How to fight climate change? Put a price on pollution

Climate change is a hoax.

OK, maybe it's real. But it's not caused by the exhaust of power plants, automobiles and other wastes of modern civilization.

All right, fine. Maybe man-made contaminates really will lead to rising temperatures, higher mortality rates, climbing sea levels, freshwater shortages, famine and even wars of survival. But reducing environmental threats would be a price too high to pay today to buy insurance against calamity tomorrow.

Apologies if you've heard this all before, tumbling from both sides of the mouths of public officials who should know better.

Anthropologists one day may dub the current majority on Capitol Hill "Homo Ignoramus." These politicians — and the people who elected them — are the climate-change deniers, followers of the Gospel According to Koch, wherein the billionaire Koch brothers and other fossil-fuel producers inject campaign cash — and phony arguments — into the deliberations of legislators.

The Obama administration in December reached a historic agreement with more than 190 other countries to curb greenhouse gases in a worldwide pact to put a brake on climate change by moving away from the burning of fossil fuels.

The president maneuvered through the deal in a way that will sidestep Senate ratification. But effective results — for Obama and future presidents — will require legislative action on regulations, incentives and limits on conventional fuel consumption.

Confronted with overwhelming evidence of temperatures and sea levels rising, weather growing more threatening and droughts becoming commonplace, the congressional majority doesn't merely get the chemistry, physics and biology wrong. It also bungles the economics.

It may be pointless to argue scientific findings with people whose favorite reference books are the Bible and the repair manual for the F-150 pickup truck? But on matters of dollars and cents they are just as oblivious to facts.

Economists know how to combat global climate change. Want to reduce greenhouse gas emission? Price it.

"Around the world, nearly 40 nations, including the 28-member European Union, and many smaller jurisdictions are engaged in some form of carbon pricing," the New York Times wrote in a recent editorial. "In this hemisphere, British Columbia, Quebec, California and nine Northeastern states have raised the cost of burning fossil fuels without damaging the economy."

Prohibitively expensive, right? A real drag on the economy?

"British Columbia started taxing emissions in 2008. One big appeal of its system is that it is essentially revenue-neutral. People pay more for energy (the price of gasoline is up by about 17 cents a gallon) but pay less in personal income and corporate taxes. And low-income and rural residents get special tax credits. The tax has raised about $4.3 billion while other taxes have been cut by about $5 billion.

Bottom line: "Researchers have found that the tax helped cut emissions but has had no negative impact on the province's growth rate, which has been about the same or slightly faster than the country as a whole in recent years."

Yet U.S. opponents of taxing carbon emissions keep insisting that cutting CO2 releases into the atmosphere will cost "trillions and trillions of dollars" — and all for naught.

Labeling moves away from fossil fuels as "job killers" ignores rising employment and investment in alternative technologies. The U.S. already has twice as many solar workers as coal miners.

Meanwhile, the costs of cleanup are overblown.

California and nine other states use "cap and trade" programs. Under such programs, businesses bid on permission to produce set amounts of carbon emissions.

In the end, overall CO2 discharges fall, while at the same time governments raise money to finance mass transit and other projects.

Nevertheless, the phrase "cap and trade" has become heresy to majority leaders in Congress, even though the idea once was endorsed by some Republicans as a market-based solution — one that didn't compel private industry to adopt government-mandated technology to get the job done.

The status quo is to do nothing, at least on the federal level. But the price of doing nothing probably is far higher than the cost of action sooner rather than later.

Not many years ago, experts estimated the effective cost of carbon emissions was $30 a ton. More recent estimates put the cost at $120 a ton — adding to the urgency (and economic returns) of abating carbon emissions.

Translated into dollars, that's $150 billion in incremental economic damage — each and every year, forever.

No, actually. It's worse than that. The cost of averting climate damage rises 40 percent for each decade of delay, the White House report concluded. "These costs are higher for more aggressive climate goals: each year of delay means more CO2 emissions, so it becomes increasingly difficult, or infeasible, to hit a climate target that is likely to yield only moderate temperature increases."

In late 2014, the University of Minnesota's Heller-Hurwicz Economics Institute held a forum on the economics of climate change. It attracted economists from Palo Alto to Zurich and from New York to London.

The common themes of their research: Costs of reducing carbon emissions are dwarfed by the costs of coping with climate change in the decades ahead — scenarios that could spark mass migrations of refugees, rising mortality rates (especially among the poor) and perhaps futile efforts to keep coastal cities from sinking under rising seas.

One economist estimated that in 2013 some 9.9 billion metric tons of carbon were added to the atmosphere — a $1.238 trillion hit to the $75 trillion world economy.

The risks of climate change may be uncertain, but actuaries price risk for insurance companies — an approach that could be adopted for gauging the cost-benefit calculation on limiting CO2 emissions.

"Cap and trade" is an antipollution strategy that already has worked. In the days when Congress actually passed legislation, a law set limits on sulfur dioxide emissions that created the bane of "acid rain" in the 1970s.

Result: A cap-and-trade program that reduced that pollutant by 85 percent. It cost about $3 billion but yielded benefits of $167 billion to $427 billion — effectively relegating "acid rain" to the dustbin of history.

Economists making the dollars-and-cents case for action on climate change already often find themselves outside their comfort zone.

Under normal circumstances, economists are content to deal with the costs and benefits of immediate problems, not threats in the distant future.

Other complications haunt the arithmetic of costs and benefits.

For example, consider the cost of cleaning up a contaminated water supply.

U.S. government economists assume a human life is worth $9 million. If spending $900 million saves 100 lives this year, the cost is repaid by benefits.

But what if $900 million in spending saves 100 lives a century from today? Lives in the distant future are an abstraction. A life 100 years from now — in today's dollars — is worth $1.24 million, by one measure economists use to discount benefits in the distant future.

In the cold calculus of economics, spending anything more than $124 million today to save 100 lives a century from now could be viewed as an extravagance — or at least an investment with a poor return.

Nevertheless, don't expect the majority in Congress to parse such fine points, as they proclaim their love of God and country — all the while contributing to a future that may be hell on Earth for future generations.