More than 200 leading economists have told politicians that a carbon tax is the best way to fight climate change however they also point out that the Liberal Green Shift won’t make much of a difference.
The Liberal plan at $10/tonne is a babystep compared to that of the Green Party at $50/tonne.
Needless to say the Harper Conservatives would prefer to do nothing about climate change…
Their policies have favoured the rapid expansion of the environmentally destructive Alberta Tar Sands.
And the NDP?
Well they currently oppose a carbon tax favouring a cap and trade system that David Suzuki and other environmentalists have questioned.
Back Carbon Tax, Leading Economists Tell Politicians
The Ottawa Citizen, October 7 2008
Joanna Laucius
More than 230 academic economists have signed an open letter to the leaders of the federal political parties, urging them to acknowledge that putting a price on carbon is “the best approach” to combatting climate change.
In a rare show of agreement, the economists say public policy needs to protect the environment “because in the absence of policy, individuals generally don’t take the environmental consequences of their actions into account, and the result is ‘market failure’ and excessive levels of pollution for all of us.”
The signatories include the godfather of Canadian economics, Richard Lipsey, whose name is familiar to generations of university economics students as lead author of the classic text Economics, now in its 13th edition.
The economists say their purpose is not to support any political platform, but to ground discussion on accepted economic principles.
Prices have to increase to provide incentives to change behaviour, said Nancy Olewiler, an environmental economist at Simon Fraser University who was one of the originators of the letter, along with Ross Finnie of the University of Ottawa and David Green of the University of British Columbia.
“We just wanted to clear the air about these issues,” said Ms. Olewiler, who has been analysing various carbon-pricing scenarios for more than a decade. “It’s supply and demand. We have been teaching this since Adam Smith.”
The three originators of the letter came up with the idea about three weeks ago, then e-mailed a draft to other economics professors last Wednesday.
By Friday, they had about 200 signatures, with more trickling in over the weekend. That’s an astonishing number for academics not typically inclined to act collectively and quickly on policy issues, Mr. Finnie said.
Pricing carbon allows every business and family to decide for itself how it values the things that generate carbon, the letter says. Each can consider the options and everyone has the incentive to change, but does it in a way that’s best for them.
“This is how to get the most bang for the buck,” said Mr. Lipsey, who calls global warming the most important problem of the century. “I think the whole thing should be revenue neutral. You cut other taxes. Low carbon users end up paying less.”
The economists argue that pricing encourages innovation because users of carbon-intensive goods will demand alternatives. Regulation is the most expensive way to meet the goal because users don’t have a choice, the letter says.
In a well-designed carbon-tax strategy, increases would be introduced gradually and announced ahead of time, providing consumers with some certainty and allowing them to make decisions based on what they know is coming.
A “cap and trade system” is another price alternative, although a more complicated one. It works like a quota system, allowing carbon users to buy and sell carbon allowances.
Mr. Finnie said the signatories don’t support one party over another.
“You can say that the Liberals have a carbon tax. Is it a good carbon tax? That’s a whole other question,” he said. “This is not about influencing the election, it’s about clarifying debate.”
October 13, 2008
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