Climate Change Is Cheap, According to Krugman

Mark Tuminello’s latest blog post –

mark tuminello paul krugmanEconomist Paul Krugman blogs regularly on the New York Times, and I highly recommend subscribing. He updates every couple days with short posts on a diverse number of topics, but always with an economic perspective. He’s a reliably good writer, and he’s even more reliable as an economist. In his latest post on the blog, Paul Krugman discusses how a recent study organized by the US Chamber of Commerce to encourage opposition coming regulations.

You can read Krugman’s post, Cheap Climate Protection, in full here.

In anticipation of regulations from the Obama administration, the Chamber of Commerce organized a study to illustrate what the impact would be on the industry and the country. The expected regulations will be an attempt to reduce the output of greenhouse gases. Krugman was skeptical that the numbers would be correct, but was surprised to see that they had ordered the analysis from an outside company in an interest of preserving credibility.

The official report from the Chamber includes some spinning, according to Krugman, but the bare numbers told a different story. What the research showed was that economic burden of reducing greenhouse gas emission would be quite small. Krugman even goes so far as to call the costs ‘cheap,’ in consideration of how significant the greenhouse gas emissions would be.

To make that significant impact on greenhouse gases, reducing emissions by 40% by 2030, the price would be 50.2 billion per year. As a headline, that can seem alarming. Krugman compares that number with the expected GDP of the United States during that time. Altogether, we can expect it to be $21.5 trillion. That makes the cost of very real action to curb our greenhouse gas emissions just 0.2 % of GDP. That doesn’t sound so bad, does it?

Where there is less of a silver lining is the expected loss of jobs. There would be over 200,000 jobs lost during the next fifteen years because of the regulations. That doesn’t represent a good economic plan. Even still, Krugman points out that in a nation with 140 million workers, 200k isn’t so bad considering the benefits of making the cuts.

Ultimately, Krugman comes to the conclusion that the economics of climate protection look quite easy. Now the question is how the report will be received, and then whether the regulations pass.

from Mark Tuminello

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