TT's Lost in Tokyo — by TokyoTom

Thomas Friedman has an op-ed at the New York Times that describes some of Denmark’s energy taxation and alternative energy policies.

No doubt these policies created distortions and in some ways left Denmark less wealthy than if such policies had not been adopted – particularly as high energy prices may discourage domestic industry to invest abroad – but as I have noted previously, a wide range of economists, businessmen and think tanks support carbon taxes in the US, particularly if they are accompanied by reductions in taxes on labor and capital.

My question, in connection with Friedman’s piece, is whether recycled carbon taxes, if coordinated by leading industrial nations (to reduce geographic shifts in capital investment), would decrease welfare globally?

I observe that the difficulties of coordination and enforcement make it highly unlikely that nations, absent dramatic climate change, will agree to very high carbon taxes.

I also observe that policies in the US to keep energy prices low bear some relation to both the health of the US auto industry and to our ruinous military engagements abroad.  Further, Denmark’s investments in energy independence have certainly spared it costly expenditures on foreign wars, and position it to make money as demand for clean energy grows. 

It’s long been obvious that:

(1) government policy concerning the use of public lands is highly bureaucratized, often inept and subject to behind the scenes sweet deals favoring insiders;

(2) discussions about how the public lands should be used often very politicized;

(3) politicization is especially prominent with respect to public lands that have potentially high commercial value but where development requires additional approvals from legislators or others outside of the Administration/regulatory bureaucracy – such as the Arctic National Wildlife Refuge (ANWR) and the native lands within it, which cannot be explored without Congressional approval, and the Outer Continental Shelf (OCS), further development of which has been blocked both by Executive Order and by annual moratoria imposed by Congress, with the strong backing of many coastal states that wish to protect their tourism industries; and

(4) supporters on both sides – whether for development of ANWR and OCS or for the continued preservation of wildlife, recreation or tourism values or protection of other objectives – have perfectly legitimate interests, and excellent arguments to make (and some not so excellent) in support of those interests.

But it has not been so obvious that the different interests are in fact irreconcilable, especially when one notes how well conservation groups that own land have been able to balance their conservation objectives with active resource extraction – which can be done carefully while providing revenues for other activities.  In fact, I suppose that if any of the major environmental groups had been given title to ANWR, development would have been well underway years ago (as I have previously suggested).  Likewise, the states that have until now blocked further OCS development have done so in good part because the federal government takes the lion’s share of the royalty revenues, while leaving the states and local communities with the short end of the stick and the risks of feared development disasters.

So – for the rather simple reason that there is no private owner of the resources at stake, but instead a politically-controlled legal owner (the U.S. citizens via their government) and an array of shadow owners (the various interest groups and bureaucrats) who have been unable either to conclude any deals or to force their preferences down the throats of those they disagree with – we have deadlock, with valuable resources sitting in the ground, and possibilities for mutually beneficial deals lost.  This is a rather basic analysis that has been recognized by libertarian thinkers and free market environmentalists like John Baden for quite some time.

Recently, in response to a proposal by Iain Murray of CEI that ANWR and the OCS be opened to development, I indicated some further thoughts on possible paths forward:

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.

However, I’d like to change tack a little bit, as these disputes are part of the bigger problem of federalized management, and we are unlikely to see Congress act in the near future to privatize ANWR or other federal lands, or even to turn them over to environmental groups to manage.  We face a real problem with respect to most of federal lands that revenues from resource extraction go into the big black hole of general funds, with very little ability of the resource managers to capture the benefit of managing well, and very little incentive by American taxpayers to make sure that resources are well-managed, priced to receive good returns and do not leave taxpayers generally holding the bag for environmental risks.  A litany of horror stories could easily be assembled on these points. 

How can we get started on improving incentives on our government resource management projects?  Well, a small idea occurs to me:

I’ve recently reviewed a slew of recent arguments on the climate change front and noted wide-ranging support (driven by equity, efficiency and expedience) for a federal carbon pricing scheme (whether by carbon taxes or by emission rights under a cap and trade scheme), particularly if all of the funds raised by the tax or permit sale are passed through to Americans on a per capita basis.  Why couldn’t we apply the same concept to ANWR and the OCS lands, with a small percentage being kept by the relevant oversight agency to fund and incentivize oversight? 

If royalty revenues are passed through to citizens, Americans will directly benefit from moving ahead (without encouraging government bloat), so that development will not be seen as simply a giveaway by politicians to evil oil and gas companies.  Further, citizens (and entrepreneurial prosecutors) will have greater incentives to monitor government performance (as in not giving away the resources too cheaply, and actually collecting revenues owed), and will able use the dividend checks to fund, to their hearts’ content, further environmental protection.  In the case of the OCS, clearly a greater cut of the royalties ought to go to citizens in the relevant coastal states to compensate them for the relatively higher environmnetal risks they bear.

