Marc Gunther lists ten reasons why "Cancun can’t." We won't go into his other nine points here, but number three on the list hit home:
Environmentalists have been disingenuous about the climate issue. They’ve argued that regulation of carbon dioxide will create green jobs and grow the economy. Typical is this graphic from Environmental Defense. (“Get a step-by-step picture of how a carbon cap will spark new jobs, lift the economy and clean the air.”) Uh, no. Most economists agree that dealing with global warming will entail short term costs. (See Eric Pooley’s excellent analysis at Slate.)
Talking about jobs is one of the most difficult things to do well in the arena of climate policy. The jobs issue is highly politically charged—and for good reason, given the state of the economy. But it struck us as unfair for Marc to use EDF as his bête noire.
To begin with, the graphic that Marc links to doesn’t make the claim he ascribes to it. We weren’t saying that climate policy was a free lunch. What we were pointing out was that doing something about climate can also create good jobs in some unexpected places. More on that in a minute.
We have bent over backwards to be as balanced and rigorous as possible in our assessment of the economics of climate change.
This turns out to be perfectly illustrated by Eric Pooley’s analysis—the same one Marc links to.
Eric's indeed excellent analysis makes two points:
First, there is a broad consensus that the cost of climate inaction would greatly exceed the cost of climate action.
That's the main, often-forgotten point because it seems so obvious: "it's cheaper to act than not to act."
We should really stop here and reflect on that for a second. Many—if not most—economists do, in fact, agree on that statement and have for a while.
But that's not our point here, either.
Small but positive
Eric’s second point concerns the cost side of the ledger. The irony here is that Eric cites our analysis as highlighting that the costs of reducing emissions will be real, but small:
The second area of consensus concerns the short-term cost of climate action—the question of how expensive it will be to preserve a climate that is hospitable to humans. The Environmental Defense Fund pointed to this consensus last year when it published a study [PDF] of five nonpartisan academic and governmental economic forecasts and concluded that "the median projected impact of climate policy on U.S. GDP is less than one-half of one percent for the period 2010-2030, and under three-quarters of one percent through the middle of the century."
That's a mouthful.
In short, yes, the best economic studies show that there will be a cost to climate action. The costs are so small that they often fall within the general noise of model predictions, but they are there. There's no denying that, and we never have. And yes, it was a much-cited EDF study [PDF] that makes this point, as well as a more recent update [PDF].
Just to be clear: Marc points to us as proponents of the "free lunch" theory, and then points to Eric as the best source on the costs—while Eric actually cites us as fairly and accurately surveying the available evidence on costs.
So did we contradict ourselves? Uh, no.
Read the remainder of the reply at http://blogs.edf.org/markets/2010/12/02/jobs/