Bad intentions did not make humans pollute the planet. So why should we assume that good intentions will help us clean up the mess?
Many well-meaning folks seem to believe that switching off the lights when they leave the room or calculating the size of their carbon footprint will help clean up the planet. It will not. We do not wish to scoff at their commitment, but merely point out that we humans are far more likely to respond to incentives rather than to morality. It takes a M.K. Gandhi or Martin Luther King to ask—and get—people to do something on account of “righteousness”. The rest of us are slaves to one of the simplest lessons in economics: incentives matter.
So, on World Environment Day we would rather pin our hopes on the global climate change talks that are expected to lead to a deal by the end of the year—and also on new technologies such as solar power and carbon capture.
The markets will have to play an important role in this process. High carbon taxes will goad consumers to use less fuel. Tradable pollution quotas will goad producers to cut down on emissions. And governments should not force technological choices through hasty subsidies.
As concerns about global warming morph from a public policy matter to a movement with a religious zeal of its own, environmentalism is the new morality in town. After all, now that both the religious “god is dead” and the Communist “god has failed”, global citizens need a new sense of virtue to derive affirmation from.
This isn’t to suggest that climate change and all the other environmental issues that confront the world aren’t real. They are, which makes it all the more imperative for governments to find true and lasting solutions to these threats. But for that they have to retool economic incentives.
The allocation of natural resources can only change when governments alter economic interactions. A cap-and-trade policy or a carbon tax is what companies and ordinary consumers will respond to in unison, not the idea of a new but pre-industrial Utopia.
Climate change is truly one of the biggest challenges facing human civilization. It needs to be tackled with a combination of science and economics.
Does combating global warming begin at home? Tell us at firstname.lastname@example.org