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Why do conservative always lie?
To support Trump’s claim that “full compliance with the agreement could ultimately shrink America’s GDP by $2.5 trillion over a 10-year period,” Cheung, the White House spokesman, pointed us to a March piece on the Heritage Foundation’s website. That referred to work originally done by Heritage Foundation senior statistician and others in an . The Heritage Foundation’s mission is to “formulate and promote conservative public policies.”
Dayaratna and his group concluded that the Paris Agreement “will result in over $2.5 trillion in lost GDP by 2035,” which would be a 20-year period, not a 10-year period, as Trump said. GDP, or , is a measure of a country’s economic output.
We asked , a resource economist at the University of Maryland and a at the economic analysis group Resources for the Future, to review the Heritage Foundation’s report. He called the $2.5 trillion figure a “reasonable estimate,” given the numbers and methodology used in the report, but said it was “expressed in a misleading way.”
The standard, he said, is to express lost GDP as a percentage of total GDP. So the foundation’s total amount — $2.5 trillion in lost GDP by 2035 — would be equivalent to a 0.55 percent decrease on average in the total GDP per year, he calculated. Williams also emphasized that the annual 0.55 percent reduction in total GDP is not to be confused with a 0.55 percent drop in the real GDP growth rate, which was in 2016. The total U.S. GDP was in 2016.
To estimate the effect of the Paris Agreement on U.S. GDP, Dayaratna and his colleagues at the Heritage Foundation a carbon tax rate — which started at $36 (in 2007 dollars) in 2015 and increased 3 percent each year thereafter — into what they called the “Heritage Energy Model.” This model, the authors say, is a “clone” of the National Energy Model System used by the federal Energy Information Administration.
A carbon tax “directly sets a price on carbon by defining a tax rate on greenhouse gas emissions or – more commonly – on the carbon content of fossil fuels,” the World Bank. The specific carbon tax rate the Heritage Foundation authors used comes from the Environmental Protection Agency’s for the social cost of carbon, which takes into consideration “long-term damage done by a ton of carbon dioxide,” including changes in agricultural productivity, human health and property damage.
Dayaratna and his colleagues say in their report: “Modeling tax changes as a substitute for quantifying the economic impact of regulatory proposals is a widely accepted practice.” Williams confirmed that this is in fact the case.
Williams told us economists consider multiple factors when choosing what specific carbon tax rate to use when estimating economic effects. Economists might use what he called a “politically viable” rate based on a carbon tax already proposed by a politician. They might also use a carbon tax rate associated with the social cost of carbon for a particular country or region, as the Heritage Foundation authors did. Or economists might use a carbon tax rate that would be needed to meet a specific emissions target.
When it comes to the Paris Agreement, Williams said going the third route makes the most sense; that is, calculating what carbon tax rate would be needed for the U.S. to meet its pledged emissions target of 26 percent to 28 percent below its 2005 level by 2025. In fact, Williams pointed us to a November 2016 by Resources for the Future that did exactly that.
Yunguang Chen and Marc A.C. Hafstead, both fellows at the organization, found that a constant carbon tax of $21.22 (in 2013 dollars) starting in 2017 would allow the U.S. to meet its Paris Agreement target by 2025. The U.S. could alternatively use a carbon tax rate starting at $16.87 in 2017 and rising at 3 percent per year to meet its target. This, and similar carbon tax rates, would reduce the real GDP from 2017 to 2025 by between just under 0.10 percent and 0.35 percent per year, depending on how the revenue from the taxes are used and depending on the year. (See figure 4.) Those figures are lower than the equivalent 0.55 percent per year decrease in real GDP from the Heritage study.
The authors conclude that “the size of the 2025 carbon taxes and their corresponding economic costs are modest.” They also say that “the cost of delaying the implementation of a carbon tax is high.”
“Delaying implementation until 2020 raises the costs of using an economy-wide carbon tax to meet the 2025 targets by 12 percent relative to implementing the policy in 2017,” the report says. “Delaying until 2023 increases the costs relative to 2017 by over 29 percent.”
, a resource and environmental economist at Columbia University, told us the cost of doing nothing would be “very expensive.”
“The Paris agreement will cost little or nothing and allowing climate change to proceed would be very expensive indeed,” Heal said, adding that “staying in Paris does not fully prevent climate change but it’s a good start.”
