Classical liberals are allergic to the issue of climate change. The reason is easy to divine—the only proffered solutions involve coercive regulations or burdensome taxes. The fact that writer Naomi Klein penned a popular book called This Changes Everything: Capitalism vs. the Climate, which argues that responding to climate change requires dismantling modern capitalism, means that many see the climate crusade, and with justice, as a stalking horse for socialist nostrums.

Yet the unpleasantness of climate change policy and rhetoric cannot be a reason to ignore the issue, just as the fact that some might not like the implications of, say, rising authoritarianism and socialism abroad is no reason to pretend these don’t exist.

A recent collection of essays edited by Jonathan Adler seeks to answer the question of whether “classical-liberal principles” can provide a distinctive perspective on climate change. After reading Climate Liberalism, I think the answer is no, they cannot. Insofar as government is going to respond to climate change, this book shows that the classical liberal or even libertarian response will look a lot like the modern liberal response.

Yet the book is a success at demonstrating, first, how contemporary responses to climate change can be fit into a classically liberal perspective, and, second, how much the free-market response to environmental problems in general has come to inform modern liberals’ response, including their response to climate change. If classical liberals are going to wrestle with this issue, this book should make them comfortable that they can do so in their own tradition and without falling into anti-capitalist extremes.

The book makes a wise decision to separate the question of the science of climate change from the political question of what to do about it. Since there is no “classical liberal science” just as there is no “socialist science,” this book does not try to contribute to that debate. But, as several authors note, even if one thinks the scientific consensus on climate is open to question, and even if one brings an appropriate humility to our ability to imagine the future, that provides little reason to pretend there could not be any costs to climate change, or at least that there could not be some risk to it.

Taking a moderate amount of climate cost and risk as given, what should classical liberals do about it? The first option would be to mimic one of the greatest successes of free-market environmentalists, namely, the creation of property rights in environmental goods. Time and again, whether it was in creating tradable fishery catch shares or privatizing public land subject to a “tragedy of the commons,” free marketers have shown the efficiency and environmental benefits of property rights.

The problem is that there doesn’t seem to be an easy way to “privatize” climate change issues. As Jonathan Adler notes in the introduction, “There is no obvious or easy way to assign property rights in the atmosphere, no ready mechanism to facilitate meaningful Coasean bargaining, and only limited opportunities to seek legal redress for warming-induced harms.” Some argue that technology could eventually find a way to create clear rights in these areas, but, as Daniel Cole notes, that amounts to the idea that “in the absence of a property-based solution, just wait for a property-based solution.” This is wishfulness, not policy.

In his chapter, “Do Libertarians Have Anything Useful to Contribute to Climate Change Policy?” Cole is the most straightforward about the absence of traditional free-market solutions to climate issues. He “concludes that even the most generous libertarian policy proposals are insufficient to grapple with the complexities of climate change.” He therefore recommends that libertarians engage in how best to design government’s climate response, ideally by maximizing market processes.

The now common “cap-and-trade” system of pollution permits, which is justly celebrated as an improvement over traditional top-down regulation, is proposed by some in this book as a market-based means by which the government can limit greenhouse gas emissions. One problem for this book, although not for the policy itself, is that the triumph of this once free-market position means cap-and-trade is fully supported by those on the left of the political spectrum. The authors can rightly claim that the left has embraced what seems to be a classically liberal position, but they cannot claim that classical liberals at this point have a distinctive vision of cap-and-trade that warrants public attention.

The larger problem with the supposed market argument for a cap-and-trade regime is pointed out by Mark Pennington, who notes the common economic result that cap-and-trade is similar to a carbon tax under most conditions. Under cap-and-trade, the government sets the quantity of carbon permits and allows the price to vary. Under a carbon tax, the government sets the price of carbon permits and allows the quantity to vary. If the government under cap-and-trade sets the quantity of permits so that they will trade in the market at the same rate as some proposed tax, there will be no distinction between the two. This does not invalidate cap-and-trade, but it makes it look like an all-too-typical tax instead of a distinctively free-market response. 

