Nice Try
Kevin Drum impressively combines two of the arguments that I have predicted carbon emissions advocates will employ when confronting the economics of global warming in a single short blog post. He cites an EPA study, “suppressed” by those raging crazies at the OMB, that Drum says shows that emissions reductions on light-duty vehicles in the U.S. will produce benefits that far outweigh their costs. Drum says of this report that:
“Far outweigh,” by the way, turns out to mean about $2 trillion. Not bad for a bunch of tree huggers.
This struck me as kind of amazing, since this is something like half of the total theoretical net benefit that the most respected carbon tax advocates assert would be created for the entire world from a perfectly designed, harmonized and implemented global carbon tax.
If you click through the supplied link, you can read the first 150 pages of this EPA report, which, as a service to my readers, I did. (I’ve got to get a new gig.)
You can find the $2 trillion estimate right there in a table on page 101. As you work your way through the analytical assumptions, however, you find that (i) this assumes a 3% discount rate, which is nice work if you can get it, and (ii) even more amusingly, counts the benefits attributable to the whole world, not just residents of the United States. At this discount rate the report estimates the total economic benefit of avoiding one ton of CO2 emissions to be $40. How much of this the U.S. portion? $1. So more than 95% of the “benefit” in this cost-benefit analysis accrues to people outside the U.S. who aren’t paying the freight.
Why didn’t the State Department sponsor this, as it sounds like the most generous foreign aid program in history? The EPA wants us to raise the price of gas so that we can help people not yet born all over the world with a problem that might develop several decades from now.
I’m way out of my comfort zone on this topic, so my goal is a modicum of coherency.
First, how could Bush have been suppressing — “since last year” — a draft that was completed on 5-30-08 (and how is an “Advanced Notice of Proposed Rulemaking” the truth?). I think Wonk Room is thinking of the EPA’s “endangerment” finding, which according to Wonk Room’s March 12 post was presented to the Department of Transportation in December 2007. (And yet, even on this issue (the case of the yet-to-be-published endangerment finding), it’s not clear whether a “suppression” is happening or not. The “senior EPA officials” admit they “have no idea” what the White House told EPA admin Stephen Johnson; all they know is that their work on the endangerment issue ceased once they completed their report and sent it off. This might be akin to saying that my work on the bar exam ceased once I turned it in, or it may in fact be something more unusual, as Chairman Waxman insinuates. I just don’t know.)
Wonk Room seems to have very mixed feelings on the EPA’s Advanced Notice of Proposed Rulemaking: the WR calls it a delaying tactic here, and a “document that could become a legal roadmap for regulation of greenhouse gas emissions across the US economy” here. These are not mutually exclusive positions, mind, but they seem to be almost contradictory in sentiment: the first post declares the document to be another brick in the wall, while the second hails it as a revelation which makes a “mockery” of Bush’s enviro-positions. Further, WR’s paranoia on the ANPR procedure is misplaced; it might have the effect of a delaying tactic, but notices asking for comments about proposed rules are about as normal as normal gets, as anyone who’s taken Administrative Law will attest to.
As to your point, Jim, I think it’s even worse than you say. As the ANPR states, “GHGs become well mixed throughout the global atmosphere so that the long-term distribution of GHG concentrations is not dependent on local emission sources. Instead, GHG concentrations tend to be relatively uniform around the world . . . as a result of this global mixing, GHGs emitted anywhere in the world affect climate everywhere in the world.”
Obviously, this muddies the issue. Not only do we have to be worried about present and future costs, we also must face up to the fact that, due to the ability of other, recalcitrant nations to counteract our reductions with their own emissions, only a global oversight leviathan with punitive powers can ensure that our present economic costs translate into climatic benefits later — that is, even if we accept the 95-to-5 disparity in benefits, which has the effect of converting our regulatory actions into a modern version of noblesse oblige.
What’s worrisome is that this is all too clear: to save the world, we’ll need to rule the world.
— JA · Jul 7, 09:23 PM · #
umm, the US has about 5% of the world’s population, so anything we do that effects the whole world will mean we only get around 5%. Saying we refuse to do anything that helps us just because it also helps other people seems fairly silly.
And, well, 5% of 2 trillion dollars is still a lot of cash, especially considering the report states that individual consumers will get the cost back in 3-7 years.
— Dan · Jul 8, 02:04 AM · #