Carbon tax. To promote a major shift away from fossil fuels, a much larger tax would be needed. According to one study, a carbon tax in the range of $200/ton would be required to stabilize global CO2 emissions double price of oil; 4x price of coal.
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“We treat the earth like a business in liquidation.”
Opportunity cost. Loss is not counted.
Economies are based on natural capital (physical assets provided by nature), manufactured capital (physical assets generated by human productive activities applied to natural capital), social capital (trust, mutual understanding, shared values, and socially held knowledge) and human capital (people’s capacity for labor and their individual knowledge and skills). Only the value of manufactured capital (structures and equipment)--and recently, software--is estimated in the current national accounts.
Can you think of ways that the stocks of natural, social, and human capital might be measured?
What kind of information would be needed?
In Burgess County, current irrigation methods are leading to rising salt levels in agricultural fields. As a result, the number of bushels of corn that can be harvested per acre is declining. If you are a county agricultural economist, what two approaches might you consider using to estimate the value of the lost fertility of the soil during the current year? What sorts of economic and technological information would you need to come up with your estimates?
Some people have argued that the monetary valuation of environmental costs and benefits is important because “some number is better than no number” – without valuation these factors are omitted entirely from GDP accounts. Others say that it is impossible to express environmental factors adequately in dollar terms. What are some valid points on each side of this debate? How do you think this debate should be resolved?
Only two aspects of household production are currently counted in GDP: