  Eliminating the NRC isn`t going to happen, so you need to be more specific.  And why should citizens be paying for permanent waste storage, instead of the utlities?]

– eliminate local and national monopoly franchises

– remove barriers to distributed generation such as microturbines

[I agree on the above two]

f) Free up domestic energy exploration

– End restrictions in ANWR and OCS as an energy security measure

[The key is to end politicized control, not to run roughshod over conservationists.  If we are serious about ANWR, we ought to simply cede it to the Sierra Club or The Nature Conservancy.  They would certainly pump from it AND protect it, and use the revenues to support more important conservation projects.   As for the OCS, exploration is limited only because states don`t want to bear the burden of pollution risks with a slim share of revenues.  With more generous revenue sharing, more OCS development will occur.]

– Allow exploitation of Rocky Mountains gas reserves etc as viable competitor to coal

[This is already happening, at the expense of ranchers and other rights owners, with inadequate compensation for damages. Developers should bear all risks of environmental claims.]

Title III: Resiliency

a) Set up Global Resiliency body to incorporate/replace Millennium Challenge Corporation and concentrate on spreading property rights, rule of law etc around world. Utilize Hernando de Soto’s expertise in setting this up. Particular responsibilities should include encouraging institutional reforms on disease, food supplies, water supplies, coastal defense and biodiversity.

[Kinda thin on justification, detail and burden-sharing Iain.  What grounds do you have for thinking that ANY state-directed “development” programs will not be hijacked by elites or mismanaged by bureacrats?  Are you becoming a soft-hearted enviro/liberal?]

b) Create a Global Free Trade Area by a provision allowing GFTA members free access to US markets on the condition that they reciprocate to the US and other GFTA members. USTR would certify. GFTA membership would be granted on the basis of an objective analysis of the country’s commitment to free trade (eg Heritage Index). Tspotlighthis will enprogramscousomehow hasboondogglesrage trade liberalization and tutilitieshereby resiliency.

c) Expand Asia-Pacific Partnership to encourage and facilitate technology transfer to developing world.

[Kinda thin on justification, detail and burden-sharing Iain.  What grounds do you have for thinking that ANY state-directed “development” programs will not be hijacked by elites or mismanaged by bureaucrats?  Are you becoming bureaucratsa soft-hearted enviro/liberal?]

 More later.  We need to go back to the past.

The latest Business Week magazine sports the headline, “Is Water the New Oil?” and a caricature of T. Boone Pickens.  The cover story -“There Will Be Water: T. Boone Pickens thinks water is the new oil—and he’s betting $100 million that he’s right” – describes Pickens’ plans to ship water to eager consumers in Dallas from his ranch and other water rights holdings in the Texas Panhandle region. 

While I’m all for water markets, there’s one small problem that deserves attention:  essentially Pickens will simply be sticking a huge straw into the unowned Ogallala Aquifer and pumping for all he’s worth.  Pickens will have to cover only his own costs (pumping and transportation), but he has no ownership stake in, or incentive to invest in maintaining or sustainably using, water resource itself.  As he draws down the water table, his neighbors will have to shell out more to dig and pump from deeper wells to maintain their own current draws, and if any of them wants to follow Pickens in shipping water to urban markets, then the race to drain the water commons in the Panhandle and other parts of the Ogallala will ratchet up further (it’s already been underway for many years in other parts of Texas and other states in which the Ogallala Aquifer lies).

Pickens may not be planning to replicate the history of the wasteful, competitive pumping of the East Texas common pool oil resources (also seen in the elimination of the passenger pigeon, the Plains bison, the great whales, and the crashing of ocean fisheries), but his own rational self interest is surely leading in that direction.  I hope Pickens can see where this is headed and take a positive role in heading off a destructive tragedy of the commons, which may be in the cards, but is not inevitable.   As Bruce Yandle has noted:

People can build institutions that take the edge off frantic commons behavior. People have unwritten and written constitutions that help to establish social order. People can and do accumulate wealth. People communicate, invent lines of kinship, and develop customs, traditions, and rules of law that limit anti-social behavior. People define, enforce, and trade property rights. People can and do avoid the tragedy of the commons. Indeed, instead of living with tragedies, people triumph over the commons. But the triumphs are never perfect or complete. There is always another commons to manage. …

At very low levels of income, what might be called stage one, human beings cannot afford to do much about property-rights enforcement and the commons. They live in a world where custom and tradition sustain them. As incomes rise and losses from the commons expand, stage two is entered. Fences go up, and rules are set for protecting the commons. Finally, in stage three, markets evolve along with rules of law that define spheres of private and public action. Private rights replace public control, and the triumph replaces the tragedy of the commons.

