Comment Log Display

The ARB makes of number of seemingly contradictory economic claims.


The ARB states that its cap-and-trade regulations will reduce the
growth rate of the California economy from 2.4 percent to 2.3
percent.  At the same time, the ARB claims that the regulations
under consideration will “not have a significant statewide adverse
economic impact directly affecting businesses, and little or no
impact on the ability of California businesses to compete with
businesses in other states.”  And that, “…impacts on long-term
projected growth rates in personal income and employment are
similarly small.”  And that, “Regulated businesses may face
additional indirect costs due to increased energy and input prices,
and some businesses might be impacted based on the compliance path
they choose to meet their obligations under the proposed
regulation.” And that, the “proposed regulatory action would not
eliminate existing businesses within the State of California, but
would affect the creation of new businesses or the expansion of
existing businesses currently doing business in California. The
proposed regulatory action would not eliminate jobs within the
State of California, but would affect the creation of jobs within
California.”  

It strains credulity to believe that California can act to
completely reorder the energy sector and only slightly reduce
economic growth, slightly increase prices and end up with more
jobs, not less.  Assuming this to be the case, does that mean that
the ARB projects more lower paying jobs and relatively less higher
paying jobs as the result of its actions?  How else can a reduction
of economic growth be explained as part of the ARB analysis?  

Lastly, the ARB in its economic analysis states that the analysis
did “…not consider the avoided costs of inaction. The potential
effects of climate change that are expected to occur in California,
such as increased water scarcity, reduced crop yield, sea level
rise, and increased incidence of wildfires, could cause severe
economic impacts.” Given that California’s cap-and-trade efforts,
when viewed in the global context of a developing China and India,
is likely to provide, at most, a day or two’s reduction in
greenhouse gas (GHG) emissions (and this is assuming that leakage
doesn’t accelerate, as more economic activity that once occurred in
California is off-shored to coal-fired China), how can this
statement even be seriously countenanced when, in fact, there will
be no significant global GHG emissions reduction as a result of the
ARB’s actions?  Lastly, over the past 150 years, California has
experienced “increased water scarcity, reduced crop yield, sea
level rise, and increased incidence of wildfires” with three of the
four directly attributable to environmental policies that have
limited water storage and conveyance (increased water scarcity),
cut flows of water to farms (reduced crop yield), and reduced
timber harvesting and forest fuel management (increased incidence
of wildfires) – the one foot rise in sea level over the past 150
years being the sole impact not caused by environmental policy, and
certainly not an impact anyone in California has seen as
particularly difficult in which to adapt.