The WSJ article notes that there is a carbon tax in Boulder amounting to $21 per household. If the tax is, in fact, imposed equally on each household, then of course it wouldn’t work as would the carbon fee/tax proposed by the Carbon Tax Center. At 10 tonnes of CO2 per household per year, the tax only amounts to $2/tonne, which should be expected to be ineffective in discouraging energy consumption (it is, however, a source of revenue).
People are motivated by the opportunity to avoid a fee more than they are motivated by the desire to receive an equivalent free benefit. There is some interesting economic research and theorizing on this and I think the phenomenon even has a name, which I forget. The idea is that sticks work better than carrots.
As an example, if we put a $3 toll on Bridge #1, but leave open the opportunity to take a 5 minute detour and cross Bridge #2 with no toll, people will tend to detour and use Bridge #2. But if we omit the toll and, instead, offer to pay people $3 to use Bridge #2, people tend to continue using Bridge #1. In either case, using Bridge #2 leaves drivers $3 ahead, but the penalty (toll) induces them to make the change while the reward tends to be ineffective.
The lesson that Boulder and other jurisdictions need to learn is that they need to slap people with a substantial fee that is directly related to their emissions and to stop worrying so much about subsidies.
Dan says
The WSJ article notes that there is a carbon tax in Boulder amounting to $21 per household. If the tax is, in fact, imposed equally on each household, then of course it wouldn’t work as would the carbon fee/tax proposed by the Carbon Tax Center. At 10 tonnes of CO2 per household per year, the tax only amounts to $2/tonne, which should be expected to be ineffective in discouraging energy consumption (it is, however, a source of revenue).
People are motivated by the opportunity to avoid a fee more than they are motivated by the desire to receive an equivalent free benefit. There is some interesting economic research and theorizing on this and I think the phenomenon even has a name, which I forget. The idea is that sticks work better than carrots.
As an example, if we put a $3 toll on Bridge #1, but leave open the opportunity to take a 5 minute detour and cross Bridge #2 with no toll, people will tend to detour and use Bridge #2. But if we omit the toll and, instead, offer to pay people $3 to use Bridge #2, people tend to continue using Bridge #1. In either case, using Bridge #2 leaves drivers $3 ahead, but the penalty (toll) induces them to make the change while the reward tends to be ineffective.
The lesson that Boulder and other jurisdictions need to learn is that they need to slap people with a substantial fee that is directly related to their emissions and to stop worrying so much about subsidies.