Thursday, March 27, 2014

Should state governments enact policies to combat climate change?

            One of the reasons I love being a tax scholar is that tax law intersects with most everything.  In addition to writing about tax law and theory, I thus spend significant time and energy thinking about the intersections between taxation and other areas of domestic policy (especially health care).

            As one manifestation of these interests, I've been talking over the past few months with California lawmakers and staff about potential reforms to California's policies for combating climate change.  You can find some of my thoughts on these reforms and on issues relevant for comparing carbon taxes and cap and trade policies in an op-ed I recently co-published with my colleague Mark Gergen, available here.

            In this post, I thought I'd share some tentative thoughts on a fundamental question underlying this whole area: should state governments even try to combat climate change?

            There is little doubt that federal efforts to combat climate change would be more effective than state efforts, and that global efforts would be even more effective.  California has little power to influence the world price for fuels or for other sources of greenhouse gas emissions on its own.  At least in the short term, to the extent that California‚Äôs policies drive up the price Californians pay for fuels in order to deter greenhouse gas emissions, the major beneficiaries may well be the consumers of fuels in other states and in other nations. 

            Why then do I think it is potentially desirable for California (and for other states) to enact policies to combat climate change?

            First, in my view, there is more to policy analysis than consequentialist reasoning.  I take seriously the notion that California has a duty to do its part in terms of combating global warming, even if other states or nations shirk on their duties.    

            Second, by acting as an early mover, California might help cultivate constituency groups for policies to combat global warming in other states or at the federal level.  I think it likely that each jurisdiction that enacts policies to combat global warming makes it easier, politically, for other jurisdictions to do the same.  This is so because California adopting policies to combat climate change can accustom voters in other states to these policies and can illuminate through practical experience how these policies might be administered.  Moreover, businesses operating in California who become subject to these policies may then lobby for similar measures to be adopted in other states or federally so as to ensure a level competitive playing field.

            Global warming is one of the central challenges of our time.  California is a rich state both by national and (especially) by global standards.  If the U.S. is to ever adopt an effective carbon tax or cap and trade policy, California seems a likely starting place.

            Of course, from my perspective as a tax scholar, all of this is just background to the fascinating design problems of enacting a state-level policy for combating climate change.  I hope to write more on some of these issues in future blog posts.

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