Group 1 week 1

Source

https://www.wbur.org/news/2024/06/06/pfas-levels-cape-islands-massachusetts-health

Problem

The environmental problem is the changing climate that is being driven by fossil fuel emissions. The policy problem is what to do about this, and who is impacted by what we do.

Summary

The article is a comment on the political conversation about BC's carbon tax that is currently again front and center. It points out that BC has had a carbon tax for 15 years, and that there have been many analyses that show it is working, it is reducing emissions below what it would otherwise be. In spite of having this tax, BC's economy does not seem to be suffering. The article points out that if BC continues to try and reduce its emissions, all the alternatives to the carbon tax will impose more cost on the BC economy. It also points out that the way that the carbon tax was implemented in BC has considered that lower income people are impacted more severely by a carbon tax, by paying a rebate, the Climate Action Tax Credit.

The article is written by a member of the Canadian Climate Institute, a think tank devoted to analysis of climate policy.

Economic concepts

1. Externalities: An externality exists when a decision made by one person has impacts on another person who is not involved in the decision. Pollution is the classic example, where the polluter is not accountable for the cost that the pollution they generate has on others.
2. Emissions taxes: An emissions tax is a tax that is based on the level of emissions that someone produces. The idea is that by taxing emissions, it creates a cost, and the polluter will take that cost into account when deciding how much emissions to produce. If it is cheaper to reduce emissions than to pay tax on the emission, then we would expect the emitter to reduce emissions.

Application of concepts

1. The article is about human emissions that are contributing to climate change. The pollution generated by people using fossil fuels is a good example of an externality. When people burn fossil fuels by driving, heating their homes, etc., the emissions are dumped into the atmosphere, making a small contribution to the changing climate. The impacts of that changing climate are felt by everyone on earth.
2. The carbon tax is a lot like an emissions tax, but not exactly. Most people's emissions are not measured, and they are not taxed based on their level of emissions. Rather, people are taxed based on the fuel that they use. If the burning of the fuel results in a known amount of emissions, then a tax on fuel is almost identical to a tax on emissions. However, the tax is paid when the fuel is purchased, not when it is actually burned. The article does link to several research studies that show the carbon tax has had the desired effect. It has changed people's choices, so that the emissions generated by people in BC is lower than it would otherwise be.

Conclusion

BC's carbon tax looks to be an effective way to reduce an important externality, the damage done by emissions contributing to climate change. However, it continues to be a political target that is easy to campaign on. What is the alternative? The critics don't seem to offer any.