To incentivize the environmental groups to support this type of approach, as well as to provide better assurance of environmental oversight, I would suggest that new leases to explore or develop in ANWR and the OCS include as a contracting party an environmental group, either as the direct lessee (subcontracting to a preferred oil and gas company) or as environmental risk manager, in either case capturing a share of the royalty.  The environmental groups will reap some benefit (that they can use for other projects) and will be subject to oversight by their members, and to competition from other environmental groups to protect wildlife and other values.

Such schemes would incentivize all stakeholders to work together in a win-win manner, while minimizing environmental risk, and directly rewarding citizens and leading to improved resource management.

Maybe the strong desire of many to see carbon pricing at the federal level can be leveraged to enhance both environmental protection AND economic growth, while streamline government and rewarding good resource management, at least in the case of ANWR and the OCS.  (Next up, federal lands – forests, hard rock mining and oil and gas – generally!)

Just a thought.

David Zetland’s libertarian-environmental blog, Aguanomics, has recently been carrying on some excellent discussions on resource and environmental economics, with interlocutors like Bob Murphy, Gene Callahan and others.  In the context of two recent posts on government approaches to climate change, I commented on one thread (An Ounce of Prevention…) that

As for the setting the level of carbon taxes, you and Gene keep assuming that there is a global government that sets taxes in a vacuum. Instead, we have a multi-player game, where any politically sustainably prices are set at levels that the chief emitters are willing to agree to.

This is analogous to ranchers, lobstermen or shrimpers deciding to close a range or fishery. No single one of them is setting a price.

On an earlier thread (Pigouvian Libertarians), I noted to the effect that:

Bob, the standard objections to Pigovian taxes don`t apply to climate change, as there is no single government administering the world. Rather, we are engaged in multi-player negotiations as to how to regulate a commons.  The taxes (or other schemes) that individual governments may impose will ultimately be coordinated, and much more resemble a Coasean trade among nations with respect to a shared resource.

David has kindly made this point the subject of a new post:  How to Set a Carbon Tax.

Allow me to elaborate my point.  A C Pigou, is often trotted out by supporters of government economic regulation, for the proposition that governments should regulate or impose taxes in order to force economic actors to internalize the “external costs” of their actions (costs that are imposed on others outside of that transaction without their consent).  This use of Pigou is a bit unfair, as Pigou himself noted that taxing authorities would always lack the information needed to determine the correct tax, but nevertheless the perception that externalities are ubiquitous has helped to justify a wide range of governmental regulatory interventions.

Other objections to Pigou can of course be raised, as Ronald Coase prominently did when he argued that, when trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial distribution of property rights.  Pigou and those using him did not consider the real world dynamics of self-help among economic actors, and many ignored Pigou’s acknowledgment that governments are seldom positioned to calculate external costs.  Coase noted that because transaction costs are NOT zero, many bargains would not be reachable, so that the initial distribution of property rights would affect ultimate outcomes in resource allocation.  Coase properly turned the focus of the debate over “externalities” towards a focus on the use of bargaining between parties to accommodate differences in personal objectives, and to fruitful discussions of how property rights and bargains are defined and enforced and whether information and transaction costs can be lowered.  Austrians have further criticisms of Pigou and Coase, but those can be set aside for the moment.

In ongoing discussions over at Aguanomics, Bob Murphy and others have trotted out that standard Coasean attacks on the proposals by economists (such as Robert Nordhaus and other members of Gregory Mankiw’s “Pigovian Club”) for carbon taxes, i.e., that government can’t know at what level to set carbon taxes, that such carbon taxes will prevent private transactions among parties that might fully address climate concerns at less costs, etc.

In the context of this discussion, I ask that people step back from the theoretical and observe the pragmatic – that we are in the midst of a multi-decade multinational negotiation of a GLOBAL resource that no one nation controls, in which there are no private property rights or common legal systems and in which transaction costs for private transactions are enormous and swamp individual economic benefits that may be achieved by them, and that in this context, our governments are essentially our negotiating proxies who can more efficiently negotiate for us and come to terms with others than can any private entities or groups.  Given these circumstances, even though our governments are all subject to domestic rent-seeking pressures, because no effective approach to climate change can be reached without the voluntary agreement of all major emitters, is it not the case that the discussions that our governments conduct – including the possibility of coordinated Pigovian taxes at the national level for implementation purposes – ARE efforts at Coasean bargaining?

Any thoughts?

There is a new paper out by economist Richard Tol that summarizes all of the economic work on climate change over the past two decades, in light of recent analyses, particularly the ground-breaking new work by Harvard’s Marty Weitzman on how the “fat tail” of climate risk affects cost-benefit analysis.  Tol is attached to the Economic and Social Research Institute (Dublin), the Institute for Environmental Studies, Vrije Universiteit (Amsterdam), and the Department of Engineering and Public Policy, Carnegie Mellon University.

Tol`s paper, “THE SOCIAL COST OF CARBON: TRENDS, OUTLIERS AND CATASTROPHES”, is here: http://www.fnu.zmaw.de/fileadmin/fnu-files/publication/working-papers/margcostmetawp.pdf

 Tol`s conclusions?

There are three implications.

