Richard Tol Changes Tune, Talks Carbon Tax

Economist Richard Tol is often quoted with approval in climate skeptic circles, and indeed he has employed some rather questionable methods to argue that, among other things, Global Warming will make Canada a vacation hot-spot. To which one can only respond: dude, if someplace like Winnipeg warms to the level characteristic of an “optimal holiday destination”, it still won't lure the tourists, it will just make the flies and mosquitoes bigger.

However, Mr. Tol seems to have had a change of heart, especially with respect to the Stern Review, which he once described as "alarmist and incompetent". In "On Setting Near-term Policy while the Dust Begins to Settle", he states that

"The major messages of the Review’s assessment of the current science are sound."

And:

A persuasive case can be made that climate risks are real and increasingly threatening. If follows that some sort of policy will be required, and the least cost approach necessarily involves starting now.

Further, the most efficacious means of meeting the climate change threat is a carbon tax designed to make lower or near zero carbon technologies more attractive than, for example, coal:

...a tax, increasing at the rate of interest a la Hotelling, would produce a persistent and predictable increase in the cost of using carbon that would inspire cost-reducing innovation and fuel switching in the transportation, building, and energy supply sectors of our economy.6 If carbon were taxed at the point it entered an economy (a couple thousand sources for the United States as opposed to millions of end-users), then it would be dispersed appropriately throughout the economy with relative prices of thousands of goods changing in proportion to the underlying carbon intensities. Moreover, it would generate revenue. The $15 per ton of carbon dioxide tax noted above would, for example, generate something like $90 billion in tax revenue in the United States in 2007 if it were paid on every ton of carbon embodied in every unit of fossil fuel consumed. This is revenue that could be used to offset the regressive nature of the carbon tax itself, by underwriting tax credits for citizens with taxable incomes below a specified level. The substitution effect would still apply, of course, so carbon conservation could be expected even from the beneficiaries of the credits. Tax revenue could also be used to reduce other distortionary taxes. It could even be used to fund research into alternative energy sources.

And if Mr. Tol can change his mind, so can I. Richard, I once described your hair as "freakish". I was wrong. It is not freakish, but magnificent. In fact, given the utter paucity of hair among the skeptic crowd, I am surprised that they didn't make you their king. So let the freak flags fly!

In fact, an even weirder thing is that the paper quoted above is slated to appear in E&E. Could it be that they're having a change of heart similar to Richard's over at the Denialist house organ? Naw. That would be too much to hope for.