Sandy May Reveal A Common Denominator
Dean Baker makes a really good point:
“It is common for news reports on efforts to limit global warming with carbon taxes to mention the negative impact that such taxes can have on growth and jobs. In the same vein it is worth pointing out that the costs associated with damage caused by global warming related storms, like Sandy, also will in the long-run slow growth and reduce the number of jobs.”
Indeed. If you believe that climate change is leading to more frequent natural disasters, such as droughts and hurricanes, then the answer to the question of whether the benefits of carbon taxes would exceed the costs becomes more concrete. Traditionally, we’ve been comparing the measurable costs of carbon taxes (i.e., the negative effect of higher oil prices on GDP) to the immeasurable benefits of reversing climate change (i.e., the improved well-being of future generations). But insofar as we can actually compute the amount of GDP lost from disasters such as Hurricane Sandy – here’s one estimate by Wells Fargo – then we might be able to run cost-benefit analyses using a common denominator.
This could potentially strengthen the case for higher carbon taxes.