Economists: Price and limit on carbon pollution needed now | wwf

Economists: Price and limit on carbon pollution needed now

Posted on 07 July 2014
From coal to clean. Wind and solar power generation provides a clean alternative for future generations, Sydney, Australia, October 2003.
Wind and solar power generation provides a clean alternative for future generations.
© Adam Oswell / WWF
Fifty-nine leading economists united today in support of a price and limit on carbon pollution.

In an open letter they urge all Members of Parliament and Senators to work towards lasting agreement on a fair, economically efficient and environmentally effective policy to price and limit carbon emissions.

The group of Australian business and academic economists includes former Liberal Party leader Dr John Hewson, financial sector economist Geoff Weir and Australian professors from universities across the globe.

Dr John Hewson said it is important to get the economics right.

“Australia needs to take substantive, urgent and apolitical action on carbon pricing for the sake of our economy and our environment,” Dr Hewson said.

“The failure of our generation to act will cost future generations dearly.”

Former hedge fund strategist Geoff Weir said all major political parties are on record as accepting the need to reduce carbon emissions, with the debate now being about how best to achieve it.

“Relying on Government advisers and officials to pick the best emerging new technologies is guaranteed to be substantially less efficient, less effective and less equitable than relying on a carbon price to alter incentives,” Mr Weir said.

“Both economic theory and Australia's earlier experience with industry assistance confirm that view.”

Kellie Caught of WWF-Australia said a polluter pays scheme, that puts a price and limit on carbon pollution is the best way for Australia to meet its international commitment to cut emissions by 5-25% by 2020.

“The economics are clear and many of our major trading partners are already pricing carbon, or moving in that direction,” Ms Caught said.

“Australia needs to move forwards, not backwards.”

Media contact: Daniel Rockett, WWF-Australia National Media Manager, ph 0432 206 592, twitter @DRock1978

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2014 ECONOMISTS’ OPEN LETTER
SUPPORTING A PRICE AND LIMIT ON CARBON POLLUTION

We are writing this open letter as a group of concerned economists with a broad range of personal political views, but united in the judgment that a well-designed mechanism that puts a price and limit on carbon pollution is the most economically efficient way to reduce carbon emissions that cause global warming.

Such a mechanism is a necessary and desirable structural reform of the Australian economy, designed to change relative prices in a way that provides an effective incentive to consumers and producers to shift over time to more low-carbon, energy-efficient patterns of consumption and production.

Australia’s major trading partners are acting on climate change and it is important to have an effective price and limit on pollution in place now to begin Australia’s transition to a low-carbon economy.

A well-designed price and limit on carbon pollution has many benefits over alternative schemes, including:
  • stable and long-term policy settings that improve certainty for business
  • greater confidence that emission reduction targets will be met
  • lower administrative cost and complexity
  • the ability to link to other global schemes, such as emissions trading schemes operating in Europe, China and the United States
  • incentives for consumers to reduce their demand for emissions-intensive goods
  • incorporation of the cost of the damages caused by carbon emissions into business decisions, by requiring companies to pay to pollute.

The Intergovernmental Panel on Climate Change has made it clear that human influence, through activities such as accelerated and large scale burning of fossil fuels and clearing of forests, is warming the globe and that the impacts of climate change are being felt across the world. These findings are supported by the leading scientific bodies of the world, including the CSIRO and the Australian Academy of Science.

Australia can and should do its fair share to contribute to global emissions cuts, which will require Australia to make significant and sustained reductions in emissions and transition to a low-carbon economy. Clear short-, medium- and long-term targets to limit emissions would guide expectations.

It is important therefore to provide stable, long-term policy that can meet deeper cuts in the future, and that improves certainty for business and investors to begin an orderly transition to cleaner technology.

We urge all Members of Parliament and Senators to work in the national interest towards lasting agreement on a fair, economically efficient and environmentally effective policy to price and limit carbon emissions.

