In other words, putting a price on carbon that accurately matches the magnitude of its external harms – and leads to emission reductions in line with the targets negotiated in international agreements – would be so severe that the national economy would collapse under normal circumstances. According to estimates, absorbing this would require an effort equal to Britain’s war mobilization in World War II.
In today’s political order, something similar to Churchill’s call for “blood, toil, tears and sweat” is not an option. On the other hand, allowing the situation to become even costlier – that is, by doing nothing – is beyond the pale. The viable path forward, then, lies somewhere in between. Smaller economic growth should no longer be treated as taboo. Meanwhile, joint creation of new, knowledge-based approaches could point the way forward. For example, we could lead an informed debate about which sectors and regions require growth, and where we, as citizens of a rich country with a high quality of life, have reached the limits to growth.
4: “Problems of measurability”
Problems of implementation are problems of measurability, many have concluded. After all, what is the cost of an environmental service like clean river water? How can you put a price tag on the extra effort that women farmers must make to obtain clean water from another source? What is the cost of quality of life? How do you calculate how much sleep is lost by the owner of a single-family home in the vicinity of an airport? How do you account for the fine dust particles produced by road and air traffic?
In truth, there are numerous methods available to calculate environmental costs. However, in the logic of neoclassical economics, they are scarcely practicable. The problem is that the definitions and boundaries that must be established are ultimately based on normative principles. Mainstream economists shy away from discussions of values, as they see economics as a hard science. And because they also claim that their science has authority over price-related issues, gridlock prevails.
5: “Internalization is not socially acceptable”
The unprecedented prosperity of Western industrialized countries and massive reduction of poverty in emerging economies are based on continual economic growth, which is in turn based on cheap energy. Low energy prices enable poorer social strata to obtain a piece of the prosperity pie. Raising taxes on fossil fuels, goes the thinking, would specifically harm these poorer strata.