Eleutherian

Dwight Filley begins Risk Homeostasis and the Futility of Protecting People from Themselves by stating:

There is a growing body of evidence...that points to the surprising conclusion that most coercive measures intended to increase safety either have no effect or an opposite effect. Thus for example, when the government mandates the use of automobile seat belts, fatality rates do not decrease as expected. This counter-intuitive result is consistent across a broad range of governmental attempts to protect people from themselves.

I firmly support the risk homeostasis theory, and in reading on it lately, I just as strongly believe it applies to the environment. Particularly, environmental homeostasis applies to government mandated fuel economy standards.

Here's a story that may sound familiar. An environmentally conscious person who normally takes mass transportation to work every day buys a Prius (or another highly fuel efficient vehicle). The government may have even influenced the decision by providing an economic subsidy. Now, this person feels better about driving to work over taking mass transit.

Yes, the vehicle travels many miles for every gallon of fuel. However, the mass transportation system is still running. Every efficient gallon of literal fuel adds figurative fuel to the problem. This environmentally conscious person became comfortable in the thought of driving a vehicle with admirably-high fuel efficiency, forgetting the reason why mass transportation was the favored option all those previous years.

When the government manipulates the market, more harm occurs to the environment than would otherwise result from individuals making decisions according to their own free will (i.e. free from coercion). Forcing the automobile industry to increase fuel efficiency standards or providing economic subsidies to individuals who purchase more fuel efficient vehicles distorts the market and changes behavior. Ironically, the government's fuel efficient mandates and market manipulations will lead to increased subsidies for government-run public transportation systems, further hurting taxpayers, the economy, and the environment.

Greg Mankiw's blog pointed me to this development - France is preparing to enact a carbon tax. Now, I've previously written on the merits of a carbon tax over a cap-and-trade system (carbon quota), but France presents an interesting case - they have both.

Also interesting is the title of the BBC News article on the story: France Set to Impose Carbon Tax [emphasis added]. When BBC reported on the EU cap-and-trade (carbon quota) program, they did not describe it as an imposition upon the people. Of course, they may have just chose the word because two-thirds of French voters are against the tax.

Mankiw was quick to point out that the French carbon tax will be revenue neutral either by offsetting current taxes or through a tax rebate. Additionally, the carbon tax will not overlap with any industries covered under the EU carbon quota program.

This Reuters article on Google made me feel all warm inside (Eleutherian warming). Basically, Google has decided to invest money in alternative energy technologies. Yet another private company displays that the government has no business spending taxpayer dollars on research by politically connected researchers.

Bill Weihl, a leading Google energy researcher, stated:

Typically what we're seeing is $2.50 to $4 a watt (for) capital cost. So a 250 megawatt installation would be $600 million to a $1 billion. It's a lot of money.

Weihl's team is attempting to cut the costs of producing key components to as much as one-fourth their current cost. Instead of taxpayer-funded government subsidies for otherwise uncompetitive technology, Google plans to use innovation to allow the technology to complete on its own economic merits. This is libertarian environmentalism that everyone can embrace.

Libertarian environmentalism is not a contradiction of terms - nor is free-market environmentalism (another good summary can be found here). Free-market environmentalism, however, is too focused on property rights and tort reform. While these are both highly productive and praiseworthy measures, I believe a broader approach is necessary. Simply put, libertarian environmentalism seeks to improve the environment without the use of force.

Many environmentalists today (I dare say a majority) rely too heavily on force to achieve their goals. They look to government to punish and coerce individuals to behave a certain way. The government often acts in accordance to their will, as the government has grown accustomed to using force to achieve other goals.

Environmentalists and the government justify their use of force by reason of market failure. To the contrary, it is the government's failure to allow the market to correctly function.

Rather than relying on force, libertarian environmentalism encourages environmentally-friendly actions through economic incentives. You could replace the Environmental Protection Agency (EPA) with the Environmental Incentive Agency (EIA), replacing negative reinforcement with positive reinforcement.

