Economics

The land valuation of our property in the Daintree rainforest has recently jumped by 250%. This may well reflect market activity over the last few years, but then again, government intervention has largely influenced these changes, with broad scale expropriation of development rights, including the right to construct dwelling homes on freehold land. It is unsurprising that properties with established homes would become more valuable, because of their administratively increased exclusivity, but these are not unimproved values. It is equally evident that those properties that were compulsorily stripped of development rights lost market value and for obvious reasons.

Our freehold property, in particular, was compulsorily inscribed within World Heritage in December of 1988. Its classification for farming was maintained, but World Heritage responsibilities, as prescribed within domestic legislation, have progressively diminished farming activities; most dramatically through the prohibition of harvesting native forests. At a local government level, World Heritage has been used to separate planning areas, to effectively deny development capabilities for the greater importance of protecting ecological values within the inscribed estate. In truth, the income-earning capabilities of freehold World Heritage lands have been progressively diminished.

On the basis of these mounting constraints, we lodged an objection to the new valuation, detailing the legislated conservation land-use and the lack of rateable services – no reticulated water, no reticulated electricity and a road that is frequently impassable due to the inadequacies of the existing infrastructure.

Not only was the decision on objection disallowed, but also a new valuation was simultaneously dispatched, with a further increase in unimproved value of an additional 250%. Details within our objection apparently alerted valuers to changes in land-use that no longer qualified for concession for farming. So what was once eligible for rateable concession, because of an existing right to harvest forest product, became ineligible, for the higher importance of protecting forest product. Go figure!

This reminded me of another valuation milestone in the Daintree rainforest, back in the mid-1990’s. Around $16million of Commonwealth and Queensland Government funds had been allocated for the voluntary conversion of Daintree freehold rainforest to National Park. Properties in the Cooper valley were prioritised for acquisition, because of their intrinsic values of rarity, endemicity and primitiveness.

In an act of perceived skulduggery, property values within the priority acquisition area, unexpectedly tripled. In response to the outrage of incensed landholders, officials insisted that those affected should have rightfully rejoiced, with the discovery that they had long enjoyed a ‘rate holiday’, brought inevitably into line with contemporary market-driven valuations.

I must confess that I remain unconvinced.

There is an insightful short article in The Guardian by Irwin Stelzer, who is the director of the centre for economic policy studies at the Hudson Institute, and editor of the book Neoconservatism:

Gordon Brown is eager to prove that red is green, while David Cameron is urging voters to “vote blue, go green”. So far, so good. But the prime minister is having some difficulty answering the question “How green are your taxes?” – while the leader of the opposition’s promise to make green taxes “replacement taxes, not new taxes”, contains more than a dash of Brownian stealth.

Continue reading Brown’s pale green policies are more honest than most, Unlike Cameron, the prime minister grasps the need to balance environmental policies against economic growth.

The tropical troposphere is where we should see the ‘fingerprint’ of greenhouse warming according to climate models, so Ross McKitrick has devised a Tropical Troposphere Temperature Tax, or ‘T3’ tax. The explanation below is a composite from various T3 tax articles on his website:

Recently I came up with a policy proposal that reconciles my skepticism with the policy activism of the alarmists: calibrate a carbon tax to the average temperature of the region of the atmosphere predicted by climatologists to be most sensitive to CO2. I call it the ‘T3’ tax, and I think the proposal should make everyone happy, except the most extreme alarmists and the Trojan horse-types who see the global warming issue as a vehicle for imposing a set of anti-growth policies that they would want even if global warming fizzles as a pretext.

My “T3” formula – short for Temperature of the Tropical Troposphere – guarantees that, if carbon emissions do not cause global warming, the charge will not go up. The IPCC predicts a warming rate in the tropical troposphere of about double that at the surface, implying about 0.2C to 1.2C per decade in the tropical troposphere under greenhouse-forcing scenarios. That implies the tax will climb by $4 to $24 per tonne per decade, a much more aggressive schedule of emission fee increases than most current proposals. At the upper end of warming forecasts, the tax could reach $200 per tonne of CO2 by 2100, forcing major carbon-emission reductions and a global shift to non-carbon energy sources.