Firstly, greenhouse gas emission reduction today is justified. The median of the Fisher-Tippett kernel density for peer-reviewed estimates with a 3% pure rate of time preference and without equity weights, is $20/tC. This compares to a future price of carbon permits of $8/tC in the European Union (and a spot price of ¢3/tC).  The case for intensification of climate policy can be made with conservative assumptions. One does not have to rely on dodgy analysis as in Schneider et al. (2007) and Stern et al. (2006).

Secondly, the uncertainty is so large that a considerable risk premium is warranted. With the conservative assumptions above, the mean equals $23/tC and the certainty-equivalent $25/tC. More importantly, there is a 1% probability that the social cost of carbon is greater than $78/tC. This number rapidly increases if we use a lower discount rate – as may well be appropriate for a problem with such a long time horizon – and if we allow for the possibility that there is some truth in the scare-mongering of the gray literature.

Thirdly, more research is needed into the economic impacts of climate change – to eliminate that part of the uncertainty that is due to lack of study, and to separate the truly scary impacts from the scare-mongering. Papers often conclude with a call for more research, and often this is a call for funding for the authors or a justification for further papers by the authors. In this case, however, quality research by newcomers in the field would be particularly welcome.

Tol drew these conclusions from the principal results of his research, which were as follows:

Besides more data and more advanced statistical analysis, this paper offers four results.

Firstly, there is a downward trend in the estimates of the social cost of carbon – even if the IPCC (Schneider et al., 2007) would like to believe the opposite.

Secondly, the Stern Review (Stern et al., 2006) is an outlier – and its impact estimates are pessimistic even when compared to other studies in the gray literature and other estimates that use low discount rates.

Thirdly, the uncertainty about the social cost of carbon is so large that the tails of the distribution may dominate the conclusions (Weitzman, 2007) – even though many of the high estimates have not been peer-reviewed and use unacceptably low discount rates.

Fourthly, if everyone were to pay a carbon tax equal to the social cost of carbon (but not reduce emissions), there is a fair chance that annual taxes would exceed annual income for many people.

(emphasis added)

The recent Marty Weitzman paper that Tol refers to is here:

Marty Weitzman: “On Modeling and Interpreting the Economics of Catastrophic Climate Change”, December 5, 2007 [Update: Weitzman has revised; the latest version is dated Februaru 8, 2008]; http://www.economics.harvard.edu/faculty/weitzman/files/modeling.pdf

Bob Murphy’s got a new climate change post, originally written for the Institute of Energy Research, now gracing the pages of The Mises Institute.

I made a few remarks, but my links seem to have triggered a spam filter, so I’m re-posting them here.

—————————

what they actually found was that of the sampled papers on climate change, only one-third of them expressed a view about its causes, and then of that subset, 97% agreed that humans were at least one cause of climate change.

Thanks, Bob. That sounds like there are damned near ZERO climate scientists who argue that human activities (CO2, other GHGs, soot, particulates?) AREN’T a cause of climate change.

I co-authored a Cato study with climate scientists Pat Michaels and Chip Knappenberger, in which we strongly opposed a U.S. carbon tax. Yet both Michaels and Knappenberger would be climate scientists who were part of the “97% consensus” according to Cook et al. That is, Michaels and Knappenberger both agree that, other things equal, human activity that emits carbon dioxide will make the world warmer than it otherwise would be.

WOW. So EVEN the Cato guys (the ones who deceived Jerry Taylor into thinking CO2 does nothing, and who quit and started Niskanen when he realized he’d been lied to) AGREE that human-emitted CO2 (fossil-fuel emissions; that have increased global atmospheric levels by ~50%, and are also affecting ocean pH and vegetation) WILL MAKE THE WORLD WARMER? [Alarmists!] Do YOU agree with them too, Bob?

[From Leder’s New Republic piece:]

Deniers have managed to undermine how the public views climate science, which in turn makes voters less likely to support climate action.

Interesting that you don’t address this charge about rent-seeking/-defending behavior at all. Could it have something to do with who funds IER, which pays you? IER and its more honestly political sister group American Energy Alliance (which also pays you) are fossil fuel industry front groups; they were once funded in part by Exxon, until it decided (1) in 2008 to “discontinue[] contributions to [IER and] several public-policy research groups whose position on climate change could divert attention from the important discussion about how the world will secure the energy required for economic growth in an environmentally responsible manner” and (2) to come out in 2009 in support of carbon taxes:

Your unwillingness to be straight up with your motives on this topic, especially at the Mises Institute, is disappointing — and doubly so, since you’ve made a noble appeal for “truth-in-advertising, something foreign in the political discussion to which all AGW issues now seem to descend.“

The sad result? Unfortunately at Mises Institute it’s pretty much exactly the debasement that you decry: “the reaction here is to guffaw at the hubris and creepy lack of doubt about how the world [works],” on the parts of scientists and other alarmists.

It’s too bad our leading Austrian thinkers won’t explain, much less live up to, their principles, but I DO thank you for showing more careful readers how strong you, Pat and Chip think the case is among scientists for concern about AGW. 

