The Government of Canada has decided to meet the objectives as set out in the Kyoto Protocol, namely reducing emissions to 1990 levels.

The way to achieve this result most efficiently would be to create a 'carbon tax' that would be passed on to end users of products in a process similar to a Value Added Tax (like the GST). In this way consumers would be able to discern clear price signals and then adjust their purchases accordingly. Meanwhile, the market would automatically adjust and deliver good and services in the most efficient (and least costly) way possible.

Due to political considerations, Canada's Kyoto implementation process will be nothing like the process described above. Instead, we have developed a system where costs are hidden, producers of GHG's are protected and the Federal Government has agreed to purchase emissions credits from other countries (Russia most probably) to cover any shortfalls.

What will be the result of this policy? Canadians will not reduce their emissions as quickly as they could, the costs of meeting the target will grow dramatically and Canada will become less competitive in the world economy.

Canadians have, by and large, supported implementing Kyoto, but so far have been insulated from actually paying for it.

Prediction: Canada will not come close to meeting the requirements of Kyoto. As the costs of the treaty begin to flow through to taxpayers, support will evaporate and we will adopt a ‘best efforts’ stance very similar to the US.

Jonathan -- thank you for your comments. And while your sentiments about the government's intentions may spark some debate, I'd like to focus our time on dialogue, rather than debate, as much as possible.

And so I ask, are consumers completely at the mercy of classical economic theory, relying on "clear price signals ... (to)adjust their purchases accordingly", or might we move in different directions, making purchase, investment, and entrepreneurial decisions based on some other opportunities?

People make purchase decisions for all sorts of reasons. The assumption in classical economics is that we are all rational beings and respond to clear price signals, and that we all know the best "value" in a given product or service when we see it.

This is, of course, nonsense.

The architects of classical economics may have been rational Vulcans (or Ferengi, if that is how you spell it - I am not enough of a Trekkie to know!), but most mere mortals are not rational when it comes to flushing away our disposable income.

In fact, I doubt that many of those ghosts who decided for us that the profit motive is paramount were rational either - witness the fact that they completely left the "sources of the resources" out of their equation, and assumed they were infinite. Oops. How irrational is that?

As an automotive person once said, "If you think people buy cars for transportation, you won't be in this business long". People buy, largely, to impress the neighbours. Even that most utilitarian of autos, the model T, was bought to make the neighbour's hayburner look old-fashioned.

So, what impresses the most? Large, flashy, wasteful, "latest and greatest" - not efficient, spare, utilitarian, practical, rebuilt, reused, recycled. Why? Because we're taught to believe that being able to waste (and this correlates to pollution, and to the issues at hand), to "consume" material goods, and always have the latest thing, is a sign of success.

The "millionaire next door" with his paid for house, paid for older car, sweater, etc. is often considered to be...well...cheap. Or maybe poor. In any case, not someone to be like. Too bad, because this attitude of contempt for thriftiness, in too many places in the world, creates a lot of problems, I think - including the kind of growth-at-all-cost mentality that results in the use of a lot of fossil fuel, etc., in a hurry.

But, do we need the smokestacks of industry churning out already-obsolete goods that nobody really needs, to have a successful economy?

Or can we alter course a bit, and see the value in other things? If money is spent on a lesson, a concert, a service, eco-efficient travel, local foods, etc. does this not make the wheels of commerce turn, just as well as ordering up a new digital gizmo?

Someone I thought was all about money once told me "it's not about the money". It's not???? Wow. This was a business person, profit-motivated, I thought. Nope. It was about the challenge, respect, and service to community. I thought he was kidding. Nope.

The money and the nice things you could do with it were secondary, after all the important things were taken care of.

Oh.

It took me about ten years to get it.

So, to get back to the point of taxes... if we have a carbon tax, and we have an offsetting reduction in income tax, there is no new tax. Just tax shifting. Sure, that will help change behaviour. Fine. Do some of that.

So will anything that creates awareness of life-beyond whatever-the-thing-is-we're-all-supposed-to-have-this-week. So, educate - and foster a new kind of consumer. One who is seeking, perhaps, some different things to do with their surplus cash that are less wasteful.

