“The science of the issue can get pretty incomprehensible pretty quickly. And the politics are clearly very ugly. Let’s not forget, however, that much of the economics is simple. It’s an externality, stupid — so price it.”
IMF economist Carlo Cotarelli wrote that a couple of weeks ago. The IT, of course, is the damage done by greenhouse gases.
And Carlos follows that thought up with this one:
Admittedly, climate change is a particularly complicated externality. Since the damage will fall largely on future generations, the proper price depends very much on how we value their well-being relative to ours.
Disclaimers or not, I think his point might be important. Maybe everyone can agree that greenhouse gases are pollution? And maybe we start the policy discussion there?
(Thanks to the Freakonomics Blog for pointing me to Carlos’s article.)
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