  • Chris Adam, Associate Dean, Professor of Finance, Australian School of Business, University of New South Wales
  • Philip Adams, Professor, Centre of Policy Studies, Victoria University
  • Tihomir Ancev, Associate Professor, University of Sydney
  • Regina Betz, Senior Lecturer and Research Coordinator Centre for Energy and Environmental Markets, University of New South Wales
  • Harry Bloch, John Curtin Distinguished Emeritus Professor, School of Economics and Finance, Curtin Business School
  • Alison Booth, Professor of Economics, Australian National University
  • Christine Brown, Professor and Head of the Department of Banking and Finance, Monash University
  • Rob Brown, Professor of Finance, University of Melbourne
  • John Burgess, Professor of Human Resource Management, School of Management, Curtin University
  • Paul Burke, Fellow, Australian National University
  • Bruce Chapman, Professor of Economics, Crawford School of Public Policy, Australian National University
  • Harry Clarke, Professor of Economics, La Trobe University
  • Deborah Cobb-Clark, Ronald Henderson Professor and Director, Melbourne Institute of Applied Economic and Social Research, University of Melbourne
  • Howard Dick, Professorial Fellow (Hon.), Faculty of Business & Economics, University of Melbourne
  • Tony Dingle, Honorary Professor, Department of Economics, Monash University
  • Matthew Dornan, Research Fellow, Australian National University
  • Patrick Doupé, Postdoctoral Researcher, Potsdam Institute for Climate Impact Research
  • Larry Dwyer, Professor of Travel and Tourism Economics, University of New South Wales
  • Craig Emerson, Economist and former Minister for Trade
  • Chris Fleming, Senior Lecturer, Griffith Business School
  • John Foster, Professor, School of Economics, University of Queensland
  • Kevin J. Fox, Professor of Economics, University of New South Wales
  • Joshua Gans, Professor of Strategic Management, University of Toronto
  • Quentin Grafton, Professor of Economics, Australian National University
  • Stephen Grenville, Visiting Fellow, Lowy Institute for International Policy
  • Clive Hamilton, Professor of Public Ethics, Charles Sturt University
  • Keith Hancock, Emeritus Professor, Flinders University
  • Geoff Harcourt, Professor Emeritus, University of Adelaide
  • Tim Hatton, Professor of Economics, University of Essex and Australian National University
  • Cameron Hepburn, Professor of Environmental Economics, Oxford University
  • John Hewson, Professor, Tax and Transfer Policy Institute, Crawford School of Public Policy, Australian National University and Former Leader of the Liberal Party and the Federal Opposition
  • Mark Horridge, Professor, Centre of Policy Studies, Victoria University
  • Stephen Howes, Professor of Economics and Director, Development Policy Centre, Crawford School of Public Policy, Australian National University
  • David Johnstone, Professor of Finance, University of Sydney Business School
  • Frank Jotzo, Associate Professor and Director of Centre for Climate Economics and Policy, Crawford School of Public Policy, Australian National University
  • Raja Junankar, Emeritus Professor, University of Western Sydney
  • Amarjit Kaur, Adjunct Professor, UNE Business School
  • Tom Kompas, Professor of Economics, Australian National University
  • Stephen Koukoulas, Managing Director, Market Economics
  • Peter Kriesler, Associate Professor, School of Economics, University of New South Wales
  • Robert Marks, Emeritus Professor of Economics, University of New South Wales
  • Judith McNeill, Senior Research Fellow, Institute for Rural Futures, University of New England
  • Adrian Pagan, Emeritus Professor of Economics, University of Sydney
  • Jack Pezzey, Senior Fellow, Australian National University
  • John Quiggin, Professor of Economics, University of Queensland
  • Sue Richardson, Matthew Flinders Distinguished Professor and Principal Research Fellow, National Institute of Labour Studies, Flinders University
  • Steven Schilizzi, Associate Professor, University of Western Australia
  • Mahinda Siriwardana, Professor of Economics, University of New England
  • David Stern, Professor, Crawford School of Public Policy, Australian National University
  • David Throsby, Distinguished Professor, Department of Economics, Macquarie University
  • Rabee Tourky, Trevor Swan Distinguished Professor of Economics, Australian National University
  • Malcolm Treadgold, Emeritus Professor of Economics, UNE Business School, University of New England
  • Elizabeth Webster, Professorial Research Fellow, Melbourne Institute of Applied Economic and Social Research, University of Melbourne
  • Geoff Weir, Director, Financial Sector Services
  • Jeremy B Williams, Professor, Griffith Business School

  • Samuel Wills, Research Fellow, Department of Economics, Oxford University
  • Glenn Withers, Professor of Economics, Australian National University
  • Justin Wolfers, Professor of Economics and Public Policy, University of Michigan
  • Gavin Wood, Emeritus Professor, RMIT University

* The signatories to this open letter have signed in an individual capacity and the views herein are not necessarily those of, and should not be attributed to, their employers.
From coal to clean. Wind and solar power generation provides a clean alternative for future generations, Sydney, Australia, October 2003.
Wind and solar power generation provides a clean alternative for future generations.
© Adam Oswell / WWF Enlarge