Don't get me wrong, I am not anti-business. That's the thing - we NEED sustainable, profitable businesses and we NEED to have good, challenging, interesting work to do. But there's more than one way to make a purchase decision, live a life, or be motivated about the business you're in or the job you do.

We need to create the opportunity for businesses to thrive in the post-Kyoto climate partly by shifting the price signals by tax policy - but also by creating a new awareness of what cool is, what success is, what is worth emulating...what, eventually, impresses the neighbours, I suppose.

-30-

"People make purchase decisions for all sorts of reasons. The assumption in classical economics is that we are all rational beings and respond to clear price signals, and that we all know the best "value" in a given product or service when we see it.

This is, of course, nonsense."

Or maybe not. Allow me illustrate with a tangible example:

Commodities (like energy) are sold on the basis of price.

We witness this basic truth every day - simply observe the queue at a gas station where they charge less that the station across the street. Most interesting (to me at least) is how small the magnitude of price change must be in order to influence behavior (5-7 10ths of one percent seems to cause plenty of rational reaction to price signals - that translates into .5 cents on a 75 cent liter of gas).

The fundamental problem with environmentalism is this: everyone is nominally for it, (who do you know that would admit to being anti-environment?) but consumers are simply UNWILLING TO PAY extra for products and services based on their environmental impact (with few exceptions mostly related to luxury goods and services).

My Grandpa said it best: “Talk is cheap, but it takes money to buy whiskey”.

[quote="Jonathan Fleming"]
"Due to political considerations, Canada's Kyoto implementation process will be nothing like the process described above. Instead, we have developed a system where costs are hidden, producers of GHG's are protected and the Federal Government has agreed to purchase emissions credits from other countries (Russia most probably) to cover any shortfalls."

Would someone please expand on what a GHG is? I have been a little fuzzy with acronyms.

Thank you so much,
Shelagh (Hynes)

[quote="Jonathan Fleming"]"
The fundamental problem with environmentalism is this: everyone is nominally for it, (who do you know that would admit to being anti-environment?) but consumers are simply UNWILLING TO PAY extra for products and services based on their environmental impact (with few exceptions mostly related to luxury goods and services).”[/quote]

Jonathan, Thank you for lighting some pathways for my brain, though I have to disagree with your comment of our "unwillingness" to pay. I believe people are willing to pay extra for products and services based on resultant environmental impacts. First of all, there has been a tremendous increase in environment-related illnesses, particularly with lung/respiratory diseases, and I believe that the average "fresh air (or wishful freshair) breathing" consumer is aware that this increase is likely strongly related to pollution, thus are willing to pay the extra - for ourselves, our children, our grandchildren and even maybe our neighbors! :)

Second of all, I also believe that the average consumer has become more aware of tragic environmental impacts on wildlife, the he/she values the wellness and existence of wildlife, and thus is again, willing to pay extra. There are many new tools of "green accounting" that have been used to demonstrate the personal economic "value" (i.e.dollar value), for example, of a healthy drinking water reservoir, or of an animal (particularly, if there has been a looming threat of extinction). As much as it may seem "out of nature's order" to place a price on a wildlife animal, at least it is placing a price on the existance and wellness of the animal and not the animal's head, so to speak. For related tools of environmental accounting, people can refer to the work of David Pearce and Edward B. Barbier - A Blueprint for a Sustainable Economy (Earthscan, Earthsummit Books: London; 2000, an update from their original in 1989).

I believe people are coming to see our issues as global issues, and are becoming aware that responsibility begins here at home, including having to pay for it. Besides, it always makes economic sense. When all of the bills add up at the end of the day (not just the environmental ones), green or sustainable decision making always makes good economic and technical sense - even for the average Josephine.

Shelagh (Hynes)

Hello everyone. Relating to our ongoing discussion of the Kyoto tax
system, I would like to refer you to a list of environmental tax-related
websites. Simply look under "Kyoto Publications" underneath our two
dialogues, (Business and Climate Change, and Kyoto Dialogue), and click on "Environmental Tax related info".

Hope this helps.