Life for mankind began on a commons where tragedies were commonplace and the incentive to improve was powerful. Out of the struggle to survive and accumulate wealth evolved markets, property rights, and the rule of law—a triumph on the commons. …

Human beings can and do avoid the tragedy of the commons. But doing so requires property rights and markets, which must be defended if the triumph is to continue.

Easy pickins?  Easy, Pickens.

h/t David Zetland

Dedicated libertarian law professor Jonathan Adler and longtime libertarian policy analyst Indur Goklany discuss the above issue at in a Roundtable entitled “Climate Change and Property Rights” hosted by Shikha Dalmia of the Reason Foundation and made available online last week.

[Update:  Ron Bailey discusses the Adler/Goklany debate here.]

As both Jon Adler and Indur Goklany are serious and even-handed, fortunately the discussion includes none of the cheap, sneering dismissals of the moral issues (as “climate welfare” such as I addressed earlier on these pages and more recently on the main blog, where an author dismisses as “absurd” and another poster labels “beautiful propaganda” my suggestion that Lockean views must be seriously considered when addressing claims that the use of the atmosphere should be shared) that tends to be the hallmark of shallow, reflexive and emotional engagement so frequently encountered here at Mises and elsewhere from purported libertarians with respect to climate change and other environmental issues.

Unfortunately, the exchange between Adler and Goklany is far too academic, and neither commentator makes any effort to seize common ground (and climate change concerns) to push for liberalization of agricultural trade or other institutional changes that would (i) materially improve wealth (and ability to adapt to climate change) in poorer nations and (ii) enhance needed mitigation and adaptation efforts at home.

Both Adler and Goklany appear to agree on the fundamental, Lockean-based principles underlying their discussion and would probably agree that, even though the nations that benefit most from climate change (and from the long period of GDP growth when GHG emissions have not been priced) have at least a moral obligation to be concerned about an uncompensated shifting of costs to other (largely poorer) nations, it is nigh impossible to build a legal case mandating compensation. 

I suppose both Adler and Goklany probably also agree that (1) climate change is likely to further bedevil the development problems in poorer nations, which are least capable of adapting to such changes, (2) development problems in such countries is largely related to the failure of governing elites to protect property rights and capital, and (3) traditional development aid has in large measure failed and instead served to benefit well-connected elites from both sides.

I am curious (4) what both Adler and Goklany think about proposals that do not amount to compensation, but recognize the interest that the West has in aiding growth and climate adaptation in the developing world, such as the proposal reported last Friday in Osaka by Treasury secretary Hank Paulson for the Group of 8 industrialized nations to back a special $10 billion fund to help developing countries fight global warming and (5) why they (and other libertarians) do not seem to see that climate change concerns in many way present golden opportunities to urge positive governmental changes, such as greater free trade (and roll back of domestic agricultural subsidies and import restrictions), greater freedom in domestic energy markets, the desirability of allowing accelerated depreciation and lowering capital gains taxes, etc.

Why are libertarians so reluctant to focus on a positive agenda that would actually do some good?

In note that, back in July 2000, Adler proposed a “no regrets” domestic deregulatory agenda when he was associated with CEI: “Greenhouse Policy Without Regrets: A Free Market Approach to the Uncertain Risks of Climate Change“; Jon has subsequently been rather quiet with respect to any specific climate change policy agenda.  Cato has just published an essay by Goklany, “What to Do about Climate Change“, in which Goklany essentially argues that a focus on mitigation (GHG reductions) is a relatively expensive and in effective way to combat climate change or advance well-being (particularly of the world’s most vulnerable populations), as compared with adaption efforts that would reduce vulnerabilities to climate-sensitive problems that could be exacerbated by climate change.

