Friday, December 12, 2008

Cost of California Greenhouse Gas Plan

Sacramento Bee story

The analysis of costs has been rightly questioned by many after seeing a unanimously critical peer review from a very solid group of economists. See UCLA professor Matt Kahn's blog for a good discussion, and a link to the actual economist reviews for real econonerds.

It is interesting to me to compare this to the water (peripheral canal) issue. In the peripheral canal case, the economic costs of cutting Delta exports are being overstated, and the environmental benefits are right in our backyard. In the air case, the state seems to be more willing to undertake the costs (which are being understated), when the environmental benefits are more global (meaning shared with people outside the state).

It will be interesting to follow the details of AB32s implementation. In the long-run, it might be incorporated into a national climate-change cap and trade plan. If this is the case, there could be some real advantages to California being an "early mover" in this direction.

(Personal tangent: Prof. Kahn and I were both econ majors at little Hamilton College years ago. I worked with another reviewer, Dallas Burtraw of RFF, on a similar project in Maryland in the recent past and he is top notch. I have been critical of some of Gary Yohe's power industry funded sea-level rise research in the past, but he is still a solid reviewer here.)

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