There are several variations of cap-and-trade or tax regimes mooted in the book. Ed Dolan argues for what he calls “target-consistent pricing” of carbon, which amounts to setting a global temperature goal, and then issuing the right number of permits to meet that goal, and then allowing the value of these permits to be decided in the market. One doesn’t have to squint hard to realize this is just cap-and-trade. Dolan argues for the value of this regime over a carbon tax by saying it “would be transparent about the elements of the policymaking process that are inherently subjective, rather than burying them in equations” about the so-called social cost of carbon, which would be the basis for any tax.

As Mark Budolfson points out in a subsequent essay, replacing economically-justified ways to discuss the costs of carbon with raw subjectivity, no matter how transparent, does not seem like an advance. Budolfson instead argues for coming up with a social cost of carbon and taxing carbon emissions commensurate with that cost. He notes classical liberal humility about policy interventions means a “Modest Carbon Tax” should be set at the low end of the plausible social cost, namely, at the level that we are 95% confident the real social cost is above the tax. He admits that 95% is an “arbitrary choice” and that it is not clear who “exactly should be in charge of estimating this confidence interval.” His classically liberal carbon tax thus amounts to a typical one with a random fudge factor. Nonetheless, Budfoson’s essay offers the best argument about why trying to estimate the social cost of carbon, no matter how one decides to respond to this estimate, is a worthwhile enterprise that should help us respond to climate issues.

The classically liberal arguments for such a modest carbon tax are strong as long as such a tax is tied to ending other top-down programs and as long as the revenue is used to offset other distortionary taxes. After all, if the government is going to tax something, it might as well tax carbon as earned income, consumption, or capital gains. The fact that government may abuse such a tax is not decisive when it could, and does, abuse any and all taxes. The best argument against such a grand bargain, carbon taxes for regulatory and tax reductions, however, is that it is unlikely. In 2016, Washington State held a referendum on a carbon tax combined with a reduction in sales tax. Yet the deal was opposed by many progressive groups for not giving enough handouts to green energy, and it went down to defeat.

There are some fine discussions in the book on how the free market can improve adaption to climate change, including an essay on the benefits of new insurance programs and alternative risk transfer mechanisms by Andrew P. Morriss. After all, unlike the public good of a stable atmosphere, adaption to climate change is something where private costs and benefits will be “internalized,” and all adaption requires to function well is for government to get out of the way. Of course, classical liberals or libertarians would not argue differently about deregulation even in the absence of climate change, but this book reminds us that demands that government force or subsidize adaption are untethered from coherent arguments about the failure of individuals to adapt on their own. 

Given that this is a book about political philosophy, and more specifically, about a certain tradition of political philosophy, there is no problem with some essays relying on arguments from authority. The authorities provided, from John Locke to Richard Epstein, should comfort those who believe classical liberals should condone a regulatory or tax regime around carbon. Ed Dolan quotes Friedrich Hayek, in The Road to Serfdom no less, saying that sometimes the government “must find some substitute for the regulation by the price mechanism” and that “direct regulation by authority where the conditions for the proper working of competition cannot be created” is an inevitable part of policy. And although Hayek is oft-noted for his suspicion of “scientism,” Dolan also quotes him that “the most objectionable feature of the conservative attitude is its propensity to reject well-substantiated new knowledge because it dislikes some of the consequences.” He notes that even though “scientists as much as others are given to fads and fashions … the reasons for our reluctance [to accept their conclusions] must themselves be rational.”

Insofar as there is a single message in this book, it is the simple but powerful reminder that a classically liberal perspective demands humility—humility about how well policymakers can understand humanity’s well-being and also about the ability of government to improve that well-being. But the book also reminds us that humility does not mean indolence. Just as classical liberals or libertarians cannot punt on the issues of national defense or public safety and merely gesture to the free market, despite some heroic attempts at trying, they also cannot pretend any attempt at addressing climate change is beyond the ideological pale. Climate change will remain a political issue, which means it will involve weighing evidence, trying to align public and private incentives, and coming to a political agreement on complex and almost unknowable issues. The best tradition of classical liberalism has done that in other spheres, and it can do it here.