California blows climate cost-benefit analysis

February 25, 2009

To support the enactment of California’s global warming bill, Mary Nichols, the state’s top air regulator, embraced as “good-news-numbers” a cost-benefits analysis that predicted the law would create 100,000 jobs and increase per-capita income by $200 by 2020.

The New York Times reported this morning that, as it turns out, it is the critics who labeled the cost-benefit analysis as “unrealistic” who were correct:

In one withering review, Matthew E. Kahn of the University of California, Los Angeles said the analysis unconvincingly portrayed the law as “a riskless free lunch.” Another economist, Robert N. Stavins of Harvard, said the regulators were “systematically biased” in ways “that lead to potentially severe underestimates of costs.”

Now, with the recession deepening — unemployment in California is 9.3 percent — manufacturers like Mr. Repman say the recession will make carrying out the state’s plan, the first stage of which goes into effect in 2010, even more difficult and could make the economy worse.

The lesson? As the Times reported:

“We’re talking about a transformation of the way of life,” said Greg Freeman, an economist with the Los Angeles Economic Development Commission. “There’s going to be transitional costs. We can’t have the debate about whether the cost is worth paying unless we have a realistic idea of what the cost will be.”

2 Responses to “California blows climate cost-benefit analysis”

  1. Says:

    We’re hosed. These regulations are going to force the last few big manufactures out of state for good. California’s decent into the third world is continuing.

  2. Just Beau Says:

    On behalf of the other 49 States, it would be kind if California would take the lead in creating green jobs and a green economy. States are laboratories for experimentation. The rest of the US can see what happens, once California becomes green and sustainable. If this outcome looks to be good, then the other 49 States will eagerly want to emulate California. And if the outcome for some unimaginable reason turns out not so good, then we will benefit by learning from California’s noble experiment.

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