The Forum > Article Comments > Challenging Time for Ag Economists > Comments
Challenging Time for Ag Economists : Comments
By John Quiggin, published 8/2/2011There is not a single economist in Australia with any professional credibility who denies the reality of global warming or the need for a global policy response.
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So how does a carbon tax/ETS, hybridised or otherwise, reduce CO2? If the price of books goes up, people may buy fewer novels, use the library, or buy an e-book. If the price of food goes up, people don’t eat less ... though they may buy fewer books. Spending on food and energy isn’t discretional for most Australians. If wealthy Jane responds to higher petrol prices by spending $40K on a new Prius, poor Tom will buy the V6 commodore Jane traded in to get to work — minimal net reduction in emissions.
If government spent 100% of a carbon tax on replacing coal-fired base-load power plants with geothermal, CH4 or nuclear, we’d achieve significant carbon reductions. But government isn’t efficient or economical — think Pink Batts & BER. If government promised a 30 year tax holiday for any new power plant using the above technologies, consumers would pay dearly, but we’d get reduced emissions AND improved infrastructure.
Economists, Quiggin says, prefer buy-back of water rights in the Regions to provision of infrastructure. Presumably, then, they’re uniformly livid about billions spent on energy-guzzling desal plants which benefit already infrastructure-rich urban centres. Perhaps they expect that ‘voluntary’ water buy-backs will motivate farmers to move to Balmain where they can get environment-friendly work collecting shopping trollies, or driving to the midnight shift at Macca’s in Jane’s old V6 commodore.
As Quiggin says, it’s one thing to get agreement in principle, quite another to formulate a workable plan. Keep working, I say.