The other half of cost-benefit

Counting the benefits of climate legislation 4

While reducing greenhouse gases will have costs, so will the results of climate change.  That may seem obvious, but up until now the debate over climate legislation has only focused on the costs, without looking at the benefits.

Last week, a federal interagency taskforce released preliminary findings that began to set a dollar value for the negative effects of climate change.  Often referred to as “the social cost of carbon,” this estimate is key to exposing the hidden costs of a high-carbon economy.  If we only focus on the costs of cutting greenhouse gas emissions, we are seeing only half the story—inaction on global warming will lead to a greater economic hit than the price tag on the Waxman-Markey bill.

The interagency taskforce put the social cost of carbon at between $5 and $55 per ton—a conservative estimate.  It was publicized in the Department of Energy’s regulation on the energy efficiency of vending machines—the first regulation after the taskforce’s results were in.  While the numbers need to be revised, the process is a vast improvement from the ad hoc way that the greenhouse gas emissions have been account for in the past, including simply ignoring them (PDF).

For years we have been looking at only one side of the coin—the negative effects of regulating carbon emissions.  Now that this interagency process has started to place a number on the price of emissions, we can use it to finally compare apples to apples—and the results are overwhelmingly in favor of taking action.

Nowhere is this more apparent than in the debate over the Waxman-Markey cap-and-trade legislation in the Senate.  There has been a great deal of hand-wringing over the cost of this bill.  But until now there has been little discussion of the benefits side of the equation.  In a recent report (PDF), the Institute for Policy Integrity used the new social cost of carbon estimates to compare both sides of the ledger.  With these numbers we were able to calculate that the benefit to cost ratio of Waxman-Markey would be as much as nine to one or more.

While having any SCC is better than none, the range that this interagency process has estimated is decidedly conservative, and if it is used to set policy, it will result in watered down regulations.  The first step was getting the federal government to start putting economics to use to defend greenhouse gas reductions—the next step will be making sure they get the numbers right.

Michael A. Livermore is the executive director of the Institute for Policy Integrity at New York University School of Law. He is the author, with Richard L. Revesz, of Retaking Rationality: How Cost-Benefit Analysis Can Better Protect the Environmental and Our Health.

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  1. Anon92107 Posted 1:08 pm
    11 Sep 2009

    Rational Cost-Benefit analyses only influence rational people.The tragedy for humanity is that most of our politicians are corrupt,Selling out to the highest bidder like some of our educational research institutions like Berkeley that sold out to BP (See "Big Oil Buys Berkeley" by Jennifer Washburn in L.A. Times March 24, 2007) andToo many of our scientists are totally incompetent (See "Fusion Factory Starts Up" by Willie Jones in IEEE SPECTRUM March 2009 issue).Until the very same universities that teach us how to do Cost-Benefit analyses develop academic integrity such rational methods of justification will not even begin to be used by politicians who must have learned more about greed and corruption at those universities instead of ethics and integrity to protect and preserve humanity.  

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  2. madeline11 Posted 7:02 am
    13 Sep 2009

    Thank you so much for writing this article! You're absolutely right about the economic benefits as compared to no action at all. People seem to forget that saving energy actually costs LESS than wasting it, as we'll see from the wave of efficiency upgrades to come from this bill.I encourage everyone to call Senators Casey and Specter today and tell them to vote for this bill!

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    1. Anon92107 Posted 10:26 am
      13 Sep 2009

      I agree with your sentiment and recommendation wholeheartedly Madeline11.However, the deadliest fact of life is we won't have the long term solutions in time to prevent CO2 from turning earth back into desert-like environments until we get university scientists like those at Berkeley and UC National Labs to care more about humanity than perpetuating their welfare state that world class scientists like the late Sir John Maddox of Nature and Freeman Dyson of Princeton's Institute for Advanced Study, along with the late President Eisenhower have characterized as being detached from the mundane needs of humanity and more attached to corrupt military-industrial complex politics plus the power of money and their own personal greed.The L.A. Times and IEEE SPECTRUM reports I referenced above document two worst case university/scientific scenarios that mean even if we can overcome congressional corruption dedicated to special interests, we still won't have long term solutions in time.California's Central Valley, like in the Fresno area is already turning into a dust bowl, and scientists should hold their environmental meetings in a Death Valley tent campground to get a feel for what their failures are creating.  

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  3. Anon92107 Posted 3:15 pm
    14 Sep 2009

    Too bad no one really cares to recognize the reality that those who are supposed to save the planet from global warming, that is to say scientists don't really care about anything but their own welfare state.  

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