————————————-

I wonder if Bob’s posting at the right site? Or is this the kind of crap that the Mises Institute wants for traffic and that ‘Austrians’ these days lap up in order to avoid hard thinking about big-government crony capitalism?

I left this comment at Bob Murphy’s Free Advice blog, where he has post noting A Critique of Jerry Taylor’s “Conservative Case for a Carbon Tax”, which links to a piece authored by Bob at the “Institute for Energy Research”. [Note: I’m not sure when/if Bob will actually clear this comment.]

Bob, I know that as senior economist for the Institute for Energy Research DC fossil fuels lobbying outfit (one that was expressly abandoned by Exxon in 2008 because its “position on climate change could divert attention from the important discussion about how the world will secure the energy required for economic growth in an environmentally responsible manner”) you’re not allowed to make consistent libertarian/market-principled arguments on climate/energy policy, so allow me to note my old post that summarized what I thought might be a productive libertarian approach to climate:

http://tokyotom.freecapitalists.org/2010/02/10/productive-libertarian-approach-climate-energy-environmental-issues/

Btw, I see that Jerry Taylor/Niskanen Center has responded to you here:
http://niskanencenter.org/blog/debating-the-carbon-tax/

Yours,

Tom

P.S. Here are a few of my old blog posts on IER, from when my blog was still hosted at the gracious Mises Institute: http://tokyotom.freecapitalists.org/?s=Institute+for+Energy+Research

Ran across a fun little 2-minute YouTube clip that is apparently going to run shortly on the ABC’s “Hungry Beast” program.

In this episode, the Hungry Beast crew, with the help of Aussie “climate scientists” and wannabees, have put together a rap video that is skeptical … of fossil fuel firms and of ‘skeptic’ pundits. 

(The “Hungry Beast” crew have done some other interesting work, which can be seen here, here, and here. Their March 3 piece on Google and their March 24 Is Public the New Private are certainly worth a look.)

Seems like just a bit of fun, similar to the soundtracks by climate scientists Roy Spencer, John Christy and their Christian “EcoFreako” rock band (looks lik the website is down, but I might have the files around somewher if anyones’s interested).

It’s interesting to see climate scientists taking part in this, but like their policy skeptics, they live in this world too, and certainly have a right to have and express their opinions on matters of concern to them.

Without further ado:

[View:http://www.youtube.com/watch?v=LiYZxOlCN10:550:0]

Here’s the script:

In the media landscape there are climate change deniers and believers, but rarely are those speaking about climate change actual climate scientists…

yo….we’re climate scientists.. and there’s no denying this Climate Change Is REEEEALL..

Who’s a climate scientist.. 
I’m a climate scientist.. 
Not a cleo finalist 
No a climate scientist

Droppin facts all over this wax 
While bitches be crying about a carbon tax 
Climate change is caused by people 
Earth Unlike Alien Has no sequel 
We gotta move fast or we’ll be forsaken, 
Cause we were too busy suckin dick Copenhagen: (Politician)

I said Burn! it’s hot in here.. 
32% more carbon in the atmosphere. 
Oh Eee Ohh Eee oh wee ice ice ice 
Raisin’ sea levels twice by twice 
We’re scientists, what we speak is True. 
Unlike Andrew Bolt our work is Peer Reviewed… ooohhh

Who’s a climate scientist.. 
I’m a climate scientist.. 
An Anglican revivalist 
No a climate scientist

Feedback is like climate change on crack 
The permafrosts subtracts: feedback 
Methane release wack : feedback.. 
Write a letter then burn it: feedback 
Denialists deny this in your dreams 
Coz climate change means greater extremes, 
Shit won’t be the norm 
Heatwaves bigger badder storms 
The Green house effect is just a theory sucker (Alan Jones) 
Yeah so is gravity float away muther f**cker

Who’s a climate scientist.. 
I’m a climate scientist.. 
I’m not a climate Scientist 
Who’s Climate Scientists 
A Penny Farthing Cyclist 
No 
A Lebanese typist 
No 
A Paleontologist 
No
A Sebaceous Cyst
No! a climate scientist! Yo! PREACH~!

Written and performed by Climate Scientists, Dan Ilic, Duncan Elms and production by Brendan Woithe at Colony NoFi.

[This is a work in progress and largely taken from previous posts, but readers might find some value in it in the meanwhile.]

1. Heated but vacuous climate wars

On environmental issues in general and climate in particular, find me someone (like George Will) ranting about “Malthusians” or “environazis” or somesuch, and I’ll show you someone who doesn’t understand – or refuses to acknowledge – the difference between:

(1) wealth-creating markets based on private property and/or voluntary interactions/contracts protected by law, and

(2) the tragedy of the commons situations that result when there are NO property rights (atmosphere, oceans), when the pressures of developed markets swamp indigenous hunter-gather community rules, in many cases where governments formally own and purport to manage “public” resources, and when governments absolve purportedly “private” actors from liability for harms to others (such as via grants of “limited liability“).

