Climate change policy is caught in a stalemate between those who fear the environmental consequences of not doing enough and those who fear the economic consequences of overreacting. But controversy over the extent and sources of climate change need not stand in the way of a positive economic policy response.
We could break the stalemate, Ross McKitrick says, if we tie a carbon tax directly to global temperature. Those who discount the likelihood of rising temperatures would expect a low carbon tax in the future, and would not worry about excessive costs associated with too strict environmental policy. Those who fear the rise of global temperatures, and its consequences, would expect the carbon tax to rise, and would not worry about loose environmental policy. Since both camps would expect to get the policy they want, this approach would end the climate-change stalemate.