Comments on: Distributional impacts of climate change http://www.owen.org/blog/648 Thoughts on development and beyond Tue, 07 Feb 2012 20:50:24 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Owen http://www.owen.org/blog/648/comment-page-1#comment-2437 Owen Sun, 28 Jan 2007 17:17:46 +0000 http://www.owen.org/blog/648#comment-2437 Tim<br /><br />That rather depends on how you value the negative externalities.  If your social welfare function places a high weight on the welfare of the least off group in (global) society - which is what John Rawls among others would recommend - then the absence of a mechanism to compensate the poor makes the negative externalities higher, which means that the the optimal Pigouvian tax is also higher.<br /><br />Owen Tim

That rather depends on how you value the negative externalities.  If your social welfare function places a high weight on the welfare of the least off group in (global) society – which is what John Rawls among others would recommend – then the absence of a mechanism to compensate the poor makes the negative externalities higher, which means that the the optimal Pigouvian tax is also higher.

Owen

]]> By: Tim Worstall http://www.owen.org/blog/648/comment-page-1#comment-2436 Tim Worstall Sun, 28 Jan 2007 13:30:05 +0000 http://www.owen.org/blog/648#comment-2436 A higher tax on carbon (I certainly support Pigouvian taxes BTW, despite the public choice problems) doesn't solve that distributional problem though, does it?<br />The correct Pigouvian tax (from Stern, roughly the Air Passenger Duty we have now, for fuel duty it should be much lower than it is now) does indeed provide the socially optimal amount of the activity: but it doesn't solve any of your distributional concerns. A higher tax on carbon (I certainly support Pigouvian taxes BTW, despite the public choice problems) doesn’t solve that distributional problem though, does it?
The correct Pigouvian tax (from Stern, roughly the Air Passenger Duty we have now, for fuel duty it should be much lower than it is now) does indeed provide the socially optimal amount of the activity: but it doesn’t solve any of your distributional concerns.

]]> By: Owen http://www.owen.org/blog/648/comment-page-1#comment-2435 Owen Sun, 28 Jan 2007 09:08:52 +0000 http://www.owen.org/blog/648#comment-2435 Not at all.  Putting a higher tax on carbon is not the same as stopping the world. Not at all.  Putting a higher tax on carbon is not the same as stopping the world.

]]> By: Tim Worstall http://www.owen.org/blog/648/comment-page-1#comment-2431 Tim Worstall Sun, 28 Jan 2007 08:17:59 +0000 http://www.owen.org/blog/648#comment-2431 To which the obvious answer is that you seem to be asserting that we should stop technology and trade in their tracks until we do have adequate international mechanisms.<br />Which, given my views on public choice theory, I don't ever think we will have.<br />Stop the world isn't a very attractive slogan to me. To which the obvious answer is that you seem to be asserting that we should stop technology and trade in their tracks until we do have adequate international mechanisms.
Which, given my views on public choice theory, I don’t ever think we will have.
Stop the world isn’t a very attractive slogan to me.

]]> By: Owen http://www.owen.org/blog/648/comment-page-1#comment-2434 Owen Sun, 28 Jan 2007 06:28:23 +0000 http://www.owen.org/blog/648#comment-2434 Tim<br /><br />Right.  And we do not have adequate international institutional mechanisms to compensate the losers with a portion of the benefits that accrue to the winners.  In the absence of such mechanisms, we cannot be quite as sanguine as you are about the aggregate costs and benefits.<br /><br />Owen Tim

Right.  And we do not have adequate international institutional mechanisms to compensate the losers with a portion of the benefits that accrue to the winners.  In the absence of such mechanisms, we cannot be quite as sanguine as you are about the aggregate costs and benefits.

Owen

]]> By: Tim Worstall http://www.owen.org/blog/648/comment-page-1#comment-2433 Tim Worstall Sun, 28 Jan 2007 05:11:39 +0000 http://www.owen.org/blog/648#comment-2433 "There are communities in some of the poorest countries - such as Bangladesh or Chad - for whom some of the climate change scenarios will be catastrophic. "<br /><br />That's true of any technological or trade change as well. It isn't specific to climate change. "There are communities in some of the poorest countries – such as Bangladesh or Chad – for whom some of the climate change scenarios will be catastrophic. "

That’s true of any technological or trade change as well. It isn’t specific to climate change.

