What does history say about the costs and benefits of environmental policies?

With just three months to go before California launches North America’s first economy- wide cap on global warming pollution, many businesses large and small all over the state are quietly and effectively creating a clean economy that will get a further shot in the arm when California puts a price on carbon in January.  Unfortunately, albeit predictably, opponents of this landmark effort choose to overlook the likely benefits and instead spread questionable information about the assumed costs.

I use the word “assumed” deliberately.  Many criticisms of California’s carbon pricing program that focus on cost are based on incorrect assumptions and incomplete information.  For example, we wrote about a recent study funded by oil interests that EDF’s economists have raised serious concerns about.

This is not the first time that opponents of environmental policies have tried to stack the deck, drastically overestimating the costs of environmental policies while failing to account for the enormous economic benefits of environmental actions.  For example, the U.S. Acid Rain Program achieved $40 in benefits for every $1 spent on compliance ($122 Billion in benefits for 2010 alone).  Here’s a graphic that illustrates just how inaccurate many of these claims about costs are:

On Thursday, staff from the California Air Resources Board, the agency tasked with implementing California’s GHG reduction program, provided an update to their board and the public on the progress of implementation.  Many public commenters expressed general support for California’s program and gave input about ongoing implementation issues.  Unfortunately, many others used the meeting as a public opportunity to spread the same ill-founded assertions about cost impacts

Since AB32 passed in 2006, California has surged forward as a global magnet for clean energy investment, and jobs in clean energy sectors have grown many times faster than the rest of the economy in recent years.  Putting a price on pollution will only speed up these exciting trends.  What’s more, with the costs of inaction on climate change – the costs of rising seas, more frequent and damaging wildfires, droughts and floods – rising every day, it’s high time to start counting the benefits that California’s leadership will provide to all of us.

While no one has any hard numbers yet about the range of economic benefits the state will reap by capping pollution, the potential outcomes have been rigorously studied. Every indication is that California’s GHG reduction program will follow the trend of recent history and deliver solid economic and environmental benefits while keeping costs well within reasonable bounds. And that’s no exaggeration.

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