So what’s the deal? Here’s a perfect opportunity for skeptics to educate the supposedly market ignorant, but they refuse, preferring to focus instead on why concerned scientists must be wrong, how concerns by a broad swath of society about climate have become a matter of an irrational, deluded “religious” faith, or that those raising their concerns are “misanthropes” or worse.

Such pigheadedness is met by those on the left likewise see libertarians and small-government conservatives as deluded and/or deliberate pawns of evil Earth-destroying corporations.

Both sides, it seems, prefer to fight – and to see themselves as right and the “others” as evil – rather than to reason.

While we should not regret that we cannot really constrain human nature very well, at least libertarian and others who profess to love markets ought to be paying attention to the inadequate institutional framework that is not only poisoning the political atmosphere, but posing risks to important globally and regionally shared open-access commons like the atmosphere and oceans (which are probably are in much more immediate and grave threat than the climate). And they also ought to recognize that there are important economic interests that profit from the current flawed institutional framework and have quite deliberately encouraged the current culture war.

2. Why the reflexive libertarian disengagement?

I have on numerous occasions tried to point out, to posters on the Mises Blog who have addressed climate issues, the stunning unproductivity of the approach that they have taken — that of focussing on science and dismissing motivations and preferences, rather than exploring root causes and middle ground, and have continued to scratch my head at the obstinacy and apparent lack of vision.

The following seem to be the chief factors at work in the general libertarian resistance to any government action on climate change:

– Many libertarians, as CEI’s Chris Horner has stated,  see “global warming [as] the bottomless well of excuses for the relentless growth of Big Government.”  Even libertarians 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 (though there remain many productive free-market environmentalists/conservationists). Even though libertarians and environmentalists still share a mistrust of big government, environmentalists, on the one hand, generally have come to believe that MORE government is the answer, despite all of the problems associated with the socialized ownership of resources and/or inefficient bureaucratic management (witness the crashing of many managed fisheries in the US), the manipulation of such management 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. On the other hand, many libertarians  reflexively favor business over “concerned citizens”, while other libertarians see that government “solutions” themselves tend to snowball into costly problems that work in favor of big business and create pressures for more government intervention. 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 or consider ways that libertarian aims can be advanced by using the pressure from “enviro” goals.

This reflexive hostility – at times quite startingly vehement – 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 when governments (mis)manage resources, and that there are various private steps and changes in government policy that would undo the previous government actions that are at the root of environmentalists’ frustrations.The reflexive hostility is also a shame because it has the effect, in my mind rather clearly, of rendering libertarians largely blind to the ways that large energy, power and certain manufacturing corporations continue to benefit from (and invest heavily in maintaining) the existing regulatory structure, in ways that shift large costs and risks to unconsenting third parties.

– There are some libertarians and others who profess to love free markets at AEI, CEI, Cato, IER, Master Resource and similar institutions that are partly in pay of fossil fuel interests, and so find it in their personal interests to challenge both climate science and policy proposals that would impose costs on their funders.

I felt particularly struck by the commonness of a refrain we are hearing from various pundits who prefer to question the good will or sanity of environmentalists over the harder work of engaging in a good faith examination and discussion of the underlying institutional problem of ALL “environmental” disputes:  namely, a lack of property rights and/or a means to enforce them. 

3. The whys of climate concerns and calls for “clean” energy

I want to get started with a list of policy changes that I think libertarians can and should be championing in response to the climate policy proposals of others.

The incessant calls for – and criticism of – government climate change policies and government subsidies and mandates for “green/clean power” both ignore root causes and potential common ground.  As a result, both sides of the debate are largely talking past each other, one talking about why there is a pressing need for government policy to address climate change concerns, while the other is concerned chiefly about the likelihood of heavy-handed mis-regulation and wasted resources. This leaves the middle ground unexplored.

There are plenty of root causes for the calls for legislative and regulatory mandates in favor of climate policies and clean / green / renewable power, such as:

• concerns about apparent ongoing climate change, warnings by scientific bodies and apprehensions of increasing risk as China, India and other developing economies rapidly scale up their CO2, methane and other emissions,
• the political deals in favor of environmentally dirty coal and older power plants under the Clean Air Act,
• the enduring role of the federal and state governments in owning vast coal and oil & gas fields and relying on the royalties (which it does not share with citizens, but go into the General Pork Pool, with a relatively meager cut to states),
• the unwillingness of state courts, in the face of the political power of the energy and power industries, to protect persons and private property from pollution and environmental disruption created by federally-licensed energy development and power projects,
• the deep involvement of the government in developing, encouraging and regulating nuclear power, and
• the frustration of consumer demand for green energy, and the inefficient and inaccurate pricing and supply of electricity, resulting from the grant by states of public utility monopolies and the regulation of the pricing and investments by utilities, which greatly restricts the freedom of power markets, from the ability of consumers to choose their provider, to the freedom of utilities to determine what infrastructure to invest in, to even simple information as to the cost of power as it varies by time of day and season, and the amount of electricity that consumers use by time of day or appliance.

