Carbon credits

[VolunteerHillbilly]

I was reading about this concept and something seemed strangely familiar. Then is hit me like a bolt of lightning. In Joseph Heller's Catch-22 there is a wonderful bit about Major Major's father who was paid by the government to not grow alfalafa:

"[Major Major's father's] specialty was alfalfa and he made a good living out of not growing any. The government paid him well for every bushel of alfalfa he did not grow. The more alfalfa he did not grow, the more money the government gave him, and he spent every penny he didn't earn on new land to increase the amount of alfalfa he did not produce. Major Major's father worked without rest at not growing alfalfa. On long winter evenings he remained indoors and did not mend harness, and he sprang out of bed at the crack of noon every day just to make sure that the chores would not be done. He invested in land wisely and soon was not growing more alfalfa than any other man in the county. Neighbors sought him out for advice on all subjects, for he had made much money and was therefore wise. "As you sow, so shall ye reap," he counseled one and all, and everyone said, "Amen."

 

[TennTradition]

I was reading about this concept and something seemed strangely familiar. Then is hit me like a bolt of lightning. In Joseph Heller's Catch-22 there is a wonderful bit about Major Major's father who was paid by the government to not grow alfalafa:

"[Major Major's father's] specialty was alfalfa and he made a good living out of not growing any. The government paid him well for every bushel of alfalfa he did not grow. The more alfalfa he did not grow, the more money the government gave him, and he spent every penny he didn't earn on new land to increase the amount of alfalfa he did not produce. Major Major's father worked without rest at not growing alfalfa. On long winter evenings he remained indoors and did not mend harness, and he sprang out of bed at the crack of noon every day just to make sure that the chores would not be done. He invested in land wisely and soon was not growing more alfalfa than any other man in the county. Neighbors sought him out for advice on all subjects, for he had made much money and was therefore wise. "As you sow, so shall ye reap," he counseled one and all, and everyone said, "Amen."

This sounds more like corn than carbon. What connection are you making...please?

 

[VolunteerHillbilly]

This sounds more like corn than carbon. What connection are you making...please?

Paying people not to do do something is bassackawards, particularly when the government is the payor.

 

[GAVol]

Paying people not to do do something is bassackawards, particularly when the government is the payor.

If I were you, I wouldn't investigate Farm subsidies very closely. It might make you sick to your stomach.

 

[TennTradition]

Paying people not to do do something is bassackawards, particularly when the government is the payor.

But there is no value in the carbon product. Really, there is only negative value (from environmental impacts). If it becomes beneficial to a company to reduce carbon output for government credit, then it would seem to make sense (but only if the credits were priced such that the offset in capital caused by the decreased carbon output - thus less welfare because of less capital - is equal to the negative impact on welfare of emitting that amount of carbon - through environmental and health impacts). That argument doesn't work for alfalfa or corn..because they don't have negative impacts on welfare...(the only negative effect of growing more is a hit on the price you can sell it for through supply and demand).

But, in general, I like the idea of a cap and trade program more than credits, specifically. Although, depending on the market, there may be room for both if a country decides it is in the general welfare of its people to cut carbon output.

 

[CSpindizzy]

Yep. People are making fortunes out of subsidies. Sounds like someone needs to look into the Farm Bill. Farmers get checks NOT to plant certain crops all the time.

 

[VolunteerHillbilly]

But there is no value in the carbon product. Really, there is only negative value (from environmental impacts). If it becomes beneficial to a company to reduce carbon output for government credit, then it would seem to make sense (but only if the credits were priced such that the offset in capital caused by the decreased carbon output - thus less welfare because of less capital - is equal to the negative impact on welfare of emitting that amount of carbon - through environmental and health impacts). That argument doesn't work for alfalfa or corn..because they don't have negative impacts on welfare...(the only negative effect of growing more is a hit on the price you can sell it for through supply and demand).

But, in general, I like the idea of a cap and trade program more than credits, specifically. Although, depending on the market, there may be room for both if a country decides it is in the general welfare of its people to cut carbon output.

When you grow a crop every year your deplete the soil. Part of the logic behind the subsidies, other than keeping prices artificially high, is maintain land for future food production.

 

[CSpindizzy]

And not to flood the market with a surplus of a certain crop. It also has a bearing on limits we've agreed on with overseas markets.

 

[TennTradition]

When you grow a crop every year your deplete the soil. Part of the logic behind the subsidies, other than keeping prices artificially high, is maintain land for future food production.

OK. But, that seems a little weird. If it is your land and your crop...it isn't a commons problem. If you were a farmer and your livelihood depended on your crop, it would seem like you would know to not plant or to rotate your crop to ensure you continue making your income. Carbon isn't like this - it is a commons problem...the little bit you are hurting yourself isn't woth cutting back (as it is in growing crops) ... it is the cumulative effect across a whole population that the government sees and therefore steps in with something like credits.

 

[TennTradition]

And not to flood the market with a surplus of a certain crop. It also has a bearing on limits we've agreed on with overseas markets.

I'm sure there's all kinds of agreements that go into setting subsidies.

 

[CSpindizzy]

My Senator is a key player on making corporate farming and subsidies a major part of his campaign war chest...er, I mean legislative agenda. Sorry about that Sen. Chambliss.