As I have previously noted, there are several libertarians who have recently been urging constructive libertarian approaches to climate change:

• Edwin Dolan, in his Fall 2006 Cato Journal essay, “Global Warming: Rethinking the Market Liberal Position“, analyzes relevant Lockean considerations and cautions that market liberals appear to be hamstringing their own analytic strengths by falling into a reflexive and conservative mind-frames that benefit established economic interests.
• Sheldon Richman of the Foundation for Economic Education also recommends Dolan’s essay and calls for less wishful thinking and greater engagement by libertarians in the December 8, 2006 edition of The Freeman:  The Goal Is Freedom: Global Warming and the Layman.
• Gene Callahan makes a similar warning in his essay “How a Free Society Could Solve Global Warming“, in the October 2007 issue of The Freeman.
• Bruce Yandle, Professor Emeritus at Clemson University, Senior Fellow at PERC (the “free market” environmentalism think tank) and a respected thinker on common-law and free-market approaches to environmental problems, has in PERC’s Spring 2008 report specifically proposed a “A No-Regrets Carbon Reduction Policy“.

I further note that Shikha Dalmia of the Reason Foundation hosted a similar roundtable on climate change policy in October 2006.

Bob Murphy, an economist at Rob Bradley‘s Institute for Energy Research, has posted on the main Mises Blog a link to a paper that he has submitted to an economic journal, “Rolling the DICE: Nordhaus’ Dubious Case for a Carbon Tax“.

[Update:  Bob thoughtfully copied environmental economist David Zetland on his draft paper, and while he has not returned to comment at his own Mises thread, Bob has made further comments at David’s blog and at his own shared blog.]

IER promotes Murphy’s paper as ambitiously “tackl[ing] the basic premise of pricing carbon … using William Nordhaus’ DICE model as the representative of economic orthodoxy”, but it seems to me that both his objectives and his achievements are far more modest.  Murphy:

(1) fails to attack either the fundamental premises of orthodox cost-benefit analysis as applied to climate change or the basic premises of the DICE model,

(2) focusses chiefly on various uncertainties involved in the parameters in Nordhaus’ model, while ignoring not only that such uncertainties cut in more than one direction, but that other economists have strongly argued that Nordhaus has underestimated or mishandled important damages and uncertainties (e.g., John Quiggin and Sterner & Persson) and has simply misunderstood the usefulness of CBA in the face of important uncertainties that CBA cannot easily handle (e.g., Martin Weitzman, Richard Tol, others),

(3) fails to note the point (made by McKitrick and others) that even if imperfect, carbon taxes, if substituted for income, capital gains and other taxes, will significantly lessen important economic distortions; and

(3) fails to offer much in the way of Austrian approaches to CBA, much less to the property rights and preference issues involved in economic decisions involving significant externalities or open-access common resources, fails to point to possible ways in which government policy may be inefficient, costly, and subject to the skewing effects of rent-seeking, and fails to recommend important policy changes that are needed to facilitate a transition to a lower carbon economy, by promoting economic freedom, competition in energy and power markets, easing corporate tax depreciation rules that slow innovation, and strengthening property rights and common law enforcement mechanisms (Bruce Yandle and Jon Adler have both made concrete suggestions on desirable policy changes; what is holding back people at LvMI?)

In short, what Murphy delivers is flawed and far less than billed.

[Update:  As Ludwig von Mises himself noted (see my blog post “Mises on fixing externalities“), private property institutions arose in response to the economic inefficiency of older systems that did not force economic actors to bear the external effects of their actions.  We are intelligent and occasionally rational creatures – why should we not be pro-actively considering what institutions might be desirable and feasible for dealing with the effects of our activities on the atmosphere and  climate (and oceans, ecosystems and unowned species, or how to improve governance in countries that don’t recognize or protect property rights)?]

I copy below (with some typo corrections) the comments that I posted on Bob’s Mises thread; I will try to revisit later to add links and further resources:

Bob, thanks for posting this

Here are a few quick notes:

– although you note that every step in Nordhaus’ analysis involves uncertainty, you have failed to note Marty Weitzman’s recent work that tells us how strongly uncertainly serves as a factor SUPPORTING early action – an important factor that neither Nordhaus nor you take into account at all. Weitzman states, “the influence on cost-benefit analysis of fat-tailed structural uncertainty about climate change, coupled with great unsureness about high-temperature damages, can outweigh the influence of discounting or anything else.”

– while you indicate that one key area of uncertainty is that future GHG concentrations may be overstated, your observations actually suggest the opposite – that because the oceanic sink is finite, as it becomes saturated atmospheric GHG concentrations are apt to rise even more sharply.