4. Is a small-government, libertarian climate/green agenda possible and desirable?

So what is a good libertarian to suggest? This seems rather straight-forward, once one doffs his partisan, do-battle-with-evil-green-fascist-commies armor and puts on his thinking cap.

From my earlier comment to Stephan Kinsella:

As Rob Bradley once reluctantly acknowledged to me, in the halcyon days before he banned me from the “free-market” Master Resource blog, “a free-market approach is not about “do nothing” but implementing a whole new energy approach to remove myriad regulation and subsidies that have built up over a century or more.” But unfortunately the wheels of this principled concern have never hit the ground at MR [my persistence in pointing this out it, and in questioning whether his blog was a front for fossil fuel interests, apparently earned me the boot].

As I have noted in a litany of posts at my blog, pro-freedom regulatory changes might include:

• accelerating cleaner power investments by eliminating corporate income taxes or allowing immediate depreciation of capital investment (which would make new investments more attractive),
• eliminating antitrust immunity for public utility monopolies to increase competition, allow consumer choice, peak pricing and “smart metering” that will rapidly push large potential efficiency gains (as identified by McKinsey),
• ending Clean Air Act handouts to the worst utilities (or otherwise unwinding burdensome regulations and moving to lighter and more common-law dependent approaches),
• ending energy subsidies generally (including federal liability caps for nuclear power and allowing states to license),
• speeding economic growth and adaptation in the poorer countries most threatened by climate change by rolling back domestic agricultural corporate welfare programs (ethanol and sugar), and
• if there is to be any type of carbon pricing at all, insisting that it is a per capita, fully-rebated carbon tax (puts the revenues in the hands of those with the best claim to it, eliminates regressive impact and price volatility, least new bureaucracy, most transparent, and least susceptible to pork).

Other policy changes could also be put on the table, such as:

• an insistence that government resource management be improved by requiring that half of all royalties from mineral and fossil fuel development be rebated to citizens (with a slice to the administering agency), and
  
• reducing understandable NIMBY problems by (i) encouraging project planners to proactively compensate persons in affected areas and (ii) reducing fears of corporate abuses, by providing that corporate executives have personal liability for environmental torts (in recognition of the fact that the profound risk-shifting that limited liability corporations are capable of that often elicits strong public opposition and fuels regulatory pressure).

5. Other libertarian discussants

A fair number of libertarian commenters on climate appear to accept mainstream sciences, though there remain natural policy disagreements. Ron Bailey, science correspondence at Reason and Jonathan Adler, a resources law prof at Case Western, Lynne Kiesling at Knowledge Problem blog, and David Zetland, who blogs on water issues, come to mind.

I`m not the only one – other libertarian climate proposals are here:

• Jonathan Adler at Case Western (2000); he has other useful commentary here, here,
• 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“;
• Iain Murray of CEI; and
• Cato’s Jerry Taylor is a frequent commentator and Indur Goklany has advanced a specific climate change-targeted proposal.
•  AEI’s Steven Hayward and Ken Green together have provided a number of detailed analyses (though with a distinct tendency to go lightly on fossil fuels).

Several libertarians recently urged 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 his piece The Goal Is Freedom: Global Warming and the Layman (December 8, 2006; The Freeman):
• 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.
• Ron Bailey of Reason Magazine, “Congratulations to Al Gore; But be wary of the man’s proposed solutions for global warming“,  October 12, 2007.
• One self-described libertarian group in California has specifically proposed carbon taxes, though their “Pay Your Air Share” proposal appears to be little-discussed.
• Dan C. Shahar, in his recent paper, “Justice and Climate Change: Toward a Libertarian Analysis” (The Independent Review, Fall 2009), notes that (i) libertarian arguments to the effect that, even if man contributes to climate change, mankind should just roll with the punches and adapt, presuppose that man-made climate change would not represent an injustice, and (ii) if climate change IS an injustice, libertarians should eagerly offer ideas about how best to protect the victims’ rights.

There have been several open disputes, which indicate a shift from dismissal of science to a discussion of policy; the below exchanges of view are worthy of note:

• The Cato Institute dedicated its entire August 2008 monthly issue of Cato Unbound, its online forum, to discussing policy responses to ongoing climate change.  The issue, entitled “Keeping Our Cool: What to Do about Global Warming“, contains essays from and several rounds of discussion between Jim Manzi, statistician and CEO of Applied Predictive Technologies, Cato Institute author Indur Goklany; climate scientist Joseph J. Romm, a Senior Fellow at the Center for American Progress; and Michael Shellenberger and Ted Nordhaus, the co-founders of The Breakthrough Institute.  My extended comments are here.

• Reason Foundation, posted an exchange on Climate Change and Property Rights June 12th, 2008 (involving Reason’s Shikha Dalmia, Case Western Reserve University law professor Jonathan H. Adler, and author Indur Goklany); discussed by Ron Bailey of ReasonOnline here; here`s my take.

