Monday, December 10, 2007

Becker and Posner on "Carbon Offsetting"

Carbon Offsetting is all the rage among the environmentally conscious middle class travellers.

What then are the economics mechanisms lurking behind the headlines and hundreds of companies offering us a way out of carbon footprint induced guilt?

The Posner blog post gives a good insight into some of the key global warming issues and is written to be accessible to all using simple language and simple examples.

The blog comments section is also worth ploughing through.

The Becker post concentrates on the "crowding out" argument that projects paid for by carbon offsetting would have occurred anyway. A fair point.

Carbon Offsets--Posner
The most serious drawback of the carbon-offsets movement is that it is likely to make the problem of excessive carbon emissions more rather than less serious, and this for three reasons. The first is that it creates the impression that modest reductions in the rate of annual increases in carbon emissions make a meaningful contribution to the fight against global warming. They do not.


Second, the movement encourages the belief that anyone who reduces his carbon "footprint" (that is, the emissions of carbon dioxide that he causes) to zero has done his bit to combat global warming.


Third, and most serious, the carbon-offset movement, combined with well-publicized projects by Google and other companies to reduce carbon emissions, creates the false impression that global warming can be tamed by voluntary efforts, just as cleaning up after dogs has been achieved by voluntary efforts, without need for legal compulsion.

On Carbon Offsets-Becker

In our complicated and interdependent global economic system, opportunities to create carbon offsets can be readily produced by both companies and governments without any significant affect on the scale of emissions. Mainly for this reason, but also because of the reluctance of most individuals to voluntarily pay significant costs for acting "green", a cap and trade system, despite its many flaws, is a far preferable direction to develop in order to cut down on carbon emissions.


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