Critics of both libertarian and free-market environmentalism are quick to bring up global warming. While I am more inclined to believe in climate change over global warming, I made my feelings clear in yesterday's post on the topic:

If a cap-and-trade system (hereon more accurately referred to as a "carbon quota") were implemented in the United States, the level of emissions would be completely arbitrary. No scientist knows the level of carbon dioxide at which the atmosphere become irreversibly unstable. Without knowing the upper limit, any restriction in quantity will necessarily be made through guesswork (or, even worse, through politics - i.e. what sounds politically popular).

Do not allow the supporters of cap-and-trade ("carbon quota") mislead you by stating they are "creating a market" for carbon. They are using force to achieve an unscientifically-based goal.

I will not completely ignore the climate change issue. In a previous post on climate change in Africa, I stated:

I won't deny the existence of climate change. However, it is more a regional phenomenon than a global one. For example, many environmentalists cite the melting glaciers of Mt. Kilimanjaro as a sign of global warming. These people overlook basic science. The area surrounding Mt. Kilimanjaro has been largely deforested by the local population. Due to the deforestation, less water evaporates from the trees, providing less snowfall to replenish the glaciers each year on the mountain.

A 2006 study by Quan Li and Rafael Reuveny found that increased levels of political freedom have been shown to lower CO2 and NOx emissions, decrease rates of deforestation and land degradation, and reduce water pollution. If force was the appropriate means to achieve environmental goals, authoritarian countries like China would have spotless environmental records.

As I mentioned previously, factors such as deforestation are major contributers to climate change. Forcing a carbon tax or carbon quota on the economy is not the most efficient way to tackle problems like deforestation that directly contribute to climate change.

However, I will not deny the role of increased carbon emissions on climate change. I previously blogged on private sector solutions to this problem, including a group of UK and US scientists who plan to create wind-powered ships to increase cloud cover, reflecting the suns rays, without affecting regional weather patterns. The plan costs $9 billion to test and launch 1,900 ships (a cost of less than $5 million per ship). There's no need for the government to force individuals' behavior when private sector solutions are available.

I've been following the carbon abatement issue for a few years now, and in the debate between a carbon tax (tax on price) and cap-and-trade (tax on quantity), Terry Dinan, the Congressional Budget Office (CBO)'s Senior Advisor for Climate Policy, has been the clearest, most reasoned voice. This post will cover her finding in my favorite paper on the issue, available at the CBO website.

I will be speaking largely from the table below (click to enlarge):


If a cap-and-trade system (hereon more accurately referred to as a "carbon quota") were implemented in the United States, the level of emissions would be completely arbitrary. No scientist knows the level of carbon dioxide at which the atmosphere become irreversibly unstable. Without knowing the upper limit, any restriction in quantity will necessarily be made through guesswork (or, even worse, through politics - i.e. what sounds politically popular).

Having stated that, the CBO recognizes that if the government somehow managed to guess the correct carbon quota to match the actual cost of reducing the carbon, then there is zero difference between a carbon tax and a carbon quota (in terms of reduced emissions and cost). This is illustrated in the "Expected Outcomes" column on the table.

It is far more likely that the government will guess incorrectly. If the cost is higher than expected, a carbon tax will reduce less carbon than a carbon quota, but the carbon tax will provide the greater net benefit as the emission reductions were achieved at a lower total cost.

If the cost of reducing carbon is lower than expected, a carbon tax will reduce more carbon than a carbon quota and do so at a greater net benefit. This illustrates an obvious limitation of a carbon quota. Even if the price level would encourage greater reductions, a carbon quota will always reduce carbon by the same amount.

Reuters reports that African Union leaders met ahead of the UN summit on climate change to agree on a request of $67 billion per year from "rich nations." The request rests on the argument that "rich nations," not African countries, are responsible for the climate change in Africa.

I won't deny the existence of climate change. However, it is more a regional phenomenon than a global one. For example, many environmentalists cite the melting glaciers of Mt. Kilimanjaro as a sign of global warming. These people overlook basic science. The area surrounding Mt. Kilimanjaro has been largely deforested by the local population. Due to the deforestation, less water evaporates from the trees, providing less snowfall to replenish the glaciers each year on the mountain.

