When you factor in externalities


TreeHugger has published a haunting image series from 1940s Pittsburgh, in the US state of Pennsylvania. They're well worth a view, even if they're presented as a slideshow. Slide six included this intresting observation:

"The idea of increased costs for a necessity like heat during Pittsburgh's cold winters was surprisingly well-received. People were willing to pay for clean air, and the improved efficiency of clean-burning furnaces actually made the net cost of heat about the same as before."

This is very much like today. If really given the choice, people will pay for a healthier environment, and in the end, they'll often find that if you take into account externalities, costs are actually lower.

The problem, especially for libertarians and some conservatives, is recognising these externalities.

Australia went through this recenty with Tony Abbott repealing our carbon price. When it was in effect, pollution levels dropped sharply (despite the embarrassingly wrong predictions of the Murdoch press). Without having to factor the cost of their carbon dioxide output, pollution levels have unsurprisingly increased.

As former PM Paul Keating put it:

Look, only prices and markets shift these big things.

I mean, this is - the price allocates capital in the market. Only a price on carbon will start allocating capital to the right places, where we should be investing in the new Australian economy.

The same applies to individuals.

Author bio and support


Ruben Schade is a technical writer and infrastructure architect in Sydney, Australia who refers to himself in the third person. Hi!

The site is powered by Hugo, FreeBSD, and OpenZFS on OrionVM, everyone’s favourite bespoke cloud infrastructure provider.

If you found this post helpful or entertaining, you can shout me a coffee or send a comment. Thanks ☺️.