Thursday, December 24, 2009

Graham Dawson on Privatizing Climate Policy

December 24, 2009

Mises Daily

Today's other Mises Dailies:

The Non-Mystery of Inflation

Privatizing Climate Policy
by Graham Dawson on December 24, 2009

Climate-change policy ought to be privatized. All government policy instruments, including taxes, subsidies, regulation and emissions trading to mitigate climate change ought to be abolished. Instead, property rights to a climate unchanged by human activity should be protected by tort litigation on the basis that strict liability is appropriate.

There is no secure foundation in climate science for the current policy rhetoric; governments simply lack the knowledge to operate climate-change policy effectively. Moreover, policy is based on the neoclassical economics assumption that climate change is a case of market failure. However, it is not markets that have failed but governments in failing to protect property rights.

The earth's climate has always been susceptible to changes caused by natural factors over which human beings have no control. The Intergovernmental Panel on Climate Change uses its monopoly power in the dissemination of its own politically edited version of climate science to advance the hypothesis that climate change is caused by fossil-fuel use. Even the IPCC's scenarios of global-average surface-air warming for the next century range from mild temperature increases that would increase world food production to those that would have catastrophic effects on human life. We face radical uncertainty rather than calculable risk.

Privatizing climate-change policy entails the abolition of all existing climate-change legislation. The tax treatment of fossil fuels should be revised to eliminate any tax contribution that had been imposed with the intention of reducing carbon emissions. Regulations aimed at reducing carbon emissions should be rescinded. National or supranational emissions-trading systems should be ended. There simply should not be a public policy toward climate change.

An Austrian and Libertarian Perspective on Climate Policy

An alternative framework for formulating climate policy, based on an Austrian approach to environmental economics (Cordato, 2004) and informed by a libertarian political philosophy, (Nozick, 1974) sees Anthropogenic Global Warming as an interpersonal conflict rather than a market failure. AGW is a possible example of interpersonal conflict over the use of resources insofar as some individuals use the atmosphere as a carbon sink, changing the climate and thereby making it impossible for other individuals to rely upon an unchanged climate as a resource for growing crops in and even inhabiting particular locations.

It is for the courts to decide, calling on the testimony of expert witnesses, whether CO2 emissions are responsible for harm by causing dangerous AGW. Litigation or the threat of it would persuade firms using carbon-intensive production processes to fund research into climate science, thus challenging the IPCC's monopoly and stimulating scientific progress.

It would be up to individuals or organizations who believed that climate change was infringing their property rights to seek redress in the courts.

The use of fossil fuels, like any other economic activity, should be subject to constraints designed to avoid the infringement of other people's property rights. Tort litigation on the basis of strict liability would protect people against others meddling with their climates. The courts would build up a body of common law and establish precedents to guide the actions of the users of fossil fuels — a privatized policy.

There is no need for new assignments of property rights. If A's use of fossil fuels causes B's land to be destroyed through inundation or desertification, this is evidently a tort. In general it seems that existing national legislation is adequate, and property rights are simply waiting to be enforced or protected. The assumption that individuals must leave it to governments to tackle the perceived threat of climate change is a product of dependency culture.

The Gains from Privatizing Climate Policy

Under a privatized climate-change policy, litigation would not impose a further burden of state intervention on industry. First, while some firms would face litigation, all would be free from the impositions of existing climate-change policies. Second, there would be no presumption of guilt. Third, the process of establishing guilt or innocence, probably through a series of court cases, would take time.

Privatizing climate-change policy will delay severe reductions in carbon emissions. This outcome is to be welcomed. If carbon emissions do cause climate change, it is their atmospheric concentration accumulating over a period of time that does so and not the additional carbon emitted in any one year. It is reasonable to exploit this opportunity to add to human knowledge of the possible effects of carbon emissions on the global climate and hence reduce the risk of incurring unnecessary costs through intemperate collective action.

Litigation would improve the public understanding of the science of climate change. Reports of the testimony of a range of expert witnesses would disseminate a more balanced account of climate science than the biased and artificially constructed dogma of the IPCC. Litigation would also further the advancement of climate science itself. It would achieve this worthwhile goal by intensifying competition among scientific hypotheses concerning climate change, so that falsified hypotheses might be discarded and others accepted as provisionally true.

Litigation as a Public Good

The courts would call expert witnesses. So firms would have an incentive to fund research into the many uncertainties of climate change. This would give a boost to the growing number of climate skeptics and challenge the monopoly position of the IPCC. The advantage of litigation is that it would replicate the process of competition, the friendly and yet hostile cooperation of scientists that Popper championed.

Litigation also holds out the prospect of action on behalf of those without the resources to undertake it themselves. Indeed, litigation is a public good, in that its benefits are both nonexcludable and nonrival. Litigation is nonrival in that A's seeking to show that B is strictly liable for a given environmental effect does not entail that there is less litigation "left over" for others to use. On the contrary, there may be bandwagon effects.

The possible benefits of litigation concerning putative climate change would be nonexcludable. Climate change, if it is a problem at all, is a problem the world over. If carbon emissions are indeed causing dangerous climate change, it does not matter where they are reduced; wherever the reductions occur, the global atmospheric carbon concentration will eventually be reduced.

Tort litigation on the basis of strict liability would protect the right to a climate free from human intervention if the climate does need protecting, and, in case it does not, would save economic activity across the world from the imposition of unnecessary costs. By providing a public arena for the competitive testing of scientific hypotheses concerning climate change, litigation would also promote the advancement of climate science.

Graham Dawson is visiting fellow in the Max Beloff Centre for the Study of Liberty at the University of Buckingham. Send him mail. See Graham Dawson's article archives.

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Cordato, R. (2004) "Toward an Austrian Theory of Environmental Economics," The Quarterly Journal of Austrian Economics, Vol. 7, No. 1 (Spring), pp. 3–16.

Dawson, G. (2009) "Privatising Climate Policy," Economic Affairs, Volume 29, Number 3, September, pp. 57–62.

Nozick, R. (1974) Anarchy, State, and Utopia, Oxford: Blackwell.

Moving from a government-supported monopoly to a privatized climate-change policy enforced through litigation, which provides a “public arena for the competitive testing of scientific hypotheses concerning climate change.” Action and answers in one package!

Posted via web from David Bourbon