WSJ: "Waxman-Markey's benefits far outweigh costs"

A non-partisan new analysis of the Waxman-Markey clean energy and climate bill finds that it will have economic benefits that will be worth at least twice as much, if not more, than what it will cost.

“From almost any perspective and under almost any assumption, H.R. 2454 is a good investment for the United States to make in our own economic future and in the future of the planet,” concludes "The Other Side of the Coin", which was produced by the NYU Law School’s Institute for Policy Integrity.

How did the authors tote up the legislation's economic benefits?

As Keith Johnson of the WSJ's Environmental Capital blog writes today, the paper examines the "social cost of carbon:" what a ton of carbon is worth to our society when it isn't in the atmosphere, contributing to climate change's effects on the environment, the economy, public health, and national security.

Multiple federal agencies have accepted the estimate that a ton of carbon-not-emitted is worth about $19.

So using the bill's targets for how many tons of atmospheric carbon it will avert over the next forty years, the NYU Law analysts calculated that Waxman-Markey would be worth around $1.5 trillion on average.

Since bill's costs will add up to around $660 billion, that is a two-to-one return on the dollar.  And this, according to the authors, is a conservative estimate, partly because it does not factor in many ancillary social benefits of cutting greenhouse gas pollution, such as "reduced ocean acidification, increased forest preservation, and reductions in local air pollutants such as sulfur dioxide, nitrogen dioxide, and particulate matter."

This new paper rounds out the picture of the bill's full impacts, as painted in cost analyses by the EPA, the Congressional Budget Office, and the Energy Information Agency on what Waxman-Markey will cost. It's also a direct rebuttal of studies that criticize the bill as too costly, such as the analysis being cited by the oil lobby group American Petroleum Institute (which API and allied lobbies commissioned from a consulting firm).

"Now, there are some important caveats," writes Johnson. "That 'cost of carbon' is a global cost; the U.S. doesn’t face quite the same risk from climate change as, say, Bangladesh. Which means all the 'benefits' cited in the paper are similarly global, even if the costs are not: 'A large portion of benefits might not be felt directly or immediately within U.S. borders,' the paper notes, suggesting that U.S. voters think of it as a 'highly effective, highly leveraged form of foreign aid.'"

Next question: How will this tally of the economic benefits of the Waxman-Markey bill affect the efforts of Senators Kerry, Pelosi and others to advance climate legislation in the Senate?