Someone did a cost/benefit analysis of climate policy, just not Vermont

July 14, 2020

by Rob Roper

Bjorn Lomborg of the Copenhagen Consensus Center just published an excellent article, How climate change alarmists are actually endangering the planet, excoriating activists for terrifying children, inciting panic that leads to poor political decisions, and generally not telling the truth about “the science” of a changing climate. (Read the article for details.) But what captured my attention was his reference to a cost/benefits study done by New Zealand regarding a plan to be carbon neutral by 2050.

The New Zealand policy sounds very similar to what Vermont politicians want to do here with the Global Warming Solutions Act (GWSA) – only Vermont politicians stringently, and in my opinion totally irresponsibly and deceptively, avoided any discussion much less rigorous analysis of what the costs of reaching these goals might be. Before moving forward with the GWSA, Vermonters deserve the same kind of study New Zealand did.

Here are a few of their finding that jump out:

  • Under a Net Zero Emissions target, the NZIER model indicates that GDP might be in the range of 10 to 21 per cent less by 2050…
  • Modelling by Infometrics for the NZIER study suggests the households in the lowest 20 per cent bracket for income may be more than twice as affected, on a relative basis, than those households with an average income.

So, the policies necessary to meet the emissions reduction targets will be a significant drag on the economy, and the effects will be twice as painful for those living in the bottom income quintile. Additionally,

  • These impacts lead to concerns about competitiveness within emissions-intensive and trade-exposed (EITE) sectors. These competitiveness challenges reflect differences in costs that New Zealand businesses face from climate action compared to their overseas competitors. In time, these differences in costs could result in businesses at the margin ceasing operation or shifting their production offshore to countries…

It’s going to make local businesses less competitive, driving some out of the region and some out of business entirely. But, so many proponents of a “climate agenda” argue, the innovative businesses that pop up to deal with climate change will offset losses elsewhere! Well…

  • New Zealand’s productivity levels are likely to be the result of low investment in research and development (R&D) amongst businesses, as well as New Zealand’s small market size and distance to overseas markets (Productivity Commission, 2018). These factors provide reasons for Sense Partners to conclude that innovation may not occur fast enough to reduce competitiveness concerns for many EITE sectors with higher emissions prices…

In other words, New Zealand, like Vermont, is not particularly business friendly to begin with, so while these new climate innovators may ramp up economic activity somewhere that is attractive to capital investment, they likely won’t do so there (or here).  

Those are some of the costs, but this is a cost/benefits analysis, so what are the benefits of heading down this path?

The report honestly recognizes that the overwhelming majority of potential benefits from climate action would only materialize if “the whole world” adopts these same policies. “Avoiding the costs of damage caused by a changing climate is likely to represent a substantial benefit of climate action. The whole world needs to act to avoid the damages from climate change.”

And the whole world – China, India, Russia, developing nations… — is not. Nor will they, making this whole exercise one of “all cost/no benefit.”

Vermont’s GWSA legislation will go back to the Vermont House of Representatives for another look when they return in late August. Before they make it law, they should do the kind of cost/benefit analysis New Zealand did. Vermonters deserve a clear understanding of what this really means.

Rob Roper is president of the Ethan Allen Institute.

{ 3 comments… read them below or add one }

Mike July 18, 2020 at 1:04 pm

Rob, A cost/benefit analysis is of no interest to the majority in Montpelier. They don’t have a clue as to what that foreign process entails. Makes no difference because it’s the usual my mind is made up, don’t bather me with facts. All the more reason for a major turn over in the legislature. Unfortunately, it will never happen, but hope springs eternal. Keep up your good works.


doug richmond July 18, 2020 at 2:28 pm

” the innovative businesses that pop up to deal with climate change will offset losses elsewhere! Well…”
Imagine growing Wheat, or industrial corn with a hoe, drill oil or digging coal all by hand.

Who needs heating fuel, jobs,electricity, tools, transportation, groceries, housing – when you could have a “clean-er planet?”…
to be buried in, as long as the grave digger still has a strong back?
Or maybe let “nature take it’s course”, and just leave the corpses to return to the earth where they died


SHAZZAM July 20, 2020 at 4:06 pm

Because Vermont lives don’t much matter ….


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