This week saw the release of a preliminary version of an economic analysis on the effect of British Columbia's carbon tax.
The good news? It doesn't appear to have an effect on our economy.
The bad news? It really hasn't changed our behavior in a meaningful way.
The ugly news? The money gained from the tax is still not being used in a way that will lead to sustainable reductions in our carbon footprint. If anything, it is costing us.
That is my short synopsis of the work by Dr. Stewart Elgie, an Associate Professor in the Faculty of Law at the University of Ottawa and Director of the Institute of Environment and Jessica McClay, a JD Candidate at the Faculty of Law at the University of Ottawa.
Their full research findings will be published in more detailed form in the journal Canadian Public Policy but Dr. Elgie said they wanted to get the results out now so it can inform the environmental strategy discussions at the premiers' summit at Niagara-on-the-Lake, Ont.
At present, British Columbia is going it alone on the carbon tax issue. From a number of different aspects, getting the other provinces on board would be beneficial.
So, has the carbon tax had an effect on our economy? The question is actually a difficult one to answer. The most commonly used statistic to discuss economic growth, strength, or size is the gross domestic product (GDP).
Ideally, in such discussions, one uses constant dollars. That is, you pick a year which forms the base and then factor out inflation. That way you are measuring real and not just inflationary growth in the economy.
But there are many ways that the GDP for a country or a province can grow. For example, having a disaster such as an oil spill has a large and significant positive effect on GDP. The money spent cleaning up shows up as economic activity and growth.
Hence, using GDP is predicated that nothing untoward has happened to adversely affect the economy. GDP also grows with population regardless of any other factors. More people mean more economic activity.
The way to eliminate population changes is to consider the GDP per capita - how much economic activity arises from each person. It is this measure that Elgie and McClay used.
For the past four years, changes in the per capita GDP for British Columbia have mirrored Canada as a whole. Indeed, between 2008 and 2011, in total British Columbia's GDP per capita changed -0.15 per cent while Canada's changed by -0.23%. Statistically, a tie.
We are doing just fine. Or, at least, we are doing just as well as the rest of the country. A province by province comparison might show up some differences but nothing that would be too spectacular.
This, by the way, despite continually being told that our economy is booming and we are on the way to the promised land by the provincial government.
In any case, the carbon tax is neutral with respect to our economic wellbeing.
When you consider the changes in behaviour that the carbon tax is supposed to engineer, that is a different story.
Governments are not particularly good at social engineering. One of the underlying premises behind the carbon tax was that it will result in people getting out of their cars and using public transit or alternative means of transportation.
Dr. Elgie and Ms. McClay present a table showing that since the inception of the carbon tax, per capita consumption of petroleum fuels subject to carbon tax has declined 18.8 per cent. That has to be good, right?
However, the authors have opted for using the figures from the Supply and Disposition of Refined Petroleum Products table generated by Statistics Canada which captures everything that comes from petroleum products - from plastic bags to home heating fuel.
Their results are not just for gasoline. This was a conscious choice on their part as they are concerned with the full impact of the tax.
But if you examine the data for gasoline, the tax doesn't seem to have had an effect. Yes, we consumed less gasoline per capita in 2012 than 2008 - 974 litres/person compared to 1033 but this is a trend that extends well beyond the carbon tax. In 2000, we were consuming 1145 litres/person.
Our consumption of gasoline has been declining at a rate of 15 litres/person per year for the past decade regardless of the carbon tax.
British Columbian's are environmentally conscious, period.
And this is why I added the ugly. In the end, I can accept a carbon tax if it is really doing something to alter the energy mix of our society.
So far, all the carbon tax has done is cost us $500 million more in income tax cuts than it has generated as revenue.
That is not going to solve the problem.
