Institutional Failure and the Tragedy of Climate Change
All this said, as a Libertarian I have no hesitation in recognising that anthropogenic climate change presents a potentially serious ‘market failure’. Even allowing scope for entrepreneurs to develop new techno-institutional devices Libertarians need to bite the bullet and recognise that ‘privatising the atmosphere’ is a fantasy. To make this admission, however, is not to suggest that there is any realistic non-libertarian solution to the problem. On the contrary, in order to reach this conclusion one would need to subscribe to at least three assumptions that are no less fantastic than the idea of privatising atmospheric resources. The first of these assumptions is the belief that government’s can be trusted to develop cost effective schemes to reduce emissions given their abysmal record at estimating accurately the costs of much more basic public infrastructure projects. The 1% of GDP estimated by the Stern Report to be the annual cost of reducing carbon dioxide emissions seems remarkably optimistic in view of the recommendation that cuts in emissions per unit of output need to reach the order of 80% by 2050. If Stern’s projected costs turn out to be as inaccurate as was the much simpler task for UK authorities of estimating the cost of the Scottish parliament building (and countless other similar schemes) – which came in more than 1000% above target – then the economic costs of climate change policies may turn out to be far greater than the costs of climate change itself.
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Mark Pennington is the author of Robust Political Economy: Classical Liberalism and the Future of Public Policy