Last month I presented a paper at the Vermont Law School Environmental Scholarship symposium, and the paper relied in some part on the idea that the most achievable (if modest) means of incorporating climate externalities into societal decisionmaking would be some form of cost internalization through the polluter pays principle — specifically by imposing retroactive liability for climate harms on those industries most responsible (specifically fossil fuel industries).

One conference attendee, a professor at Vermont Law School, challenged me on this idea.  His view was that economics-based responses to climate change undermine attempts to respond to greenhouse gas emissions as a moral issue.

That’s an intriguing thought — certainly I agree that climate responsibility is a moral issue of the first order.  After all, the basic principle that one should do no harm to others easily covers pollutant emissions that will cause great harm to agriculture, patterns of habitation, and ecosystems worldwide.

But I am not sure that law can possibly deal with climate response as a pure moral issue rather than as an issue of allocation.  Laws that ban absolute moral wrongs do so absolutely, or with limited exceptions.  Prohibitions against murder are an example.  In the environmental law context, the Endangered Species Act (as originally enacted) comes to mind — all takes of endangered species were banned by section 9, and section 10 incidental take permits were not authorized until the 1982 amendments to the ESA.

But no legal system could ban all emissions of greenhouse gases like the ESA bans takes of endangered species.  Even the most strident climate activists continue to drive cars, heat and light their homes,  and fly around in planes — activities that are inconsistent with the view that all greenhouse gas emissions are absolute moral wrongs akin to murder to the killing of an endangered species.

The moral objection to greenhouse gas emissions is an objection to unsustainable levels of emissions.  Not all greenhouse gas emitting activities are morally wrong, only those in excessive of a sustainable rate.  And that’s the rub for a system of greenhouse gas regulation based on moral principles: once you set out to reduce or limit an activity, but not to ban it entirely, you get into a process of allocating limited resources.  And allocation of limited resources is all of what economics is about.

How you go about allocating these scarce resources — whether by market trading and price signals, centralized planning and allocation, straight per capita distribution — you are choosing an economic system.  So unless the law’s response to climate change is going to be to ban all greenhouse gas generating activities on moral grounds (I am not holding my breath for that one!) then the law’s response will of necessity be some sort of economic system of allocation.  As long as we keep our primarily market based economic system in this country, price signals are the most likely means of internalizing climate costs and allocating the atmosphere’s scarce carbon recycling capacity.