BY Javier Jaramillo
This Tuesday, UN Secretary General Ban Ki-Moon met with a group of senators to rally support for climate change legislation that is currently under deliberation in the U.S. Senate.
As his past comments on the issue indicate, the Secretary General strongly believes that climate change legislation is necessary: ‘Some say tackling climate change is too expensive. They are wrong. The opposite is true. We will pay an unacceptable price if we do not act now.”
The Secretary General’s declaration summarizes one of the strongest arguments in favor of passing climate change legislation. Whatever the economic costs of implementing such legislation, the long-term consequences of doing nothing are far worse. As revealed by the most recent report of the IPCC (Intergovernmental Panel on Climate Change), current scientific consensus paints a grim picture if carbon emissions continue to rise unchecked.
In this context, the Secretary General’s argument offers a rational and compelling defense of the need to enact legislation addressing climate change.
As his comments suggest, two opposing viewpoints have dominated the global warming debate. In recent years, Democrats have emphasized the environmental consequences of inaction, while Republicans have often highlighted the economics costs of environmental legislation. Both concerns are valid. Even if the Secretary General is right that the cost of inaction is too great to ignore, sound economic analysis should still play a role in the climate change debate.
Unfortunately, this last criterion is often neglected in the political controversy that swirls around climate change legislation. If passing a climate change bill is important, it is also important to pass it in a form that acknowledges and minimizes economic and societal costs. Rather than seeking to minimize costs, however, advocates of climate change legislation often choose to ignore them altogether.
It is understandable that politicians and environmental groups concerned about global warming would wish to make the transition to an eco-friendly economy as palatable (and politically attractive) as possible. Nevertheless, claims that government environmental policy will benefit the economy and create millions of green jobs with few, if any, negative consequences belie the same disconnect with reality associated with global warming skeptics.
In practice, environmental policies often take the form of government mandates, regulation and incentives that impose direct and indirect costs on the economy. Cap-and-trade legislation to reduce carbon dioxide emissions, for example, will require businesses to either find ways to lower their carbon output or to buy permits that allow them to pollute.
Either way, businesses will end up paying more to produce the same goods, an increase in costs that will inevitably be passed on to consumers in the form of higher prices. Businesses that struggle to meet new environmental regulations will look for ways to cut costs, and as the recent recession shows, one potential solution is to lay off workers.
It is true that greening the economy creates environmental jobs, but these jobs often come at a price. Subsidizing alternative sources of energy, for instance, comes at the expense of taxpayers and the economy as a whole.
When the government diverts money toward environmental projects through subsidies and mandates, it diverts money away from where it would otherwise be spent. Environmental jobs are created in this process, but jobs in other industries are lost. Such environmental gains may well be worth this sacrifice, but simply pretending it does not exist cheapens the political discourse.
Of course, the economic costs of government environmental policy are not the last word in the climate change debate. Nor should they be ignored. At its heart, economics is the study of how society can best distribute scarce resources among its members. In considering the future ravages of climate change, it is important not to lose sight of the poverty, food shortages, natural disasters and suffering that occur today.
Minimizing the economic costs of climate change legislation is a legitimate objective in its own right, since every dollar saved can be spent on a host of other worthwhile causes.
Jaramillo is a member of
the class of 2011.