Deforestation and land degradation is rampant throughout much of the African continent. It was not caused by "rich nations."

As for the request of $67 billion per year, this sum will have no effect at best. In 2005, the Center for Global Development released a study, finding that short-impact aid worked better than aid that had a long-term goal. The study also found that aid "had a zero effect on growth when it reached 8 percent of the recipient’s GDP, and after that the additional aid had a negative effect on growth."

So, up to a certain point aid can work, but efforts past that actually impede growth. Therefore, the continued aid given to the average African country is actually harming it, with 15% of its GDP coming from aid in the 1990s. Most likely, that percentage has increased, especially with the Millennium Development Goals.

The additional $67 billion per year will likely cause more harm than good.

"We have just four months. Four months to secure the future of our planet."

This quote was by UN Secretary-General Ban Ki-Moon at the Global Environment Forum in Incheon, South Korea.

In a previous post on climate change, I commented on a claim that we had only ten years before it is too late to save the planet:

Really? 10 years? Where are the figures that show our current level of carbon emissions will cause a an irreversible atmospheric imbalance? No such findings exist.

The UN Secretary-General, like so many others, is just using his position of influence and mock-power to scare people with unscientifically-based time frames. Additionally, choosing four months wasn't very well thought-out. No government action takes effect in less than four months. By October of this year, only 11 percent of federal Stimulus funds will have been put into the economy. If government action cannot quickly stimulate the economy, it also cannot quickly reduce carbon emissions. The Secretary-General fabricated a time frame in which nothing can be accomplished.

Instead of looking to government for a solution, let's turn our attention to the private sector. The Telegraph reported last week on a study by the Copenhagen Consensus Centre, evaluating private sector climate change solutions. "Cloud ships" were the favored project.

The project, which is being worked on by rival US and UK scientists, would see 1,900 wind-powered ships ply the oceans sucking up seawater and spraying minuscule droplets of it out through tall funnels to create large white clouds.

Unmanned ships will sail by satellite to regions of the world with the best conditions for increasing cloud cover (and to avoid changing land weather patterns), thus reflecting the sun's rays and decreasing the negative effects of increased carbon dioxide in the atmosphere.

The best aspect of this project is the cost:

They would cost $9 billion (£5.3 billion) to test and launch within 25 years, compared to the $250 billion that the world’s leading nations are considering spending each year to cut CO2 emissions, and the $395 trillion it would cost to launch mirrors into space.

Oregon State University recently released a study linking carbon emissions to human reproduction. Besides providing fodder for China's population control agencies, the report contains a common economic fallacy. I previously posted on the same fallacy with regard to carbon abatement.

The study concludes:

When an individual produces a child - and that child potentially produces more descendants in the future - the effect on the environment can be many times the impact produced by a person during their lifetime.

Under current conditions in the United States, for instance, each child ultimately adds about 9,441 metric tons of carbon dioxide to the carbon legacy of an average parent - about 5.7 times the lifetime emissions for which, on average, a person is responsible.

Apparently, carbon Malthusianism is the next big theory in population control. Thankfully, the study's authors state that they do not support government efforts to control population; they simply want to make people aware of (guilty for?) their actions (having sex).

However, their study fails to consider how couples will spend their extra money that would have otherwise been used to raise their children. According to MSN Money:

For 2004, the newest data available, the U.S. Department of Agriculture estimates that families making $70,200 a year or more will spend a whopping $269,520 to raise a child from birth through age 17.

The report's authors failed to determine how couples will spend this quarter-million dollars and the resulting carbon emissions. Additionally, you must incorporate the future loss to the labor force. This has drastic consequences, as China will experience in coming decades.

In 2050, China's population will reach its peak, given current fertility rates. The country will begin to feel the effects of population aging. As an increasingly larger percentage of the country’s population enters old age, the available workforce declines and the medical and social costs of supporting such a demographic increase drastically.

CNN ran an article last Friday on 'Greening the Internet.' While I found the title amusing, the article raised a few issues I would like to illustrate.