To support Trump’s claim that “full compliance with the agreement could ultimately shrink America’s GDP by $2.5 trillion over a 10-year period,” Cheung, the White House spokesman, pointed us to a March piece on the Heritage Foundation’s website. That referred to work originally done by Heritage Foundation senior statistician and others in an . The Heritage Foundation’s mission is to “formulate and promote conservative public policies.”
Dayaratna and his group concluded that the Paris Agreement “will result in over $2.5 trillion in lost GDP by 2035,” which would be a 20-year period, not a 10-year period, as Trump said. GDP, or , is a measure of a country’s economic output.
We asked , a resource economist at the University of Maryland and a at the economic analysis group Resources for the Future, to review the Heritage Foundation’s report. He called the $2.5 trillion figure a “reasonable estimate,” given the numbers and methodology used in the report, but said it was “expressed in a misleading way.”
The standard, he said, is to express lost GDP as a percentage of total GDP. So the foundation’s total amount — $2.5 trillion in lost GDP by 2035 — would be equivalent to a 0.55 percent decrease on average in the total GDP per year, he calculated. Williams also emphasized that the annual 0.55 percent reduction in total GDP is not to be confused with a 0.55 percent drop in the real GDP growth rate, which was in 2016. The total U.S. GDP was in 2016.
To estimate the effect of the Paris Agreement on U.S. GDP, Dayaratna and his colleagues at the Heritage Foundation a carbon tax rate — which started at $36 (in 2007 dollars) in 2015 and increased 3 percent each year thereafter — into what they called the “Heritage Energy Model.” This model, the authors say, is a “clone” of the National Energy Model System used by the federal Energy Information Administration.
A carbon tax “directly sets a price on carbon by defining a tax rate on greenhouse gas emissions or – more commonly – on the carbon content of fossil fuels,” the World Bank. The specific carbon tax rate the Heritage Foundation authors used comes from the Environmental Protection Agency’s for the social cost of carbon, which takes into consideration “long-term damage done by a ton of carbon dioxide,” including changes in agricultural productivity, human health and property damage.
Dayaratna and his colleagues say in their report: “Modeling tax changes as a substitute for quantifying the economic impact of regulatory proposals is a widely accepted practice.” Williams confirmed that this is in fact the case.
Williams told us economists consider multiple factors when choosing what specific carbon tax rate to use when estimating economic effects. Economists might use what he called a “politically viable” rate based on a carbon tax already proposed by a politician. They might also use a carbon tax rate associated with the social cost of carbon for a particular country or region, as the Heritage Foundation authors did. Or economists might use a carbon tax rate that would be needed to meet a specific emissions target.
When it comes to the Paris Agreement, Williams said going the third route makes the most sense; that is, calculating what carbon tax rate would be needed for the U.S. to meet its pledged emissions target of 26 percent to 28 percent below its 2005 level by 2025. In fact, Williams pointed us to a November 2016 by Resources for the Future that did exactly that.
Yunguang Chen and Marc A.C. Hafstead, both fellows at the organization, found that a constant carbon tax of $21.22 (in 2013 dollars) starting in 2017 would allow the U.S. to meet its Paris Agreement target by 2025. The U.S. could alternatively use a carbon tax rate starting at $16.87 in 2017 and rising at 3 percent per year to meet its target. This, and similar carbon tax rates, would reduce the real GDP from 2017 to 2025 by between just under 0.10 percent and 0.35 percent per year, depending on how the revenue from the taxes are used and depending on the year. (See figure 4.) Those figures are lower than the equivalent 0.55 percent per year decrease in real GDP from the Heritage study.
The authors conclude that “the size of the 2025 carbon taxes and their corresponding economic costs are modest.” They also say that “the cost of delaying the implementation of a carbon tax is high.”
“Delaying implementation until 2020 raises the costs of using an economy-wide carbon tax to meet the 2025 targets by 12 percent relative to implementing the policy in 2017,” the report says. “Delaying until 2023 increases the costs relative to 2017 by over 29 percent.”
, a resource and environmental economist at Columbia University, told us the cost of doing nothing would be “very expensive.”
“The Paris agreement will cost little or nothing and allowing climate change to proceed would be very expensive indeed,” Heal said, adding that “staying in Paris does not fully prevent climate change but it’s a good start.”