• Debate at Reason, October 2007, Ron Bailey, Science Correspondent at Reason, Fred L. Smith, Jr., President and Founder of CEI, and Lynne Kiesling, Senior Lecturer in Economics at Northwestern University, and former director of economic policy at the Reason Foundation.

• Reason Foundation, Global Warming and Potential Policy Solutions September 7th, 2006 (Reason’s Shikha Dalmia, George Mason University Department of Economics Chair Don Boudreaux, and the International Policy Network’s Julian Morris).

• Readers might also find this upbraiding of Penn & Teller at a gathering of skeptics in 2008 to be interesting.

Finally, I have collected here some Austrian-based papers on environmental issues that are worthy of note:

Environmental Markets?  Links to Austrians

Ones such paper is the following: Terry L. Anderson and J. Bishop Grewell, Property Rights Solutions for the Global Commons: Bottom-Up or Top-Down?

Apologies, but I can`t resist:

I saw a news item earlier today – “Copenhagen climate summit borrows Dylan’s voice” – that indicates that the COP 15 organizers (the 15th Conference of the Parties to the UN Framework Convention on Climate Change, to which Pres. George H.W. Bush & Congress made US a party) are making informal use of Bob Dylan`s “A Hard Rain is Gonna Fall” as a conference theme (“UN to release ‘Hard Rain’ film with Bob Dylan tune on eve of climate talks | Spero News“). 

Well, a different Dylan song popped into my head; tweaked very slightly, it goes like this:

The Climes They Are A-Changin’

Come gather ’round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You’ll be drenched to the bone.
If your time to you
Is worth savin’
Then you better start swimmin’
Or you’ll sink like a stone
For the climes they are a-changin’.

Come writers and critics
Who prophesize with your pen
And keep your eyes wide
The chance won’t come again
And don’t speak too soon
For the wheel’s still in spin
And there’s no tellin’ who
That it’s namin’.
For the loser now
Will be later to win
For the climes they are a-changin’.

Come senators, congressmen
Please heed the call
Don’t stand in the doorway
Don’t block up the hall
For he that gets hurt
Will be he who has stalled
There’s a battle outside
And it is ragin’.
It’ll soon shake your windows
And rattle your walls
For the times they are a-changin’.

Come mothers and fathers
Throughout the land
And don’t criticize
What you can’t understand
Your sons and your daughters
Are beyond your command
Your old road is
Rapidly agin’.
Please get out of the new one
If you can’t lend your hand
For the climes they are a-changin’.

The line it is drawn
The curse it is cast
The slow one now
Will later be fast
As the present now
Will later be past
The order is
Rapidly fadin’.
And the first one now
Will later be last
For the climes they are a-changin’.

Dylan`s original, The Times They Are A-Changin` is here.

I intend no offense here to anyone; those with different predilections on climate and the problem of government and rent-seeking will see this and other Rorshach Blots differently.

But for readers that have made it this far, I note the following:

• Rex Tillerson, Exxon CEO and Margo Thorning of American Council for Capital Formation both support carbon taxes;
• In this they agree with prominent NASA climate scientist James Hansen, recently arrested for an anti-coal sit-in and author of a new book, “Storms of My Grandchildren: The Truth about the Coming Climate Catastrophe and Our Last Chance to Save Humanity”, who says the cap and trade approach being taken at Copenhagen is “fundamentally wrong”, plans to boycott the meeting and hopes the talks fail;
• leading property insurers Allianz, Munich Re and Swiss Re advocate steps to forestall, reduce and prepare for climate change;
• While Exxon has made much of its decision to no longer fund climate “skeptic” PR shops like CEI and Rob Bradley`s Institute for Energy Research (and new “free market coal” MasterResource blog) – both places frequently feeding Bob Murphy – growing mountains of evidence document the efforts that fossil fuels firms make to maintain status quo and the sweet deals that they have under it;
• there is plenty of common ground, where libertarians and progressives should both be able to agree on regulatory changes that would promote market freedom, competition and clean energy:  A libertarian immodestly summarizes a few modest climate policy proposals – TT`s Lost in Tokyo.

Further to my preceding posts regarding John Quiggin`s post on “Libertarians and delusionism“, I copy below a few of the comments that I left there:

TokyoTom

November 4th, 2009 at 08:13 | #3

John,
thanks for raising the topic more widely. However, I think you`ve
wandered a bit astray yourself by missing the problem of cognitive
traps, as well as missing a libertarian point or two.

I respond more fully here: http://mises.org/Community/blogs/tokyotom/archive/2009/11/04/john-quiggin-plays-pin-the-tail-on-the-donkey-with-quot-libertarians-and-delusionism-quot.aspx

Tom

TokyoTom

November 4th, 2009 at 18:09 | #33

John,
I note that I have made a few additional comments, chiefly in an effort
to clarify my understanding of libertarian views on property:

http://mises.org/Community/blogs/tokyotom/archive/2009/11/04/a-few-more-comments-to-john-quiggin-on-climate-and-libertarian-principles.aspx

I look forward to your further thoughts.

