Environmental Politics and Economics

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Environmental Politics and Economics

Post by dac » Fri Feb 10, 2012 10:05 pm

In the book, I agrue that there is no such thing as environmental economics.
... the problem is not "Pigovian taxes versus cap and trade." It is much more fundamental. One can engage in economic calculation of costs and benefits, profits and losses only within the market. There is no such thing as "environmental economics," only environmental politics, precisely because one cannot calculate the "social costs" or social benefits and "correct the divergence between private costs and social costs." One cannot economize, when he cannot quantify benefits and costs. It is no surprise that "there remains little consensus on how far to restrict future green-house gas emissions, or -- and this comes to the same thing -- how high to set the carbon tax." (123) Any such decision is going to be arbitrary from the market point of view and politically determined.
I stand by this, but it admits an improvement. What I am saying is that the ends of the public cannot be efficiently determined. Voters go block against block. 51% get what they want; 49% do not. This is unlike the market, where each consumer is precious and well served. Further, the ends are not even strictly speaking of the majority but of the state.

Still, if we take the ends as given, however inefficiently arrived at, economists can weigh in by evaluating various means to those ends. For example, they can come up with a market socialist scheme of fixing the total amount of pollution and allowing people and firms to trade permissions to pollute. This is the sense in which the phrase "environmental economics" can be legitimately used.

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