]]> By: Owen http://www.owen.org/blog/648/comment-page-1#comment-2432 Owen Sat, 27 Jan 2007 17:38:29 +0000 http://www.owen.org/blog/648#comment-2432 Tim<br /><br />I hope that global inequality will now start to fall - though the evidence of a century of rising inequality does not make me hopeful.  The emergence from poverty of China and India will lead to massive reductions in the number of people living in poverty; and could, in principle, lead to a fall in the Gini coefficient.<br /><br />But that does not address my point.  There are communities in some of the poorest countries - such as Bangladesh or Chad - for whom some of the climate change scenarios will be catastrophic.   Even if those countries grow faster than the world average - so closing the gap on the richest countries in percentage terms - the increase in income and wealth in absolute terms will accrue to you and me more than it will to them.  They have no prospect of being able to adapt to the change in temperature, the impact on agriculture, the movement of people, or the extreme weather events that are predicted under some scenarios.  <br /><br />So if we in rich countries decide to impose that outcome on them, we should be ready - much more ready than we have shown ourselves to be until now - to support the most disempowered communities live with the consequences of our actions.  Nothing in our history suggests we are ready to do this.<br /><br />That distributional effect is, for me, a persuasive reason to look beyond the aggregates that you quote.  Even if you turned out to be right about the aggregate effects, we simply do not have international mechanisms to compensate the losers for the effects on them with some of the gains of the winners.<br /><br />Owen Tim

I hope that global inequality will now start to fall – though the evidence of a century of rising inequality does not make me hopeful.  The emergence from poverty of China and India will lead to massive reductions in the number of people living in poverty; and could, in principle, lead to a fall in the Gini coefficient.

But that does not address my point.  There are communities in some of the poorest countries – such as Bangladesh or Chad – for whom some of the climate change scenarios will be catastrophic.   Even if those countries grow faster than the world average – so closing the gap on the richest countries in percentage terms – the increase in income and wealth in absolute terms will accrue to you and me more than it will to them.  They have no prospect of being able to adapt to the change in temperature, the impact on agriculture, the movement of people, or the extreme weather events that are predicted under some scenarios. 

So if we in rich countries decide to impose that outcome on them, we should be ready – much more ready than we have shown ourselves to be until now – to support the most disempowered communities live with the consequences of our actions.  Nothing in our history suggests we are ready to do this.

That distributional effect is, for me, a persuasive reason to look beyond the aggregates that you quote.  Even if you turned out to be right about the aggregate effects, we simply do not have international mechanisms to compensate the losers for the effects on them with some of the gains of the winners.

Owen

]]> By: Tim Worstall http://www.owen.org/blog/648/comment-page-1#comment-2430 Tim Worstall Sat, 27 Jan 2007 09:28:31 +0000 http://www.owen.org/blog/648#comment-2430 The problem with that argument is that it doesn't conform to what the SRES (which are the economic scenarios which underpin the IPCC report) actually say. All of them, as you know, are business as usual scenarios, none contain any mitigation.<br />In the family of scenarios that emissions paths actually seem to be following (A1) gloibal inequality is predicted to fall: that globalization (upon the continuance of which the A1 family depends) continues to boost growth in the poor countries faster than it does in the rich: as people like Paul Ormerod, Xavier Sala i Martin and Deepak Lal  say it already is.<br />In the A1F1 scenario, which is the one I have used as an illustration of this point, the entire globe in 2100 is at 2000 levels of consumption in the US.<br />So my argument is rather that, if we are indeed to be concerned with the incomes of our descendants, we should follow the policy recommendations which lead us to the scenario where those incomes are highest and where there is the greatest convergence.<br />Whether we want to add mitigation as well is another question. The A2 scenario used by Stern (broadly speaking, the sort of regional and local economies advocated by people like Caroline Lucas) gets us to one result, pre-mitigation. The letting global capitalism rip one (A1F1) gets to four times that wealth per capita in 2100.<br />If I am to, as you suggest, concern myself with the future incomes of those alive in 93 years,  which policy mix should I be advocating? One that costs us something (leave aside the argument about how much) now, and improves their lot by 20%, as Stern avers? Or one that not only costs us nothing now, actually benefits us now, and benefits those in the future by 300%? The problem with that argument is that it doesn’t conform to what the SRES (which are the economic scenarios which underpin the IPCC report) actually say. All of them, as you know, are business as usual scenarios, none contain any mitigation.
In the family of scenarios that emissions paths actually seem to be following (A1) gloibal inequality is predicted to fall: that globalization (upon the continuance of which the A1 family depends) continues to boost growth in the poor countries faster than it does in the rich: as people like Paul Ormerod, Xavier Sala i Martin and Deepak Lal  say it already is.
In the A1F1 scenario, which is the one I have used as an illustration of this point, the entire globe in 2100 is at 2000 levels of consumption in the US.
So my argument is rather that, if we are indeed to be concerned with the incomes of our descendants, we should follow the policy recommendations which lead us to the scenario where those incomes are highest and where there is the greatest convergence.
Whether we want to add mitigation as well is another question. The A2 scenario used by Stern (broadly speaking, the sort of regional and local economies advocated by people like Caroline Lucas) gets us to one result, pre-mitigation. The letting global capitalism rip one (A1F1) gets to four times that wealth per capita in 2100.
If I am to, as you suggest, concern myself with the future incomes of those alive in 93 years,  which policy mix should I be advocating? One that costs us something (leave aside the argument about how much) now, and improves their lot by 20%, as Stern avers? Or one that not only costs us nothing now, actually benefits us now, and benefits those in the future by 300%?

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