So what would a carbon tax really cost?.
While writing my paper on the tragedy of the commons and desalination, I was a little shocked to see that the cost of paying for CO2 permits — or even the much higher social cost of carbon — was actually quite small, i.e., the cost of offsetting carbon emissions at $12/ton would be roughly $3.60 per San Diego resident* — a number that’s a tiny fraction of people’s water costs (let alone their latte budgets).
Increasing the cost to $30/ton CO2e (one estimate of the social cost) would mean that San Diegans could offset the GHG-cost of 100 percent desalinated water for only $9 per year, which is about equal to the price of one hour of downtown parking.
How can that cost be so low and why are people so opposed to it if it is?
The first answer is that a little cost can have a big effect if its spread across enough people.
Wal-mart regularly breaks conservation records by shaving 0.2 percent off its shipping distances or packing weight.
Five cent charges for plastic bags have dropped use by 50 percent or more in many cities.
Second, the people who oppose these moves often face a much higher cost than the average person because they are in the oil selling, pig selling or bottled water selling business.
Too bad politicians seem more interested in listening to fossil-fuel lobbyists than to economists (and others) urging price signals as a cheap way to mitigate carbon emissions and the dangers of climate change.
** This price reflects existing "green taxes," which makes me wonder how much Dutch prices would change — if at all — under a carbon pricing scheme.