Adam T’s Recent Comments

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  I took a course in environmental economics

  I'd like to add 3 points to this fine article

  1.The point where the increasing marginal cost of taxing pollution (either through a direct tax or through cap and trade) meets the diminishing marginal benefit, is known as the 'equimarginal point' and in economics this concept is called the 'equimarginal principle'.

  2.In regards to the benefits, the one thing this article left out is the benefit of decreasing CO2 production which should at least slightly slower the onset of global warming.  Although the producers of CO2 like to lie that their output has no costs, global warming, and other pollution raise production costs in myriad ways from increasing health costs to decreasing farm yields.

  3.Although I haven't researched this myself, Sean Casten is quite correct according to the textbook we used that compliance costs have always been significantly lower than the effected industries predict. This can, no doubt, be easily researched on the pollutants that cause acid rain and other pollutants that have either been outlawed (CFCs for instance) or have been subjected to a cap and trade system.  The reasons, of course, are twofold.  First, as Sean Casten mentions, the system is dynamic.  Putting money into finding compliance solutions almost always results in lower costs for those solutions.  Secondly, it's in the effected industries interest to put the highest number out as possible in order to drive political considerations.  I'm not saying they intentionally lie, but...

  On Cap & trade: Carbon tax or wealth transfer? posted 6 months ago 5 Responses