In theory, carbon has a price. We just aren't paying it

JustinTrudeau's government may well succeed this fall at establishing a nationally recognizedprice on the carbon emissions that driveclimate change.

It is the subject of some acrimony that action to mitigate climate change will come at some explicit cost. It is, no doubt, the easiest point of complaint.

But perhaps this should not merely be a discussion about the cost of acting. If we accept that there is a reason to act, it is surely because there will be a cost to not acting.

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On that count, there is already one officially recognized measure. Unbeknownst to most, the federal government already attaches a cost to each tonne of carbon emissions anestimate that was adopted by Stephen Harper's government.

Buried in the explanatory notes of various federal regulations passed in recent yearsis a measurement known as the "social cost of carbon." It is, with some limitations, an estimate of the cost associated with climate change's impacts on agricultural production, human health, flood riskand ecosystems.

For2012, it was set at $28.44 per tonne, and was to increase gradually to $57.80 by 2050. After a reassessment earlier this year, it was set to$40.70 per tonne for 2016, rising steadily to $74.80 per tonneby 2050 higher than any carbon price that currently exists at the provincial level.

This is an approximate price of climate change, a monetary estimate of the impact on future generations.

We just aren't paying for it.At least not in any way that could be described as a national tax.

The market failure of climate change

Nicholas Stern, the British economist who led a landmark study of the economics of global warming a decade ago, has argued that climate change is a failure of the free market. That is, the price we pay for the goodsthat produce carbon emissions does not account for the consequences of those emissions.

It is that disparity that could justify a governmentdecision to intervene and, with the common welfare in mind, impose a price on those emissions.

Of course, the politicalequation is far from straightforward, complicated by thepolitics of taxation,the ephemeral nature of future consequence and the riddle of collective global action.

At present, the social cost of carbon, which the Canadian government formalized after Barack Obama's administration studied and adopted its own estimate,exists as a means of assessing the cost effectiveness of government regulation.

Canadian regulations on new vehicles in 2012, for instance, were estimated to reduce carbon emissions by 162 megatonnes, thus providing a benefit of $3.9 billion.

Thatofficial estimate isnot perfect. It does not account for the sort of catastrophic weather events that are projected to increase as the planet warms. As the economist Mark Jaccard notes, it does not attach a value to ensuring that the polar bear doesn't go extinct,a goal that society at large might find significant.

Research published three years ago argued that pricing carbon at the same rate as the social cost of carbon would not be enough to meet Canada's reduction targets. But Greenpeace's Keith Stewart has suggested it should be the starting point for discussion.

There are also other estimates. A Stanford study in 2015 put the cost at $220 per tonne. Meanwhile, if you take a decidedly different view of the math or the potential future impacts of climate change, you can reduce the price to a fraction of the current estimate.

Regardless,a debate about consequence might be preferable to what we have witnessed over the last decade: a debate about whether or not to put a price on carbon as if that was merely a political preference, rather than a potential imperative.

The price of not acting

There would, of course, still be a question of collective action: Why should we act to reduce our emissions unless or until largerpolluters are ready to do exactly the same?

This argument seemingly discounts any leverage we might exert on such nations if we acted, any international restrictions or scorn we might face for not acting, and any moral grounds that might exist to act.

Waiting also comes with a price: As the White House argued in a 2014 report,the conceivable cost of acting increases over time as it becomes harder and harder to limit the rise of global temperatures.

In 2011, the National Roundtable on the Environment and the Economy estimated that the difference between limiting climate change and allowing the planet to warm more significantly could be an annual costof $29billionto the economy by 2075.

Last year, the Environmental Protection Agency in the United States attempted to quantify the avertedconsequences ifclimate change is mitigatedand tallied thousands of fewer deaths due to poor air quality and extreme heatand billions of dollars in avoided damages and adaptation costs.

Last month, the United States formally began to incorporate climate change into its national security planning, acknowledging the social and political upheaval that environmental havoc could create.

All of which could be set against what the parliamentary budget officer projects to be the relatively modest impact on the Canadian economy of acting to meet our 2030 target.

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The White House has described action to reduce emissions as "climate insurance," to be"taken out against the mostsevereand irreversible potential consequences of climate change."

The alternative is to wager thatnot paying now doesn't somehow end up costing a lot more later.