Economics, the hopeful science

Green Tax Shift Discussion of environmental problems is often polarised between two kinds of pessimists.

On the one hand, many environmentalists argue that we cannot possibly sustain existing standards of living without wrecking the environment. On the other hand, are opponents of environmental policy who argue that we must accept grave damage to the environment as the cost of economic progress. Economics suggests a more hopeful answer. We can, if we choose, address the most severe environmental problems facing Australia and the world, and still enjoy rising standards of living over time.

Economist have issued a statement of consensus on climate change. It has been signed by 2000 economists, including six Nobel Laureates. As well as acknowledging the reality of climate change, they also point out the most effective way of addressing the problem:

Economics studies have found that there are many potential policies to reduce greenhouse-gas emissions for which the total benefits outweigh the total costs. For the United States in particular, sound economic analysis shows that there are policy options that would slow climate change without harming American living standards, and these measures may in fact improve U.S. productivity in the longer run.

The United States and other nations can most efficiently implement their climate policies through market mechanisms, such as carbon taxes or the auction of emissions permits. The revenues generated from such policies can effectively be used to reduce the deficit or to lower existing taxes.