Tom

TokyoTom

November 5th, 2009 at 00:43 | #48

John, obviously my own experience at Mises (and at the libertarian law
blog Volokh Conspiracy) is that while decidedly irrational “skepticism”
and wishful thinking predominates, it is not universal. But those like
me who believe that climate concerns are justified and want to analyze
policy (and who are critical of ad homs directed toward “enviros”)
always face challenges and criticism from those who feel too threaded
to venture out into a discussion of policy.

However, outside of boards like that, it seems to me that there is a
general swing by libertarian commenters on climate to an acceptance of
a rather mainstream science view, though there remains natural policy
disagreements. Ron Bailey, science correspondence at Reason and Jon
Adler, a resources law prof at Case Western, Lynne Kiesling at
Knowledge Problem blog, David Zetland, who blogs on water issues, come
to mind. Others, at AEI, CEI, IER and Master Resource are partly in the
business of running cover for fossil fuel interests, and so frequently
challenge both science and policy.

There have been several open disputes, where Bailey, Kiesling and
others have challenged skepticism at CEI and elsewhere, as I noted on
my recent “libertarian views” summary post. Readers might also find
this upbraiding of Penn & Teller to be interesting: http://mises.org/Community/blogs/tokyotom/archive/2008/07/05/penn-amp-teller-quot-bull-quot-artists-get-ready-to-change-their-quot-skeptical-quot-stance-on-climate-change.aspx

BTW, I note that one self-described libertarian group in California
has specifically proposed carbon taxes, though this is a rather obscure
group and their “Pay Your Air Share” proposal appears to be
little-discussed: http://mises.org/Community/blogs/tokyotom/archive/2008/02/13/quot-pay-your-air-share-quot-libertarian-think-tank-advocates-carbon-taxes.aspx

1. 

   TokyoTom
   

   November 5th, 2009 at 17:08 | #36

   @Freelander
   “It is the collective action that is required that extreme libertarians hate so much. ”

   Libertarians don`t oppose collective action per se, but are opposed
   to “collective” actions that are dictated by the state -because it
   hampers the ability of communities to respond to problems on their own,
   weakens links between resource users and the relevant resource,
   frequently locks in benefits for powerful insiders (viz., the big firms
   that profess to love markets but really love their deals from
   government that lock in their advantageous position) – thereby setting
   up enduring fights over the wheel of government -and because the
   “knowledge problem” generally ensures that solutions will be ham-handed
   and generate a need for further interventions.

   You, John and others might not have noticed, but these are some of
   the chief conclusions of the empirical research by “tragedy of the
   commons” expert Elinor Ostrom, and her writings about how
   counter-productive stated-led “development” and commons-management
   efforts have been is precisely the reason why the Swedes awarded her
   the Nobel Prize in economics.

2. 

   TokyoTom
   

   November 5th, 2009 at 17:19 | #37

   Reply |
   Quote

   @Alice
   Alice, on the topic of “watermelons”, surely the libertarians have a
   point that many environmentalists really do not understand how markets
   or free societies function, but typically this term is used not to
   explain, but as an ad hom, both to dismiss concerns over climate
   science and to avoid the heavy work of arguing over policy, as I`ve
   noted here:

   http://mises.org/Community/blogs/tokyotom/archive/2009/11/05/the-road-not-taken-v-libertarian-hatred-of-misanthropic-quot-watermelons-quot-and-the-productive-love-of-aloof-ad-homs.aspx

4. 

   TokyoTom
   

   November 5th, 2009 at 17:33 | #39

   Reply |
   Quote

   John,
   to sum up, while clearly many libertarians are guilty of wishful
   thinking as to the climate science, by the same token many
   environmentalists and leftists seem to blithely ignore all of the
   problems that are associated with state/bureaucratic responses.

   Yes, there are self-deluded on both sides, but to seek to explain
   away (or dispense with considering) the opposition of others is itself
   a flight from reason and responsibility.

   That this is understandable , human and a common phenomenon in the
   case of tribal or partisan conflict – as Nick Kristof points out: http://mises.org/Community/blogs/tokyotom/archive/2008/04/17/nick-kristof-on-politics-why-we-conclude-that-i-m-right-and-you-re-evil.aspx
   – makes it something that we should all the more try to avoid, rather
   than indulge in, which seems to be the drift of this post and many of
   your commenters.

   On this point, I would recommend that you and others take a look at
   some of the opposition to cap-and-trade now springing up on the left in
   the US; see the comments of two EPA lawyers and of Dr. Janese Hansen
   here:
   http://dotearth.blogs.nytimes.com/2009/11/02/epa-lawyers-challenge-cap-and-trade-for-climate/

   Says Hansen: “I hope that Williams and Zabel give decision makers
   pause. This is no time to be rushing into costly ineffectual
   legislation. It is time to call a halt on any legislation this year,
   and take time to understand the matter. It would take 20 years to fix
   the mess that Congress, with the help of special interests, seems
   intent on creating.”

   Regards,

   Tom