1. Accountability - Who do you hold accountable for carbon dioxide emissions caused by "the Internet"? Additionally, who do you hold accountable for reducing these emissions? The end users? ISPs? data centers? Microsoft? Policy without accountability is useless at best, and harmful to competition through unjust application at worst. This further shows the inability of policymakers to understand the nature of the Internet, demonstrating their failure to grasp the libertarian moment.

2. Secondary consequences - I just finished my long-overdue reading of Henry Hazlitt's Economics in One Lesson (a MUST-read for anyone seeking a better understanding of economics, regardless of your politics), and he focuses heavily on looking beyond the immediate consequences. The author of the Internet article falls for the all-too-common fallacy of looking at one entity in isolation. In this case, she (and the researchers she cite) look only at the carbon emissions caused by the Internet but completely ignore the emissions reduced by our utilization of the Internet.

For example, due to the Internet, many people no longer subscribe to printed media such as newspapers and magazines. This eliminates emissions in producing these products, including the paper and ink used to make them. (For a popular example, check out I, Pencil by Lawrence W. Reed courtesy of the Foundation for Economic Education).

As a bigger bonus, the Internet reduces the need to cut down as many trees, which, in turn, reduces the amounts of carbon dioxide in the air. Ironically (but unsurprisingly), many policymakers want to bailout these very printed media outlets even though their contraction reduces carbon emissions.

3. Imperativeness - The article passes the following statement off as scientific fact:

"Scientists are saying to us that we have 10 years to take some serious action to avoid the most catastrophic effects of climate change so taking some sort of initiative is absolutely vital."

Really? 10 years? Where are the figures that show our current level of carbon emissions will cause a an irreversible atmospheric imbalance? No such findings exist.

I agree with Keith Hennessey, in his discussion on the need for a carbon tax:

If we knew with certainty that Earth would warm 10 degrees over the next 20-30 years, I would be screaming for an immediate big carbon tax. If instead we think Earth is likely to warm one degree over the next century or two, then climate change is a trivial concern and we needn’t worry about it. The problem is that nobody knows where we are between these two extremes. This uncertainty matters a lot, and it makes the problem hard.

...And so I am willing to consider significant and effective policy actions to slow the growth of greenhouse gas emissions to reduce that risk [emphasis in original]. I do not, however, believe that risk is so great or so certain that we must immediately commit to drastic changes in our economy, or that we must ignore the costs of those policy actions [emphasis added].

Researchers at the University of Iowa are currently conducting field tests on technology to replace the current gasoline tax with a by-the-mile road tax. These tests utilize GPS devices installed in vehicles to log the number of miles driven. Before I get into the complications that arise from such a move, officials endorsing the road tax believe:

...the traditional by-the-gallon fuel tax, struggling to keep up with road building and maintenance demands, could fall even farther behind as vehicles' gas mileage rises and more alternative-fuel vehicles come on line.

Basically, their argument is that because vehicles are becoming more fuel efficient (at least partly as a result of government mandates), the established tax on gasoline no longer provides enough money to "properly" fund road maintenance. (I'm sure you can deduce why "properly" in is quotations).

I decided to list complications of this switch in list form. If you think of anything I missed, comment, and I may choose to add your suggestion.

1. Privacy - I don't know about you, but I don't want the government lojacking my vehicle for any reason. Even if the bill's language includes specific references to the use of the information, simply having the device already in place makes it easier for the government to go further with the collected information in the future.
   
2. Environment - Presently, the gasoline tax serves a dual purpose. It funds road maintenance and discourages consumption (thus promoting research and development into alternative fuel sources). Switching to a road tax adds a new tax to owners of electric vehicles (and increases taxes for owners of more fuel efficient vehicles). The government may also be pressured to institute a separate excise tax on gasoline, effectively making this tax shift into a new tax.
3. Stolen Vehicles - The road tax adds a new complication to victims of vehicle theft. Not only will the victim be left without a vehicle, but may also potentially have to pay a tax on the miles driven by the thief.
4. GPS Capacity - I am no expert on this subject, but will the current Global Positioning System (GPS) have the capacity to relay information from every vehicle in the country?