What a brilliant rebuttal to the argument. If we apply the same logic to all of the costs that are being heaped upon people for potential ecological degradation from human activity, we should also benefit from the benefits that those same human activities cause. There is no justifiable reason not to look at all sides of an issue to come to a conclusion. The laws of physics taught mankind long ago that for every action, there is a re-action. Likewise, for every cost there is a benefit.
Enjoy the article and share widely.
YiT ~ Shelly
Posted on
January 11, 2013 by
Willis Eschenbach I see that the New York Times (NYT) is going to close their environmental desk. Given that there still are actual environmental problems on the planet, I consider the closing as a sad commentary on the hijacking of the environmental movement by carbon alarmists. CO2 alarmism has done huge damage to the environmental movement, and thus to the environment itself.
In any case, a few months ago in the NYT Green Blog they talked about “monetizing” the “social cost” of carbon. The article said:
In 2010, 12 government agencies working in conjunction with 
economists, lawyers and scientists, agreed to work out what they considered a coherent standard for establishing the social cost of carbon. The idea was that, in calculating the costs and benefits of pending policies and regulations, the Department of Transportation could not assume that a ton of emitted carbon dioxide imposed a $2 cost on society while the Environmental Protection Agency plugged 10 times that amount into its equations.
How does one “monetize” something, and what is a “social cost” when it is in its native habitat?
First, the easy one. A “social cost” is generally some estimated or inferred cost to society from something, in particular a cost that is not reflected in the price of the item itself. For example, alcohol has a social cost in the form of a variety of societal problems. That cost is not included in the raw ex-factory price of alcoholic beverages.
First, the easy one. A “social cost” is generally some estimated or inferred cost to society from something, in particular a cost that is not reflected in the price of the item itself. For example, alcohol has a social cost in the form of a variety of societal problems. That cost is not included in the raw ex-factory price of alcoholic beverages.
Next, to “monetize” a social cost means 1) to attach some monetary value to that social cost, and then 2) to attach that monetary value to the retail cost of the product in the form of an increased price. In the case of alcohol, that is usually done through government taxes. Sometimes, the revenue from these taxes is dedicated to ameliorating that social cost. In the case of alcohol, that might be in the form of alcohol dependence programs or clinics. Other times the income goes into the general fund.
My second objection is that while people are often in a hurry to monetize the social costs of something, they rarely take the necessary other step. They rarely are in a hurry to monetize the social benefits of something. But if you do one, you have to do the other. After all, this is why it’s called a “cost/benefit” analysis …
I have even had someone seriously argue that there is no need to monetize the social benefits, because they were already included in the market price. After all, he argued, the reason we buy something is because of the perceived benefits. So they are already included in the price.
I find this argument singularly unconvincing. Some benefits are already included in the price, and some aren’t. Since a single counter-example will serve to disprove the general theorem, let me take a social benefit of CO2 as an example. This is the known effect of atmospheric CO2 levels on plants, which is that they increase their production with increasing atmospheric CO2. Obviously, nobody goes out and buys gasoline for their car in order to help the plants, so it is not included in the market price. However, increased plant growth is an undoubted social benefit, a huge one that affects the whole world. Therefore, it is an un-accounted for social benefit, one which does not get included in the price.
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