By the end of last year I attended an interesting presentation by Peter Barnes, entitled "Who owns the Sky?".
He began answering such question practically by an application of the "uti posidetis" principle: it belongs to the one who uses it, and since its main use nowadays is to pollute it, therefore the sky belongs to the polluters. I'd quickly say that I believe he is half wrong on this idea with some consequences for the conclusions he derives later, the reason being that since the sky is treated as a free resource (there are no charges for using it) it is no source of competitive advantage for anybody, therefore it generates no rent for the polluter. So the benefit of these actions relies both on the polluter and the consumer who receives a product or service free riding on the cost levied on the people that suffer the consequences of dirty air (sometimes their own selves). (Those who have studied economics can imagine a simple fall in the cost for all the firms in the industry, to get the picture).
Furthermore, Barnes believes that control via carbon taxes (or any other taxes) would be ineffective since "even if that idea overcomes the political conundrum, demand for polluting is inelastic". He didn't seem to notice that this final statement (if true) would reinforce the idea of the consumer being the real beneficiary of pollution rather than the "polluting firm".
Based on these ideas he advocates for a control based on licensed exploitation with caps to cover all carbon emitting resources in the economy. According to him this should be applied upstream rather than downstream (at the point of creation or collection of the resource rather than at its final use). He admits that this may punish some innocent (not polluting) uses of such resources, but he reckons that trying to make such distinctions may only serve as a way for fraude. All potentially contaminant resources (oil, coal, etc) should be capped no matter their final application, and not accepting any sort of offsets nor issues of extra permits. The idea of upstream capping seems simpler than other plans, hence its strength and the passion Barnes transmits also reinforces that feeling, but he completely disregards any kind of incentives for the pollution-efficiency in the use of that capped quantity, and therefore, we might end up with less oil and coal, but having it burnt in the most polluting way, if that turns to be the more profitable one. We will be favouring those who use less quantity rather than those who pollute less.
Then he moves on to the way of distributing these rights to produce potentially polluting resources, and suggests public auctions, or even more: fixed term rights that could be distributed among the population and then sold through private markets. In either case the idea is that whomever wants to produce potential carbon emitting sources should buy that right to "the people", whether directly or indirectly through the public sector. Thus all the increases in cost that would be transferred to the consumer would also be captured by the consumers who would end up unaffected (sic).
Now this raised all kinds of questions regarding the more or less regressive impact of this model since everybody would be given the same amount of benefits arising from the auctions (that would be the case if the markets are cleared fast enough to converge to a single price, which in a repeated exercise might be the case) but not everybody pollutes the same. Whether this would be regressive or not does not appear clear to me. It's true that rich people uses more cars and jets than poor people, but it's also true that their marginal propensity to consumption (of polluting and no polluting goods) is smaller than that of poor people, whose consumption baskets, on the other hand, include more polluting elements that most people think of (the proportion of the cost of basic goods arising from transportation and other polluting activities is very high). Therefore this redistribution issue does not appear clear, so the idea still sounds appealing, in principle.
But the reall fallacy is that assuming redistribution we end up unaffected!! We are capping emissions: therefore something has to diminish and that would probably be the rate of growth. (In fact, if the capping is too agressive it may create some recession). We have learnt there's no free lunch, haven't we?
I must say I regarded the conference as quite interesting, even though I can't share some of his approaches. In fact, I still believe that as long as people (rather than governments) aren't really convinced on the relevance of this issue, and by that I mean having people willing to pay the price of more expensive and less goods and services, things will still be the same. And I do believe that not only because of the "demand side" approach that every libertarian would prefer, but also because the "supply approach" seems unsustainable without the other. But, when Peter Barnes finished his intereting conference I couldn't help but ask him only one question: WHO? Who will measure, who will cap, who will enforce? And the images of Japanese ships breaking a world agreement on non commercial whale captures (1.000 whales for research in one year?) in front of the eyes of everybody (including a ruling from the Australian Courts), without a word coming from other governments clearly tell us that there's simply not enough demand... yet.
