Thomas Gale Moore
Hoover Institution
Stanford University
Many advocates of acting now to curb greenhouse gas emissions assert that, since they pose an unknown but possibly great danger, governments should take steps now to reduce the specter of damage. This precautionary principle, however, is valid only if such measures in and of themselves impose no risks or costs. But curbing CO2 emissions would be very costly. As reported in earlier WCRs, those restrictions would reduce incomes and wealth. DRI estimates the cost to Americans of reducing greenhouse gas emissions to 1990 levels as 2.3 percent of GDP. The IPCC's Working Group III reviewed various estimates of GDP losses, not including DRI's, from stabilizing emissions at 1990 levels and concluded that the average projected loss would be 1.5 percent of US GDP by the year 2050, with the costs increasing more or less linearly with time. By the year 2100, the costs would be roughly 3.0 percent of American national income.
Those costs would be reflected in higher energy prices, which would be passed on to the consumer in all the items purchased in the local stores. As a consequence, they would affect most adversely those with low incomes. If, as has been proposed, carbon taxes were returned through cuts in the income tax, the adverse distributional consequences would be severe. Rich people would enjoy lower taxes while poor people would pay more for goods and services. Gary Yohe, an economist at Wesleyan University, has shown that the lowest quintile in the income distribution would be most severely distressed while the highest quintile would actually benefit. Alternatively, the government might keep the revenues and spend them, with foreseeable results. An increased portion of the economy being allocated by politicians would depress growth rates and increase the costs of such policies.
As many economic studies have shown, being rich is healthier; being poor shortens one's life. A program that reduces incomes will increase mortality. Researchers have estimated that a loss of $5 to $10 million in US GDP would lead to one extra death. Assuming that the cost of reducing greenhouse gas emissions to 1990 levels -- not enough to prevent climate change, only to slow it -- were 1.5 percent of GDP, the loss in today's income for the US alone would be roughly $120 billion. Using the more conservative estimate of the effect of income on deaths implies that about 12,000 Americans would die prematurely each year.
Moreover, rich nations also suffer less from natural disasters, especially in terms of human life, than do poor regions. When the Loma Pieta earthquake struck northern California, 67 people lost their lives. A year earlier, a slightly weaker earthquake ravaged poor and backward Armenia with a death toll of nearly 25,000. To slow economic growth of poor countries through measures taken to cap CO emissions would leave underdeveloped nations more exposed to damage from inevitable natural disasters. Higher worldwide mortality would be the result.
On top of any higher energy costs that might be instituted, the Clinton administration will likely to make matters worse by recommeding much tougher Corporate Average Fuel Economy (CAFE) standards. Those rules mandate the average miles per gallon that the average vehicle sold by auto companies must achieve. The only way that car manufacturers could meet much tighter standards would be to shrink the sizes of their new vehicles. Car buyers, who have shown that they prefer big heavy sports vehicles, which are more fun and more comfortable, would find their choice restricted. Moreover, light small cars are inherently more dangerous for occupants than heavy vehicles. Looking only at the law in 1989, two economists concluded that "CAFE will be responsible for several thousand additional fatalities over the life of each model-year's cars." According to the Insurance Institute for Highway Safety, the occupant death rate in the smallest cars (such as the Ford Escort, at 2,313 pounds) is double the rate for the largest cars (such as the Buick LeSabre, at 3,267 pounds). Raising CAFE sharply, depending on its new level, will result in thousands of extra highway fatalities each year.
Higher heating costs would also increase the use of insulation and more airtight buildings, reducing ventilation and trapping more air pollution indoors. Such hazardous chemicals as formaldehyde, carbon monoxide, nitrogen oxides, volatile organic compounds, and particulates would build up inside the structures. Since people spend most of their time indoors, the quality of the air in houses and offices is important to maintaining health. Without doubt the more energy efficient structures would cause some increase in sickness and perhaps an unknown number of early deaths.
Government regulations often, if not always, have unfortunate, unintended consequences. The effort to protect the ozone layer provides a recent example. Under the Montreal Protocol, chlorofluorocarbons (CFCs) have been banned in the industrial nations and will be phased out in the rest of the world over the next decade. CFCs are relatively inert, benign, non-poisonous substances that provide excellent cooling. Not only do the substitutes fail to work as well, they turn out to be dangerous to people's health. Scientists have confirmed that workers accidentally exposed to substitute chemicals, such as HCFC-123 and HCFC-124, have developed acute hepatitis. The banned CFCs have produced no known cases of harm to any men or women.
In other words, policy makers must weigh the costs of acting to slow greenhouse gas emissions against the costs of maintaining current policy. Neither is without risk but claiming that the precautionary principle requires action to curb CO2 is nonsense. Under the most efficient possible policy for curbing CO2, one under which all countries cooperate to reduce their emissions, people will die, growth will be slowed (leading to more damage and fatalities from naturally occurring disasters), and the poor will suffer the most. Yet the politicians are aiming for a treaty that would be even worse. It would impose these heavy burdens yet produce little in the way of curbed emissions. This is folly.
References:
Yohe, Gary W. "Climate Change Policies, the Distribution of Income, and U.S. Living Standards," Special Report, American Council for Capital Formation, Center for Policy Research, November 1996.
Chapman, Kenneth S. And Govind Hariharan. "Controlling for Causality in the Link from Income to Mortality," Journal of Risk Uncertainty 85 (1994).
Duleep, Harriet O. "Measuring the Effect of Income on Adult Mortality Using Longitudinal Administrative Record Data," Journal of Human Resources 238 (1986).
Cross, Frank B. "When Environmental Regulations Kill," Ecology L. Q. 1995.
The Washington Post, August 22, 1997, p. 14A.