New Paper Shows Staggering Cost to Americans of Waxman-Markey

by Iain Murray on September 9, 2009

There’s a new cost:benefit study from New York University Law School’s Institute for Public Integrity that, its authors claim, shows that, “From almost any perspective and under almost any assumption, H.R. 2454 [Waxman-Markey] is a good investment for the United States to make in our own economic future and in the future of the planet.”  A good investment for the US? Really?

The authors recognize that the benefits they find are global, while the costs are located in the US.  So let’s see what benefits accrue to US citizens and at what cost. (I am working with the authors’ figures here, which derive from the EPA, and are significantly different from the figures provided by such groups as the Heritage Foundation or the American Council for Capital Formation, which find much, much higher costs.)

Highest possible benefit = $5.2 trillion / 6 billion people = benefits of $866 per person

Cost to US citizen = $660 billion / 300 million people = cost of $2200 per citizen

That means a best possible benefit to cost ratio for a US citizen of 0.4:1.

The report talks about thinking of the Waxman-Markey costs as a “highly effective, highly leveraged form of foreign aid.”  One has to doubt that, given that the benefits that accrue to the developing world do so mostly in the far future, while the developing world is in desperate need of greater wealth – and better access to energy – today.  Even if it were true, however, one wonders whether the American public will accept a de facto tax increase of around $1300 per person, or $400 billion total, to pay for such climate aid.

Yet that’s assuming that the “high end” benefits scenario is what occurs.  The global low end benefits are actually far outweighed by the American costs, leading to a benefit:cost ratio to America of something in the order of 0.05:1 (or a cost:benefit ratio of 20:1).

And, of course, there’s no guarantee that a reduction in American emissions will amount to a reduction in global emissions.  We have seen the response to European cap-and-trade schemes being the relocation of facilities to other jurisdictions.  If so, the effective foreign aid program of Waxman-Markey might actually be a loss of American jobs to be replaced by developing world jobs, with no emissions reduction at all.  That would be very generous of us, but not quite what the authors of this study have in mind.

To summarize, the authors of the study have conclusively demonstrated that the Waxman-Markey bill is actually a very bad deal for the United States, and their attempts to claim otherwise are just spin.

Troy September 10, 2009 at 4:16 am

"while the developing world is in desperate need of greater wealth – and better access to energy – today"

This is the problem right here – we don't NEED more wealth. More wealth and access to cheaper energy is the bulk of our problems. Both create population explosions. We don't NEED more people. We need a strong population. Currently, the poor population is exploding, taxing the rest of us as well as the environment. This is what we need to fix!

Patsy September 10, 2009 at 1:43 pm

This site lays it out–Waxman Markey–not a good idea for citizens. If we don't want higher taxes and energy costs then make your voice heard and go to this site: http://tinyurl.com/klfut8

Rubicon September 12, 2009 at 11:33 am

Once again, someone wants us to pay for something, despite flawed reasoning & seriously flawed science. While Americans once again pay through the nose, and supposedly poor people around the world benefit as supposedly so too does the environment, we know as fact that some folks invested in the green energy scheme, will benefit handsomely. I suspect Al Gore's personal wealth will go up into the billions, while he lives an energy consuming life & preaches to all the rest of us how terrible we are. (Will Al ever get over being rejected by the American electorate? Could revenge actually be behind his motivations to promote hysteria?)

John A. Jauregui September 12, 2009 at 7:20 pm

As common sense would strongly suggest, new Climate Change GCM models show the sun is the source of observed Global Warming, NOT CO2.

“Previously, the direct impact of increased irradiance on global average temperature has been estimated at around 0.25°C last century—a threefold amplifying effect would raise that to 0.75°C. This leaves practically no warming effect for CO2 to account for and renders the whole anthropogenic global warming argument moot. In other words, if the atmospheric solar amplifier theory is correct anthropogenic global warming is wrong, a useless theory describing a nonexistent phenomenon. It seems like poetic justice that a modeling experiment may point the way to discrediting global warming once and for all.”

See http://solarcycle25.com/?id=84 for details.

ws ketola September 13, 2009 at 6:57 pm

I tried this once already – must be it didn't take… I'll try again. Al Gore (et.al.) facts: 380ppm CO2 in the atmosphere; 95% of CO2 is generated by nature – thus 5% from mankind. That's 19ppm from man. Now my observations: Let's say 25% is from the USA, that's 0.95ppm. I've heard (unconfirmed) that Cap&Trade will save 17% over the next 10 years, so 17% of 0.95ppm is 0.1615ppm – that's over 10 years. Annually that would be… 0.01615ppm/yr. We're discussing a "million" parts of our atmosphere per year. Cap&Trade will reduce our CO2 contribution by 0.01615ppm/yr!!! For perspective let's say we have a business with a "million" dollar revenue per year, by analogy if we want to improve that revenue by the same amount as we can improve our atmosphere with Cap&Trade, we will improve our revenues by 1.6 cents/yr… How much will that cost us?? How much will Cap&Trade cost??? Maybe $1,000,000,000/yr for 0.01615ppm/yr??? Maybe 5? or more??? In my opinion no one can rationally support C&P no matter how it can be presented. One last point, since we are discussing a "fraction" of a "ppm", how much is 1.0ppm? We we divide the cost by the fraction – or $1B/0.01615ppm… or $61,919,504,644.00/ppm. Cheap at twice the price. Right??

ws ketola September 13, 2009 at 7:42 pm

Opps… 25% of 19ppm is 4.75ppm not 0.95… must have been distracted somehow… recalculating 17% of 4.75 is 0.8075… say 0.81 over 10 years, or 0.081ppm/yr. In the analogy then the figure is 8cents/yr, not 1.6cents/yr. So the cost per "ppm" is only $1,238,390,092.88 – still cheap… right??? Sorry about the mistake.

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