Packaging the carbon tax: Can we affect emitter behavior like consumer behavior?

Read the full story in GreenBiz.

Earlier this month, Yale economist William Nordhaus was announced as this year’s co-recipient of the Nobel Prize in Economics (along with Paul Romer, who we profiled the other day). Nordhaus is a pioneer in environmental economics and has his research has laid the foundation behind using a carbon tax to counter climate change. While Romer’s research deals with knowledge as a “public good,” Nordhaus has explored climate as a public good. His views are summarized by global advocates for carbon pricing:

“Climate change is a member of a special kind of economic activity known as global public goods.” To solve this problem, “At a minimum, all countries should agree to penalize carbon and other GHG emissions by the agreed upon minimum price.”

Charging a fee for using the atmosphere as a garbage dump for carbon would create incentives both to cut down on damaging emissions, to invest in cleaner sources of energy and transportation, and to more quickly come up with ideas and technology for fighting global warming. While it seems like a heavy lift, the carbon tax would be the most subtle and systematic way to inform the decisions of producers, consumers and investors in a way that would lead to lower carbon emissions.

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