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Policy Wonking Could Be Relevant, Maybe Fun? A Review of the Social Costs of Carbon

The third of a three-part proposal for using sustainability to recharge America's problem-solving. Read parts one and two.

By Matt Polsky | Published 7 years ago | About a 8 minute read

The third of a three-part proposal for using sustainability to recharge America's problem-solving. Read parts one and two.

Andy Revkin’s article in Pro Publica: “Will Trump’s Climate Team Accept Any ‘Social Cost of Carbon'?" discusses a new report by the National Academies of Sciences, Engineering, & Medicine called Valuing Climate Damages: Updating Estimation of the Social Cost of Carbon Dioxide, aimed at “improving the process” and overcoming some of the “issues” with developing a dollar number for this externality. He does this in the course of pondering what the new Administration might do, including entirely deleting its use (i.e. effectively treating it as zero).

There are at least two reasons this may be of interest to the sustainable business community. The first is because quantifying the non-market environmental and social damages of carbon emissions could be the heart of a Pollution Tax or Marketable Permit. While it’s hard to imagine either nationally at this point, it’s worth noting that the nominee for Secretary of State seems to approve of the former from his latter Exxon days; and California, proudly aiming to be the model anti-Trump state, already has the latter — and California has often proven to be the forerunner for actions elsewhere.

To review a few policy wonk aspects, there has historically been some liberal and conservative support for these policy tools — something you don’t see a lot, so there’s one potential advantage. Economists, whichever one they prefer, cite their advantages in minimizing the costs of reducing carbon emissions. They’re often considered the single most powerful policy tool to address climate change.

So it’s important to get this right — whatever “right” turns out to be. If it’s anything like the $36/ton estimate made by the previous Administration, which Harvard economist Gernot Wagner thinks is “far too conservative,” it would have a big impact on business’ decisions.

Beyond this, a second reason for the broader business relevance of this topic is that several of the fundamental concepts used in developing and evaluating it are often seen in other issues with which society is struggling — and business is very much a part of society. Therefore, regardless of whether the Trump Administration eventually places a high number or no number on carbon, a deeper analysis of the nature of some misleadingly simple, mostly everyday concepts can lead to a better understanding of them. And that might help in addressing other divisive social issues about which we don’t seem to know where to even begin to attempt some convergence of views.

So let’s still look at some of the concepts Revkin extracts from the National Academies document as a way to try this.

Fairness

The article’s subtitle refers to the panel’s efforts “to set a fair price.” To start, “fair” is an obvious minefield, as societal consensus of what that even means is scarce. But it is an underrated property, critical to sustainability, and due for an update. It is important, therefore, to keep working at it.

So it is improvement if the process used by an earlier internal government effort, according to Wagner, was a “damn impressive exercise at assembling a lot of firepower,” and the National Academies’ process was done “fresh” and “independently,” and might help “constrain misinterpretation and boost…acceptance.” I doubt, though, that scientists and economists are any better than anyone else at knowing what’s fair. There were no ethicists involved in the latter, which would have contributed to the best shot at seeing and resolving lurking fairness issues.

Perhaps we need a cadre of ethicists for issues heavily involving fairness, such as the budget and tax proposals.

The Discount Rate

This fundamental concept is not the neutral fact of life that mainstream economics sees it as. It’s a value-laden choice that implies the future is worth less than the present. While one might accept that priority, we can’t pretend even “normal,” supposedly “ideal,” policy-making is devoid of value choices. Questioning whether this one should even be a positive number might help with evaluating proposals for the harvesting of natural resources.

Transparency, Unbundling, and Clarity

Revkin states that the report’s “main recommendation is to ‘unbundle’ the mix of models (from different fields like science, technology, and economics) behind that seemingly simple dollar figure.” This would help with “transparency” and, according to Myles Allen, a climate scientist at Oxford University, “clarification.”

Transparency is often a good thing, but it shouldn’t be superficial. Certainly “clarification” is also good; as is “unbundling,” at least for transparency and to facilitate understanding, and then ideally building creative, new, interdisciplinary approaches. However, it is questionable whether facts and values can always be separated. They may not actually be unbundle-able.

As we see in the “False News” debate, whose irresolution is a threat to democracy, there are presumed to be only facts and non-facts. And sometimes that is true. But, there can be gray areas between these two poles that are not getting attention. Just because something is labeled a “fact” doesn’t mean it is. Post-modernism, while easy to caricature and ignore, is not always wrong. For centuries, it was assumed there were only two genders; we recently realized there were more. So all along we were wrong about this “fact.”

For complex, uncertain, high-stakes issues, the field of post-normal science tells us that facts and values can be inseparable. You can’t just assume you can pick up, as Allen states, “where data ends and societal and political choices begin,” as the last two might have influenced the first in non-obvious ways.

This can be relevant to nutrition and many health issues, although a new way that reshapes the relationship between science and societal decision-making would take a lot of getting used to.

Apolitical and Political

Wagner described the earlier government process as “about as apolitical as things can get in Washington.” Whereas Allen states: “There are obviously political decisions which need to be made in any calculation like the social cost of carbon.” This shows some ambiguity about these terms.

Maybe in some ways they are both right. “Apolitical” could mean keeping political participants or those with obvious “political” views or ideologies out of processes. Even if you could and did this, you just might drive those points of view underground. Better to have them up front.

But in another sense, this whole thing — given the stakes, the diverse views, that our private actions often affect others, and that this is about us as a society — means it has to be political. So for this, and a lot of other reasons, we need to return “politics” to its older, honorable meaning, and figure out guidelines on how to live up to that.

A Guide to Begin

It would help if we can become more comfortable with the inherent messiness of a better intended political process. False clarity through faulty assumptions will not help, but real clarity can. However, it will probably be partial, and may come in phases. Interdisciplinary thinking needs to be much better, and practiced more widely. Assumptions need to be questioned more often, even if long-held, comforting, and prevalent; and if off, replaced with better ones (Here, a couple of my earlier Sustainable Brands articles — “Is It Objective to ‘Be Objective’ About Sustainable Business Metrics?" and “What If ‘Opposites’ Aren’t Really Opposite?” — might be useful.).

A Remaining Problem

This still doesn’t necessarily help much with the climate change denial that has resisted formal and civics-driven self-education. The solution appears to nominate some of its holders to cabinet-level government jobs, and watch their views change when testifying to Congress. OK, I’m 2/3 kidding. But it shows that “politics” can help with “the science.”

Conclusions

Beyond the subject of the social cost of carbon, this article aims to provide a fuller sense of key concepts such as fairness, and describes how the beginning of a reshaping of the relationship between science and society might look.

Both in this article, and in the earlier parts of this series on “Design” and the leading “Purpose” edge of sustainable business, I offered several broad ideas on new and perhaps better ways for both businesses and others to formally and informally work on searing social issues in the U.S.

I bet there are others with potential to cross the camps of those whose clashing worldviews and mutual contempt seem to defy Barbara Ward’s real fact from 1983: There is Only One Earth.

Matt Polsky

Matt Polsky is a Ph.D. student at Erasmus University’s Sustainability Program, studying Mindset Barriers to Sustainable Transformation, and a dabbler in too many things.

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Matt Polsky