October 06, 2009
October 06, 2009
There are many studies of the impact of climate legislation on our pocketbooks and jobs, and they project startlingly different outcomes. For every study that projects job loss, there is another that projects job gain.
Policy Matters Ohio took a close look at the top dozen current studies to try to make some sense of it all. We found legitimate and substantive differences in assumptions about key economic concerns, such as the mix of fuels used in energy production under a cap and trade program. We also found different methods used in projection (econometric, input-output, and others); different rates and base years used in accounting for inflation; and different measures of impact on the pocketbook ("household income" or "consumption," for example). We found studies on different versions of legislation: some consider last year's Lieberman-Warner bill, others the early provisions of Waxman-Markey, and others, the American Clean Energy and Security Act of 2009 as passed by the House of Representatives. We found some studies excluded key elements of legislation - say, energy efficiency provisions - while others focused solely on that issue. In brief? It's hard to make an apples-to-apples comparison.
Generally speaking, we found that for studies undertaken using econometric models, what is commonly described as 'job loss' or 'Cost to Households' is better described as a limit on otherwise projected growth. In all studies that considered gross domestic product (GDP) between now and 2050 (the time that a cap and trade program would be in place) the US economy is forecast to grow; however, in some studies growth rates are projected to be slightly less with a cap and trade program than under a 'business as usual' forecast, within a range of .1 percent to 3.4 percent.
We note that the 'business as usual' scenarios do not focus on the cost of global warming, which World Economist Nicholas Stern of the United Kingdom warns will top the most costly scenarios of the studies reviewed here.
For a background of the studies, read here:
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