[A2k] Harvard Economist calls for Prizes to stimulate energy-efficient innovation

[James Packard Love]

* New technologies are likely to be our best weapons against climate
change and we should try to encourage more energy-efficient
innovation. Our patent system is poorly suited to encourage these
innovations, since successful innovations will create environmental
social benefits that far exceed the private revenues earned by the
innovator. Patents also make it less likely that technology will be
transferred to the developing world. A better system might be to
offer large public prizes that reward innovations, which are then
made freely available throughout the globe.

http://www.boston.com/news/globe/editorial_opinion/oped/articles/
2007/05/21/a_road_map_for_environmentalism/

The Boston Globe
EDWARD L. GLAESER
A road map for environmentalism

By Edward L. Glaeser  |  May 21, 2007

WE ARE ALL environmentalists now. The growing threat posed by global
warming makes it impossible to ignore the environmental impacts of
our actions. No presidential candidate in 2008 will be able to act as
if climate change is a loony leftist cause best fought with
aggressive development of the Arctic.

But environmentalists should celebrate their much-deserved success
with an increasing commitment to responsible policies that target
climate change and weigh costs against benefits. In the early days of
environmentalism, almost any action could be justified as a means of
increasing environmental awareness. Now we are all aware and
committed to the environment, and it is time to turn to policies that
are both green and smart.

Smart environmentalism has three key elements. First, policies should
be targeted toward the biggest environmental threat: global warming.
Second, our resources and political capital are limited. This means
we must weigh the benefits of each intervention against its costs.
Third, we must anticipate unintended consequences, where being green
in one place leads to decidedly non green outcomes someplace else.

These simple rules provide a policy road map for environmentalism.
The fight against climate change requires us to reduce greenhouse gas
emissions. The most effective way to reduce emissions is to charge
people for the social costs of their actions with a carbon tax. A
significant carbon tax would be painful -- gas will cost more at the
pump -- but it is never easy to change behavior, and change behavior
we must.

The big challenge in reducing greenhouse gases is to reduce the
growth of emissions in rapidly developing economies like China and
India. I suspect this will require Europe and the United States to
create incentives for these places to reduce emissions. One possible
course of action is for American and European carbon taxes to provide
funding that could be used to reward poorer countries for cutting
emissions.

New technologies are likely to be our best weapons against climate
change and we should try to encourage more energy-efficient
innovation. Our patent system is poorly suited to encourage these
innovations, since successful innovations will create environmental
social benefits that far exceed the private revenues earned by the
innovator. Patents also make it less likely that technology will be
transferred to the developing world. A better system might be to
offer large public prizes that reward innovations, which are then
made freely available throughout the globe.

But smart environmentalism doesn't just mean more government
programs, it also means rethinking current policies. Our emissions
policy, which requires regular emissions tests for newer vehicles, is
expensive to operate and poorly designed to fight climate change.
After all, it does nothing to induce less driving. Even more
problematically, by letting owners of older cars off the hook, the
current system imposes costs on the Prius driver but exempts the
drivers of the vintage gas guzzlers that create the most emissions.
We should require different emissions tests and even higher emission
taxes for older cars that generate higher environmental costs.

Our paper recycling programs cost time and money and do little to
protect first-growth woodlands and rain forests. The trees used by
paper mills are a renewable resource. When people use more paper,
suppliers plant more trees. If we want bigger commercial forests,
then we should use more paper not less. Our policies should directly
protect important wildlife habitats, not try to reduce our demand for
paper.

Perhaps the most environmentally problematic local policies are land-
use controls. The foes of development correctly point out that new
development will use energy and land, but the right calculation also
considers the costs created by stopping development and pushing it
elsewhere. When we stop development in Boston's inner-ring suburbs,
we shift development to areas with fewer people that might oppose new
development. The move from higher- to lower-density development
ensures more driving and energy use. Protecting green space in the
inner suburbs is a form of environmentalism, but it is an
environmentalism that creates local benefits by imposing costs on the
rest of the world, since it pushes development into the highway-crazy
exurbs.

The state should take the lead by requiring environmental impact
reviews to compare the environmental costs of allowing a project with
the expected environmental consequences if a rejected project is
built elsewhere.

Climate change is too important for us not to consider all of the
consequences of our policies. We should rethink policies that appear
environmental but that actually ensure more driving and greenhouse
gases.

Edward L. Glaeser, a professor of economics at Harvard University, is
director of the Rappaport Institute for Greater Boston. He is a guest
columnist.

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James Packard Love
Knowledge Ecology International
mailto:james.love@keionline.org
tel. +1.202.332.2670 / U.S. mobile+1.202.361.3040, Geneva mobile
+41.76.413.6584

"If everyone thinks the same: No one thinks." Bill Walton"