# Climate action imposes upon social welfare

*Published:* 2009-03-13
*Author:* EDF Blogs

### Claim:

> “Even under the most optimistic assumptions, every study we examined predicts huge welfare costs in terms of consumption. A lower estimate involves a drop in consumption of 0.8%-1% below the business-as-usual scenario in every year starting in 2008 and going into the future, which represents a huge decrease in social welfare.”
> 
> – From *The Cost of Climate Regulation for American Households*, a report published by the George C. Marshall Institute, March 2, 2009

### Truth:

> This report claims to be a meta-analysis review of several studies on the economic impact of the Lieberman Warner Climate Security Act from last year’s Congress.
> 
> The studies covered in the Marshall Institute report include those from:
> 
> - The Massachusetts Institute of Technology
> - The Environmental Protection Agency
> - The Environmental Investigation Agency
> - The American Council for Capital Formation and the National Association of Manufacturers (joint study)
> - The Charles River Associates
> - The Heritage Foundation’s Center for Data Analysis
> - The Clean Air Task Force
> 
> The Marshall Institute report gives equal weight to all these studies, including those studies by the Charles River Associates, the Heritage Foundation and ACCF/NAM, which have been widely discredited for faulty economic modeling and assumptions.
> 
> The report considers the percentage change in consumption rather than gross domestic product as the most important welfare indicator and then claims:
> 
> “Even under the most optimistic assumptions, every study we examined predicts huge welfare costs in terms of consumption. A lower estimate involves a drop in consumption of 0.8%-1% below the business-as-usual scenario in every year starting in 2008 and going into the future, which represents a huge decrease in social welfare.”
> 
> In fact, the EPA, MIT and EIA numbers for 2015 loss in consumption were all around 0.4%. In other words, the Marshall report ignores the data from the most credible studies.
> 
> They then continue to use the upper range of their own over-inflated 0.8-1% increase to apply a “balanced growth equivalency” lowering of the consumption – i.e. they estimated what a 1% loss in consumption would be for an average household of four.
> 
> And, to further inflate the cost number, they start counting in 2008, years before a climate bill would even come into place.