I am pleased to learn that you were misquoted — or rather, that the magazine chose to manipulate your words for their own purposes. Elsewhere today on Prometheus I have posted a comment about environment reporters. It appears that I understated my case.

I agree with you completely that permits are superior to carbon taxes insofar as they are able to limit graft and governmental revenue addiction, both of which cartbon taxes encourage. My concern about permits remains threefold:

(1) Will governments create permits that are truly property rights that can be freely traded without constraint, restriction or taxation? So far as I know, there may be only one precedent for this by any national government: the New Zealand ITQ fisheries regime. I’m not sure we economists are as smart or clever in the real world as we are in theory.

(2) Will the permits that are created be genuine? A property rights regime founded on bogus permits will fail to achieve its objectives. Moreover, bogus permits will damage public confidence in and support for peroperty rights-based incentives. Think about the damage done by Enron to the cause of electricity markets. Now multiply by a very large number.

(3) Does a permit system rely for its success on nations incapable and/or unwilling to establish and enforce property rights? China and Russia are the least capable of managing their end of any bargain that relies on property rights. They can’t (or won’t) even stop the pirate DVD market; they don’t have or don’t honor real property rights; they routinely expropriate assets.

These are problems we ought to be thinking hard about. If we cannot figure out solutions, then perhaps we need to begin looking for third-, fourth-, and fifth-best schemes.

I occasionally say this to illustrate that global warming will have to stop at some point, starting with the most far-fetched example (evaporated oceans) that most people would agree would not be good …

and then moving on to those impacts that we may cause and may want to avoid.

A proper journalist, of course, stops writing after the first example.

Is this an accurate translation?

Dr. Tol, are you seriously proposing that greenhouse gas emissions would ever cause the earth’s surface temperature to even approach 30 degrees Celsius (from the present ~15 deg C), let alone 100 degrees Celsius (the boiling point of water)?

Second, tradable permits are not ideal. Their big advantages are that it is easier (1) to harmonise international climate policy with permit trade and (2) to transfer money.

I would think that China, India etc would rather have tradable permits that can be exported than a carbon tax — but these countries are far from considering a discussion on this, so that is pure speculation on my part.

I am intrigued by the repeated efforts of the interviewer to badger Prof. Tol into agreeing that it is perfectly acceptable to mislead the public as long as it is for this good cause. I congratulate him for consistently (and persistenty) resisting, telling the interviewer that this tactic undermines the cause it purports to serve. I infer from his comments about the next IPCC report that it may be so “over the top” that it is easily discredited. In that case progress toward a consensus could be delayed another 5 years, or dashed entirely if it poisons the debate.

I sense two critical problems confronting the climate change community. First, it has allowed (and indeed encouraged) climate change to be cast as a moral issue. Technical solutions, whether of an engineering or economic variety, cannot be reconcled with moral claims. Prof. Tol, whose other comments in the interview I applaud, seems to have slipped into this moral chasm by characterizing the USA and China as the greater climate “sinners.” In our decadent state, it’s possible that American elites (especially Democrats) will accept that self-abasement but the majority of voters will not. If the Democrats use their congressional majorities to promote a moral basis for action on climate change, they will surely lose in 2008 because Americans will not accept the accusation that they are an immoral people. Moreover, unlike its American counterpart, China’s elite will utterly reject the moral charge and be profoundly offended by it. To have a chance at being successful, the climate change community must get over its moral vanity.

Second, this moral vanity encourages a socially pathological asymmetry: Because we represent the moral high ground, it is morally permisible for us to manipulate science to achieve our purposes but morally corrupt for our opponents to attempt to do the same.

On the substance of Prof. Tol’s comments, he states that a carbon tax is the best approach but infeasible and that transferable emission permits is the second-best. I have previously commented on implementation problems with permits; there’s no need to bring them up again.

I’d like to raise two new issues. First, Prof. Tol presumes that emission permits would be given away and not auctioned. I am much less confident in government’s ability to withstand the temptation to collect revenue. I expect governments to prefer carbon taxes, which are easier to impose the more that the climate change community talks in moral terms. I also expect that if taxes prove to be politically infeasible governments will seek ways to auction them, either directly (like spectrum) or indirectly (by erecting administrative hurdles or taxing transactions). (Note that any tax imposed on trading reduces the value of permits and undermines the effectiveness of a permit regime. In a contest between revenue and program effectiveness, governments will choose revenue.)

Second, India might agree to a market-based mechanism; they have made major strides toward free markets since their socialist days. But I don’t see why the Chinese would be willing to do so. Allowing the market to set prices relieves them of the capacity to extract maximum rents. Why would they agree to give it up?

First, thanks for the translation.

Emissions trade with “business as usual” targets for China and India can only be a start, drawing these countries into CO2 regulation with the promise of a new export market. (The OECD, by the way, would gain from the imports.)

In the long run, if China and India are not interested in greenhouse gas emission reduction, then climate will continue to change.

Just how likely do you think is it that Europe, the US, Canada or Australia are going to transfer $ billions worth of CO2 certificates to their most feared (i.e. Chinese, Indian or Russian) competitors? Wouldn’t the promotion (let alone implementation) of such a massive money-transfer scheme come close to political suicide?