He began answering such question practically by an application of the "uti posidetis" principle: it belongs to the one who uses it, and since its main use nowadays is to pollute it, therefore the sky belongs to the polluters. I'd quickly say that I believe he is half wrong on this idea with some consequences for the conclusions he derives later, the reason being that since the sky is treated as a free resource (there are no charges for using it) it is no source of competitive advantage for anybody, therefore it generates no rent for the polluter. So the benefit of these actions relies both on the polluter and the consumer who receives a product or service free riding on the cost levied on the people that suffer the consequences of dirty air (sometimes their own selves). (Those who have studied economics can imagine a simple fall in the cost for all the firms in the industry, to get the picture).
Furthermore, Barnes believes that control via carbon taxes (or any other taxes) would be ineffective since "even if that idea overcomes the political conundrum, demand for polluting is inelastic". He didn't seem to notice that this final statement (if true) would reinforce the idea of the consumer being the real beneficiary of pollution rather than the "polluting firm".
Based on these ideas he advocates for a control based on licensed exploitation with caps to cover all carbon emitting resources in the economy. According to him this should be applied upstream rather than downstream (at the point of creation or collection of the resource rather than at its final use). He admits that this may punish some innocent (not polluting) uses of such resources, but he reckons that trying to make such distinctions may only serve as a way for fraude. All potentially contaminant resources (oil, coal, etc) should be capped no matter their final application, and not accepting any sort of offsets nor issues of extra permits. The idea of upstream capping seems simpler than other plans, hence its strength and the passion Barnes transmits also reinforces that feeling, but he completely disregards any kind of incentives for the pollution-efficiency in the use of that capped quantity, and therefore, we might end up with less oil and coal, but having it burnt in the most polluting way, if that turns to be the more profitable one. We will be favouring those who use less quantity rather than those who pollute less.
Then he moves on to the way of distributing these rights to produce potentially polluting resources, and suggests public auctions, or even more: fixed term rights that could be distributed among the population and then sold through private markets. In either case the idea is that whomever wants to produce potential carbon emitting sources should buy that right to "the people", whether directly or indirectly through the public sector. Thus all the increases in cost that would be transferred to the consumer would also be captured by the consumers who would end up unaffected (sic).
Now this raised all kinds of questions regarding the more or less regressive impact of this model since everybody would be given the same amount of benefits arising from the auctions (that would be the case if the markets are cleared fast enough to converge to a single price, which in a repeated exercise might be the case) but not everybody pollutes the same. Whether this would be regressive or not does not appear clear to me. It's true that rich people uses more cars and jets than poor people, but it's also true that their marginal propensity to consumption (of polluting and no polluting goods) is smaller than that of poor people, whose consumption baskets, on the other hand, include more polluting elements that most people think of (the proportion of the cost of basic goods arising from transportation and other polluting activities is very high). Therefore this redistribution issue does not appear clear, so the idea still sounds appealing, in principle.
But the reall fallacy is that assuming redistribution we end up unaffected!! We are capping emissions: therefore something has to diminish and that would probably be the rate of growth. (In fact, if the capping is too agressive it may create some recession). We have learnt there's no free lunch, haven't we?
I must say I regarded the conference as quite interesting, even though I can't share some of his approaches. In fact, I still believe that as long as people (rather than governments) aren't really convinced on the relevance of this issue, and by that I mean having people willing to pay the price of more expensive and less goods and services, things will still be the same. And I do believe that not only because of the "demand side" approach that every libertarian would prefer, but also because the "supply approach" seems unsustainable without the other. But, when Peter Barnes finished his intereting conference I couldn't help but ask him only one question: WHO? Who will measure, who will cap, who will enforce? And the images of Japanese ships breaking a world agreement on non commercial whale captures (1.000 whales for research in one year?) in front of the eyes of everybody (including a ruling from the Australian Courts), without a word coming from other governments clearly tell us that there's simply not enough demand... yet.
Powered by ScribeFire.
Entradas
