I think that the most useful point of departure, at least with respect to
the economic theory of pollution taxation, is to identify the feasibility
of imposing a "Pigovian" tax -- i.e., a direct tax on the harm itself. See
generally Arthur C. Pigou, The Economics of Welfare (4th ed. 1932). Most
taxes in practice are not strictly Pigovian in that they target a workable
surrogate for the pollution itself (which often eludes easy measurement
and/or detection). See generally Thomas A. Barthold, Issues in the Design
of Environmental Excise Taxes, 8 J. Econ. Perspectives 133 (1994) (a very
good source).
For example, a Pigovian tax on auto exhaust would assess a charge per cubic
meter of CO (or any other pollutant du jour). That tax would perfectly
reflect the social cost of each marginal cubic meter of CO. But because we
can't stick a cheap, reliable CO meter on every car (and can't trust
drivers not to disable the meters!), we rely on two principal alternatives
to the Pigovian auto exhaust tax: (1) gasoline excise taxes and (2)
fleet-wide "CAFE" [corporate average fuel efficiency] standards imposed on
automobile manufacturers. I think you'll have no trouble drawing the
appropriate analogies to farm chemicals.
Farmer Meade has made a very powerful point regarding the regressive food
taxation effect of a proposed tax on farm chemicals. The trouble arises
because we have different discount rates, levels of risk aversion, and
levels of wealth. Witness the traditional debate over fuel excise taxes
whenever they are proposed as revenue measures. A Pigovian retort goes
something like this: redistribution by *failing* to tax the
pollution-related externalities of gas use is no good deed at all, because
all that happens is that past patterns of polluting behavior become
exacerbated, and the poor will continue to absorb an ever larger share of
the harm. Marxist and pseudo-Marxist economists frequently make the same
argument, but they offend many by calling the populist argument against
taxation the product of a "false consciousness." It's like the practice of
using the word "praxis" -- you score huge points with
tenure-and-promotion gurus in university circles, but only at the expense
of broader acceptance. (See, for example, the subject heading to this
post!)
Another problems with economic incentives aimed at reducing pollution is a
direct outgrowth of the imprecision inherent in non-Pigovian taxes. People
forced to pay an extra nickel on each gallon of gas won't necessarily
reduce their total automotive travel. They may just as easily buy more
fuel-efficient cars that achieve an illusory level of parsimoniousness by
dispensing with heavy, fuel-consuming pollution control equipment! This
effect has been documented in the related context of "negawatt acquisition
programs" (NAPs) for electric utilities. See Bernard S. Black & Richard J.
Pierce, Jr., The Choice Between Markets and Central Planning in Regulating
the U.S. Electricity Industry, 93 Colum. L. Rev. 1339, 1354-85 (1993).
Why is this relevant? NAPs are subsidies for forgone generating
capacity and are therefore properly conceptualized as "negative"
non-Pigovian taxes on pollution related to the generation of electricity.
This entire set of concerns is in fact an outgrowth of the general theory
of second best, an economic critique of any and all imperfect regulatory
measures. See, e.g., R.G. Lipsey & Kelvin Lancaster, The General Theory of
Second Best, 24 Rev. Econ. Stud. 11 (1956); F.M. Scherer & David Ross,
Industrial Market Structure and Market Performance 36-38 (3d ed. 1990).
I hope this information helps. Incidentally, I would love to see what
conclusions the debaters reach. Best wishes,
Jim Chen
Associate Professor of Law
University of Minnesota Law School
229 19th Avenue South
Minneapolis, MN 55455
voice: (612) 625-4839
fax: (612) 625-2011