Sunday, June 03, 2012

Cap'n Dividend

Since I was very recently complaining about how conservatives and libertarians really should care more about the environment, it was great to see this article by Jonathan Adler on a conservative approach to combating climate change:
It is a well established principle in the Anglo-American legal tradition that one does not have the right to use one's own property in a manner that causes harm to one's neighbor. There are common law cases gong back 400 years establishing this principle and international law has long embraced a similar norm. As I argued at length in this paper, if we accept this principle, even non-catastrophic warming should be a serious concern, as even non-catastrophic warming will produce the sorts of consequences that have long been recognized as property rights violations, such as the flooding of the land of others.

My argument is that the same general principles that lead libertarians and conservatives to call for greater protection of property rights should lead them to call for greater attention to the most likely effects of climate change. It is a well recognized principle of common law that if company A is flooding the land of person B, it is irrelevant whether company A generates lots of economic prosperity for the local community (including B). A's action would still violate B's property rights, and B would be entitled to relief of some sort. By the same token, if the land of a farmer in Bangladesh is flooded, due in measurable and provable part to human-induced climate change, why would he be any less entitled to redress than a farmer who has his land flooded by his neighbor's land-use changes? Property rights should not be sacrificed as part of some utilitarian calculus. Libertarians readily accept this principle when government planners violate property rights in the name of economic development (see e.g., Kelo v. New London). Yet they seem to abandon their commitment to property rights when it comes to global warming.
Here begins the path of wisdom!  I would quibble with a lot in the article, but mainly I'm just happy to read a conservative who's not convinced it's all a giant hoax. And really, quibbles aside, it's striking how similar his solutions are to what you might hear from a dirty-hippie liberal environmentalist.

In particular, I was glad to see him hype a cap-and-dividend plan (also known as a revenue-neutral carbon tax), since I've always been a fan of that particular policy. You can read the details of the plan here, but the basic idea is that we implement an economy-wide cap on carbon emissions, where energy producers or importers must buy a permit for each ton of carbon. This will naturally lead to higher prices for dirty energy from coal and petroleum (in contrast with clean energy sources, who will not need permits), but the proceeds from the permit auction are automatically refunded back to the public in equal shares (the dividend), rather than going into the general fund of the federal government.

This means that if you emit exactly the national average of carbon emissions, your rebate will exactly cancel out those higher energy costs.  If you use less than the national average you get a cash bonus, and if you use more than your share you pay a price. What's more, when the cap gets slowly lowered (to slowly reduce national emissions), the size of the rebate will rise with energy costs. This gives everyone an incentive to switch to cleaner energy. A cap-and-dividend plan is also more politically feasible since it is clean and simple and everyone likes getting a monthly check in the mail.  By contrast a regular cap-and-trade plan (e.g. Waxman-Markey) is easily demonized as an economy-killing tax on the working man.

Now we just need a Congress who will pass it.