Dealing with climate change
Date posted: January 12, 2012
Climate change is a controversial world issue that has generated intense disagreements. N.C. State University’s Mike Walden considers some of the economic options for addressing it.
“This is a sticky issue. … It’s one that the … world has been dealing with for at least a decade, and … there are some options here. One, of course, would be prohibition. If we have fuels or commodities that … supposedly — and I’m … not an expert in this, but supposedly air quality is in climate change –one approach is to say, ‘Well, just ban them.’ Just say that we can’t burn this or … use that because it’s causing too much damage to the climate.
“Now the problem with that, of course, is — number one — there might be a major cost in shifting from one commodity or fuel to another. And secondly there may not be available substitutes.
“Second approach would be the price-tax approach. That is to say, allow … — if we stick with the fuels — those fuels that maybe cause climate change to continue to be used, but make the users pay for the potential damage through paying higher prices or … higher taxes on those fuels.
“Now one problem with that approach, of course, is calibrating — deciding what those prices or taxes ought to be.
“The third approach is the one I think everyone hopes will work, and that is new technology. And here what we want to do is encourage new technologies that will reduce the negative impacts — again to continue with the fuel example — from particular fuels. That’s a win-win for everyone, because we continue to use the fuel, yet it doesn’t hurt the climate for example.
“Problem here, of course, is finding those new technologies, and …. sometimes that can be very, very uncertain. So, this is … a big issue. It’s a big problem, and there are several approaches that policy makers should weigh and consider.”
Category: Economic Perspective