Education sector: The smartest investments

Opponents of free debate are celebrating. Last week, under pressure from some climate-change activists, the University of Western Australia canceled its contract to host a planned research center, Australia Consensus, intended to apply economic cost-benefit analysis to development projects—giving policy makers a tool to ensure their aid budgets are spent wisely.

Gov. Jerry Brown has won praise for promising that California will live up to the Paris accord despite President Trump’s withdrawal from the treaty. He also signed a climate deal with China last month, and has unveiled plans for a global climate summit in San Francisco next year. Earlier this week, California lawmakers voted to extend the state’s cap-and-trade program for another 10 years.

The message is clear: With a few other states, California is going it alone — an approach that is popular locally and resonates with much of the world.

A carbon tax is much discussed as a solution to climate change. It is simple and straightforward: a climate price tag makes industry and consumers take into account the implicit negative effects of their actions, whether it is the aircraft fuel for a vacation, or fossil fuels for food fertilizers or to heat and cool a home.

I have argued for a well-designed carbon tax for more than a decade. But five important caveats, almost universally breached by politicians, affect the likelihood of such a policy working.