– while you indicate that the temperature increase form a given GHG concentration may be overstated, you ignore the possibility of the opposite – that the long-term temperature impact of a given GHG level may be higher than the number Nordhaus has used. Further, given paleo evidence that Hansen has noted, it appears unlikely that climate sensitivity will be less than 3 degrees C.

– Similarly, while you note that economic damages from a given temperature increase may be overstated, you fail to address the possibility that such damages may be understated – and also fail to note that the Earth is apparently more sensitive to climate changes than has been expected, witness the rapid Arctic/Greenland melting that we are seeing at only a 0.7 C increase, and the rapid expansion of tropical zones.

– it is a distinct possibility that Nordhaus has underestimated nonmarket damages, as John Quiggin and others argue. In any case, Nordhaus does not account for the changing relative prices for various goods and services that the changing composition of the economy and climate change will induce,as Sterner and Persson have noted in a recent paper at RFF:

“future scarcities that will be induced by the changing composition of the economy and climate change should lead to rising relative prices for certain goods and services, raising the estimated damage of climate change and counteracting the effect of discounting. … [C]hanging relative prices … has major implications for a correct valuation of future climate damages. We introduce these results into a slightly modified version of the DICE model (Nordhaus 1994) and find that taking relative prices into account can have as large an effect on economically warranted abatement levels as can a low discount rate.”

– in looking at damages, you tend to focus on the US picture alone, without regard to other nations – largely poorer ones – in which greater net losses are expected to be felt. You also completely fail to address, even in the case of the US, that benefits and impacts will not be uniformly shared, and that those with net benefits presently have no obligation to compensate those shouldering losses.

– while you fairly note that Nordhaus’ analysis can be helpful in comparing the relative net costs and benefits of different proposals, you fail to note that with changed assumptions, even using Nordhaus’ model as is, much higher estimates of “optimal” levels of carbon taxes can be derived.

– You point to Nordhaus’ remarks on how free-riding be various countries will drastically affect the benefits to be derived from any carbon taxes, but argue that this itself is a justification for the US to free ride, rather than for us to work to coordinate compliance by others.

– You also seem to be very worried that a coordinated approach would actually result in heavily distorted worldwide production, when widespread noncompliance by the various Kyoto parties indicates how ready nations are not to unilaterally assume burdens that other nations will not share.

– You also express concern that any coordinated approaches to climate change may be difficult to unwind as information changes, when it is clearly that various nations (and their industries) are acutely aware of comparative advantage and quite ready to react to what others are or are not doing (in the fact of the easy movement of capital).

– Further, you have confused measures like possible geoengineering and carbon sequestration approaches – which would be incentivized by carbon taxes and are a form of “mitigation”, with what is properly considered as “adaptation” to unavoided temperature increases and climate changes.

There are of course many other points that one would like to see Austrians making – such as the benefits of freeing up the economy from burdensome regulations (while strengthening property rights and private litigation remedies), adding greater degrees of freedom and competition to energy markets to drive greater energy efficiency, allowing immediate depreciation of capital investments, and the desirability of avoiding government-directed investments and subsidies – but perhaps these are things you intend to address in another paper spelling out a truly Austrian approach, rather than nitpicking at a single conventional CBA argument?

Sincerely,

TT

(I apologize that this is link-poor, but it seems like the best way to actually have this comment posted.)

Published: June 12, 2008 7:49 AM

Bob, allow me to suggest that you (and others) may also wish to consider taking a look at addressing also the recent short pieces by Joe Stiglitz, Tom Schelling and Ken Arrow others in last year`s The Economists’ Voice; they are as relevant as Nordhaus, and much more accessible to the average reader:

Joseph Stiglitz, A New Agenda for Global Warming

Kenneth J. Arrow, Global Climate Change: A Challenge to Policy

Thomas C. Schelling, Climate Change: The Uncertainties, the Certainties and What They Imply About Action

Published: June 12, 2008 9:41 AM

I copy below comments I made on June 11 (Tokyo time) on Bob Murphy‘s June 4 blog post, Cap and Trade Is Not a “Market Solution”, that have apparently been held up for moderator approval (perhaps because my three links triggered the blog’s spam defenses?):

Bob, I thank you for posting your piece from IER, which has stimulated a relatively even-tempered and productive discussion.

