is a form of insurance makes very little sense. Insurance is an arrangement that ensures some measure of compensation if adverse events occur. In more economic terms, it transfers income from states of the world where its marginal utility is low to states of the world where its marginal utility is high. But in this instance, the relevant adverse event is that attempts at global mitigation fail and we suffer the consequences of global warming. Were that scenario to eventuate, a unilateral carbon tax, far from making us better off when the harm occurs, would only mean we were poorer, and hence even less well-placed to adapt. To that extent, such a scheme comes closer to being anti-insurance -- reducing income (relative to the "in case of" scenario) in states of the world where its marginal utility is high. Alternative scenarios need modelling Weighing up all these issues would be easier if we had comprehensive modelling of their economic consequences. Treasury has modelled a scenario in which the rest of the world adopts such a scheme and we do too; and it also models the somewhat irrelevant case in which the rest of the world acts and we do not. But it has not modelled (or at least, not released) the most relevant scenario; the one in which we impose such a scheme and our major competitors do not. Moreover, Treasury's modelling is based on a range of assumptions that need to be tested -- for instance, that we will