Columns

Hana Nyhof argues we should; Paul Hunt disagrees.

Hana:
   We have access to good information around how carbon emissions are shaping the global environment so it seems bizarre that we don't encourage this information to be distributed as widely as possible. Let's assume there are two types of producers” those who want to label their goods as they are relatively 'carbon friendly' and those who don't (
‘carbon meanies’). The friendlies are often barred from labelling their goods for a couple of reasons. Firstly, if you're the only carbon-labelled product, there is the risk that consumers will see the label and be put off by a large-looking carbon footprint (remember they have nothing else to compare it to), and secondly, that people will view the brand as 'some lefty hippy thing' and steer clear altogether. This means there is less information available for consumers who do want to take carbon into account when making decisions.
   Now I realise that the environment is not first on everybody's shopping considerations list and so green labelling won't change consumer behaviour overnight. But, most decision making occurs in the margins. Consumers balance up competing interests, (cost, flavour, size, convenience, etc) all the time, and by ensuring carbon labelling we're giving consumers another part of the equation: information about the true (environmental) cost of the product they are buying. If the choice is close between two brands of cereal and consumers are now aware that one kills less rainforest this will have some impact on decision-making. We should also know the full cost of what we're buying. Production costs are passed on to us at the till but we have no way to access the price the planet is paying for our shopping trolley. While the overriding incentive of price will ensure that products stay cheap and low earners won't be priced out of the basic commodities market. 'Carbon meany' producers now have an incentive to make their production greener. So compulsory labelling brings us: more information for consumers, greater understanding of how we interact with our environment and a dollars-based incentive for producers to 'green up their act'.
 
   Paul:
   As the most influential economist of the modern era, Milton Friedman points out government intervention usually harms the very people it’s designed to help. This situation is no different. Mandatory carbon labelling will delay the world’s response to climate change. Why is that?
   Let’s assume carbon labelling does actually make consumers buy more environmentally-friendly products – a dubious assumption, but one the affirmatives case relies on to succeed. This will result in a decrease in sales in products from poorer nations. Why? Firms in developing countries do not have access to the technology and information that would enable them to reduce their carbon footprint. Products from rich nations will be able to market themselves as more environmentally friendly, and thus have a comparative advantage.
   Why is this a bad thing? Cooperation from all nations is necessary for action to reduce global emissions. Developing countries already resent having to make sacrifices. After all they didn’t cause the problem, so feel no obligation to bear any costs. That’s why the hyped Copenhagen negotiations failed. This policy only creates further harms for developing countries: fewer sales of their goods means fewer jobs and people continuing to live in destitute poverty. Given they will (correctly) see this harm as stemming from an initiative from the rich world, this further reduces their incentive to commit to global agreements. 
   Global agreements are paramount given no individual nation will ever make the necessary sacrifices alone. Why? Because if they do, their economy will be at a relative disadvantage. Mechanisms such as emissions trading schemes necessarily make that country’s products more expensive. You only need look at the carnage on both sides of the political spectrum in Australia to see why even rich nations will never do enough by themselves.
   So if we want to tackle climate change, don’t cause any more suffering for already poor nations. Allow their goods to access all markets. That way their economies can develop to allow them to afford the technology which will reduce their emissions in the long run. But more importantly we need to avoid pissing them off, so we can finally get a decent global agreement.
 
    Debatable is a column written by the Otago University Debating Society. They meet every Tuesday at 7pm in Commerce 2.20.