Some people have responded to my T3 idea with the concern that essential increases in the carbon fee might be delayed due to lags in the climate system. But the lags are associated with oceanic responses. According to models, the tropical troposphere responds relatively quickly to carbon emissions. And even if there is a short delay, it is better to learn with a lag than not to learn at all, which is the problem with all other policy plans.

Another advantage of the T3 tax is that it would create a market for accurate climate forecasting. Someone building a billion-dollar power plant would want an objective estimate of the likely carbon emissions price five or 10 years out. Competition would create strong incentives to get the science right. The T3 rule would create market incentives for climate modelers to eliminate sources of exaggeration in their models. And investors would search out the best forecasts to guide their current planning, thereby factoring long-term greenhouse warming changes into today’s investment decisions.

Nor would we need politicians to argue about how weak or strong the long-term policy should be – the atmosphere would decide. If the policy turns out to be too weak to force emission reductions, it would indicate that the climate is not sensitive to emissions.

Climate policy needs to shift from static to dynamic thinking. This requires tying policy to actual greenhouse warming. Anything else is like taking a shot in the dark.

Read Ross McKitrick’s articles on the ‘T3’ tax on his publications website.

Steve McIntyre has plotted a graph over at Climate Audit which shows the UAH (black) and RSS (red) data for the tropics (both divided by 1.2 to synchronize to the surface variations – an adjustment factor that John Christy is said to use in an email). Allso collated is the most recent CRU gridded data and calculated a tropical average for 20S to 20N, shown in green. All series have been centered on a common interval:

Steve notes that there have only been a few months in the past 30 years which have been as cold in the tropical troposphere as March 2008.

In comment 118, Ross McKitrick says, “…when I wrote that chapter last year the T3 tax rate was $4.67. It’s now $3.33 and falling. If this trend continues it could indeed become a subsidy, but to oppose it on the grounds that it might end up as a subsidy for CO2 emissions is to admit that one actually expects global cooling.”

As Ross McKitrick says – Why not tie carbon taxes to actual levels of warming? Both skeptics and alarmists should
expect their wishes to be answered.

In case anyone didn’t notice, the UK Treasury is the epicentre of climate related reports and also benefits from the resultant so called ‘green taxes.’ Nicholas Stern was a member of the Treasury at the time of the Stern Review on the economics of climate change, which was based on extreme computer modelled scenarios. The Stern Review spawned the equally absurd Garnaut Review.

The most recent review instigated by the UK Treasury was the King Review of Low Carbon Cars, which looked at the potential for alternative fuel cars, such as ethanol, hydrogen, or battery powered electric vehicles My suggestion for considering methanol as an alternative, as proposed by Nobel Prize for Chemistry winner George Olah, was ignored. Recently, I was fortunate enough to attend Professor Julia King’s inaugural lecture as Vice Chancellor of Aston University, which was based on the King Review. I talked to her afterwards and it became clear that isn’t a fan of personal motorised transport and is ‘government friendly.’ Hardly a recipe for objectivity, yet government reports and reviews are always described as ‘independent.’

March saw the Chancellor of the Exchequer’s ‘Budget.’ This included changes to the current road tax system for cars, which is based on CO2 emissions. As a result, the vast majority of drivers will pay more, drivers of family-sized vehicles being the hardest hit. Last week, as reported in The Telegraph, shadow Treasury minister Justine Greening obtained Treasury projections which disclose that while the amount raised from car tax will more than double – from £1.9 billion to £4.4 billion by 2010 – carbon dioxide emissions from motoring are expected to drop by less than one per cent.

I’ll leave the last words to Greening, who said, “This is a massive tax hike which will have virtually no impact on the environment. Despite their claims, the Government don’t expect this move to change behaviour at all – it is just another eco-stealth tax of the worst kind.”

THE Rudd Government’s planned carbon trading system will cost business between $14billion and $22billion a year and will have to be considered in a review of the taxation system.

Taxation Institute director Michael Dirkis yesterday said that the money generated by the emissions trading system would be equivalent to more than 40 per cent of company tax revenue.

“You cannot design a system that impacts on business and brings in that level of government revenue without dealing with tax,” he said.

The Australian: Carbon plan ‘to cost business $22bn’

Of course, the effect on climate will be a big fat zero.