Shadow pricing carbon and Stern’s economics of climate change for Heathrow expansion

February 19, 2008 at 3:37 pm | Posted in Benefits, Carbon emissions, Climate change, Costs, Economics, Heathrow, Heathrow airport, Heathrow expansion, Monbiot, Price, Shadow price of carbon, Social cost of carbon, Valuation, Values, Worth | Leave a comment

Monbiot rightly questions the reduction of decision-making to simple financial calculations. He illustrates the climate change dilemma very well. From his first paragraph mention of Sipson, I thought he would say more about the Government’s intended destruction of that community. He does not expand, but you should still read the article:

Juggle a few of these numbers, and it makes economic sense to kill people
Britain’s official approach to climate change puts a price on human lives. And the richer you are, the more yours is worth

There are a couple of points to note.

First is that the Social Cost of Carbon (SCC) used by Stern has been replaced, according to Defra, by the Shadow Price of Carbon (SPC). This removes the sense that dealing with carbon has social consequences, by referring instead to a shadow price (a less tangible and more abstract term is difficult to imagine), and also adjusts government thinking in terms of costs to prices. Costs are what you bear, prices are what you charge. The producer-consumer emphasis and the implication of who controls the transaction have been reversed.

Second is that Heathrow expansion simply serves as a case in point. It’s a more immediate and concrete example (no pun intended) of the way economic arguments are used to justify ends—at any cost to those of us who do not appear to matter. As residents of Greater London and Thames Valley, we clearly have a lower value than do City business chiefs, Government Ministers and top aviation and construction industry executives. Our combined (net) worth is obviously insignificant, our considered views and emotional appeals are inconsequential, in comparison with our opponents’ opinions, due in part to the potential windfalls associated with massive capital expenditures.

In practice, there appears to be no honourable and honest weighing up of the opinions of the poor and powerless against the wealthy, powerful decision-makers. The Open Public Consultation is as closed and private as could be, and, sadly, there’s none so deaf as those who will not hear.

Carry on campaigning.

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