We all want to see environmental wellness improve, but what if it comes at the cost of the world’s financial wellbeing? According to a new analysis, if the world were to adopt carbon restrictions of the magnitude mandated by the Lieberman–Warner and Waxman–Markey cap-and-trade bills or the Boxer–Sanders carbon-tax bill, global economies would suffer.
But “going green” improves financial wellness, doesn’t it? Often, but not to this scale. Adhering to the Lieberman–Warner cap-and-trade bill would actually reduce worldwide income, even after accounting for the economic benefits of moderated warming. For the remainder of the 21st century, the costs would exceed the benefits by more than $100 trillion – and that’s only if the US took on the extreme climate policy. If we in the UK and other major developed countries were to join America implementing an equivalent policy to restrict carbon emissions, the perverse financial impact would be even worse.
As it stands, the impacts of warming, how much we have contributed to it with carbon emissions, and how much the planet will warm over the next century and beyond, is actually fairly uncertain. So if it turns out future warming is less that some believe, there is little need to address carbon emissions now. Regardless, carbon policies flunk the cost-benefit test by wide margins, and this is how policies should be evaluated; by comparing their impact relative to their costs.
So might the costs and benefits be if the world were to adopt a carbon policy with restrictions similar in size and scope to those in the Waxman–Markey legislation (an 80% cut in CO2 emissions by 2050)? If the US alone adopt this policy, which House of Representatives passed in 2009, there would be a worldwide aggregate income loss of $109.6 trillion by 2100, and a one-year worldwide loss of $3.5 trillion in 2100, equivalent to 4.75% of US gross domestic product (GDP). There would also be adverse impacts, on net, in every year of implementation, and these same results would hold for a carbon tax. Remember, this is if the US alone cut carbon emissions by 80% – the results are even worse if more countries adopt the carbon-restricting policies.
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