But allow me to express a little disappointment.  Even as I agree fully with the gist of your post (the largely self-evident and unsurprising point that politicians prefer, as an alternative the more honest, open and politically less-palatable approach of direct Pigouvian taxes of the type supported by a wide range of mainstream economists, to address the concerns of scientists, economists, business leaders and others about man’s contribution to ongoing climate change by dressing up such taxes as a “market approach” involving a cap and trade program), I think that:

(1) you unfairly conclude that, since it will be government that will be implicitly pricing carbon emissions, such pricing “won’t reflect genuine economic scarcity” at all, when Austrian approaches do not deny that lack of property rights will result in economic actors ignoring external costs, but simply indicate the government pricing of resources can only imperfectly reflect economic factors;

(2) you’ve gone to a bit of unjustified rhetorical excess with your statements that:

– “[t]his is no more a “market price” than if the government decided to sell people permits giving them permission to sneeze”:  rather, it’s more like the government trying to price grazing rights, resources extraction rights or other user fees on “public lands”– yes, such prices are not market prices (and are perhaps more likely to be underpriced rather than overpriced), but that does not mean that they do not represent or at all reflect valuable resources.

– “Cap and trade is not a market-based solution” – while not a true market solution, a cap and trade approach is clearly one that makes use of markets.

– “Cap and trade … can therefore be justly viewed as a tax, stealthy or otherwise, on energy – the lifeblood of our economy” – this not only overbroad, as it would only tax certain types of energy, and overdramatic, it completely ignores the point that certain activities (a wide array not limited to combustion of fossil fuels, including release of other GHGs) are perceived as adversely affecting (now and in the continuing future) many within the country as a result of externalities involving an open-access and unowned and unmanaged commons, which is precisely what expressly motivates (actually or allegedly) so many – including many in your profession – to support Pigouvian approaches;

(3)  surprisingly, you failed to take the opportunity to add to the discussion by informing your readers of Austrian concerns, including the following:

– the calculation problem;

– whether, as you note it posting here, there is any reasonable basis to “trust governments around the world to implement the scheme ‘properly'” (by exploring problems with rent-seeking and bureaucratic incentives);

– whether it is desirable for the government to presume that it should act as the owner of the atmosphere in creating emissions rights (as opposed to citizens generally or long-standing/homesteading users of fossil fuels), and the related ethical issue of creating rights to emit that cut off those who may be harmed from any direct remedy (such as a share of the proceeds of the sale of rights); and

– the underlying institutional problem of lack of clear or enforceable property rights (for which past interferences by government have some responsibility); and

– whether growing concerns (and private responses) regarding the shared global issue (affecting nations with different circumstances and legal systems than ours) of increasing GHG emissions might be addressed less expensively and more rapidly by voluntary actions and national and international litigation rather than by coordinated action by various governments and implemented by individual nations.

None of these points is easily addressed, but they would help to provide a Austrian framework that may be useful to your readers. 

(4)  Finally, it is disappointing that you completely failed to take on any of your mainstream colleagues (such as those in Gregg Mankiw’s “Pigou Club”  http://en.wikipedia.org/wiki/Pigou_Club) who support either carbon taxes or cap and trade approaches. 

I understand that you’ve got a paper in the works addressing Nordhaus, but he’s hardly the only one writing specifically on climate change; I hope you will also be looking at Marty Weitzman at Harvard, Richard Tol and a few others noted here and here:

http://mises.org/Community/blogs/tokyotom/archive/2007/12/16/the-social-cost-of-ignoring-carbon.aspx
http://mises.org/Community/blogs/tokyotom/archive/2007/10/17/reason-congratulations-to-al-gore.aspx

Sincerely,

TT

Yes, even enviros recognize the importance of clear and enforceable property rights in protecting wlidlife.

A new report by TRAFFIC, the wildlife trade monitoring network, and WWF finds that “Well-managed wildlife trade has the potential to deliver significant development benfits for the world’s poor.”   According to a press release, the report “In particular, … highlights the need for secure ownership of wildlife resources by poor people.”  The press release further noted:

According to Dr Susan Lieberman, Director of WWF International’s Species Programme: “Trade in wildlife products can have a significant positive economic impact on people’s livelihoods, childhood education, and the role of women in developing countries, provided it is legal, well-managed and sustainable.”

Conversely, wholesale ‘plundering’ of natural resources and illegal trade not only deplete wildlife populations, but also deprive poor communities of vital livelihood benefits. 

It’s good to see important environmentalists becoming quasi-Austrians in recognizing that property rights deficiencies – and the stripping of resources by non-owners – lie at the core of environmental problems.