Here’s a great article written by Jeff Rubin and Benjamin Tal of CIBC World Markets (Two great Canadian economists). It’s called The Carbon Tariff.
Unless you’ve been living under a rock, you will have heard all sorts of things about the Impact of Global Warming on our planet. Today, there is a ton of momentum in developed countries pushing towards cleaner (”greener”) tech. However, the developing countries don’t seem to share the same enthusiasm as we do, specifically China . Unfortunately, these countries are the ones making a lot of the dirt which is causing the problems.
Since 2000, global emissions have risen 25%. Of this growth, 90% comes from developing economies. The article points out that while some of this growth can be attributed to the rapid economic development in places like China, it’s mainly explained by the energy intensive industry their economy possesses, plus a heavy reliance on coal plants (very dirty, high carbon emitters).
In a Globalized world, it makes sense that when our countries tell a company it’s too dirty and will have to pay for it, they pack up their bags and leave. Where they ultimately end up going are countries which don’t care as much about what someone puts in the air as opposed to how much someone can put into their pocket.
Obviously there is a problem here, where developed countries are paying a double price; we lose industry and still suffer from rising emissions. Rubin and Tal suggest our frustration could lead us to slap a tax on incoming goods tied to the carbon footprint their production leaves. I think it’s a pretty cool idea.
I asked my environmental economics prof (a class I’m currently taking) what he thought of this idea, and he wasn’t too into it. He thought that bodies like the World Trade Organization would never allow it, and that actually monitoring carbon footprints across all types of goods would just be way too hard.
Personally, I think its a great idea, and wouldn’t be surprised if we did see it come about. Obviously, it wouldn’t happen anytime soon, but in the next 5 to 10 years you never know. We could just pinpoint high carbon emitting industries, and apply the tax only on those goods.
This whole Green kick has swept into our culture so quickly and powerfully, that I think it will have a lasting effect on how the next century will play out. I see changes in my friends, families and politicians… a new sense of accountability for what we do. I see no reason why the WTO wouldn’t hop on board if this current of care keeps flowing across people all over the world. That being said, not everyone cares, or will ever care. Developing countries get the short end of the stick, as while we benefited largely in the past from dirty tech, now that it’s their turn, people are trying to throw up road blocks. I have a lot to say on that topic too, but it seems like it would need a full post…
I think that underlying all these issues is just a simple model about individual time preferences. When you are wealthier, you care about things more in the long term… things bigger than yourself and your personal needs. When you are poor, you concentrate on short term things… eating, making a living, survival. Maybe this will be my topic for my Masters thesis… who knows.
