Policy Studies Carbon Pricing

A practical approach to climate change

The attached policy study appeared in the Summer 2015 edition of National Affairs.

Climate change resulting from human activity likely poses the biggest environmental risk modern society faces. Its impact could be global, its long-term costs are likely to exceed those of any other environmental challenge, and its effects probably cannot be entirely averted, regardless of the choices we make. To address these potential dangers, the environmental movement and the political left have offered numerous policies and proposals, but nearly all of them have been profoundly flawed.

Those flaws stem not so much from the proposed higher taxes, diminished individual freedom, and expanded government control over the economy — although the left’s proposals would make all of those mistakes. They come from an excessive faith placed in mere assumptions about what is an intractably complex problem, and from insufficient flexibility should those assumptions prove mistaken.

Although climate change could be a major challenge, many of the most important and effective means of confronting it are likely to involve relatively modest steps, such as limiting government activity in areas likely to prove maladaptive, increasing government efforts in a few select areas, and unleashing the private market to solve problems. Among the specific steps toward these ends that policymakers should consider are slashing subsidies to activities that either promote climate change or that forestall adaptation; committing to “source agnostic” public investments in a “smart grid” that would move power around the United States, while encouraging distributed generation; enacting a swap of carbon-dioxide taxes for other tax cuts to stimulate the economy; and ramping up funding for scientific research in a variety of cutting-edge fields, perhaps most notably geo-engineering.

Above all, preserving a generally prosperous, dynamic economy capable of responding to any future changes in the climate (or anything else) is probably more important than any other public policy. By approaching the problem of climate change with humility, we can remain flexible, ready, and able to respond to whatever challenges the future might hold.



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