Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Monday, December 20, 2004

Becker-Posner-Coase-Palmer on Global Warming

In this week's Becker-Posner blog postings, the topic of global warming is tackled. Posner summarizes the scientific controversies and says that there is continuing evidence that global warming is occurring and that it is likely due to carbon dioxide [CO2] emissions. He favours having the U.S. sign the Kyoto accord. Becker and commenters to Posner are skeptical of the effectiveness of the Kyoto accord. Becker recommends, instead, a market in tradable CO2 emission permits.

Lots of economists have favoured moving toward markets in tradable permits for pollution control: creating well-defined and enforceable property rights that can be traded means that we will have the optimal allocation of pollution reduction. The problems with tradable permits are many, however: who will decide how many permits should be issued? Who will do the enforcement? How effective will the enforcement be? What will be the punishments and deterrents? I certainly do not trust the U.N. to do this, nor do I believe the U.S. would accept any U.N. decisions on these questions.

These problems are serious, to the point of scuppering the idea, within a single sovereign state. Imagine the barriers to such a plan internationally! Who will decide, and by what process, the answers to these questions? Because of the difficulties answering these questions, I just do not see tradable permits as a realistic option for controlling CO2 emissions internationally.

Maybe Posner doesn't either, and maybe that's why he supports having the U.S. sign on to Kyoto.
And then there's Canada: sign the Kyoto Accord but don't do anything about it.
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