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The President’s Climate Speech: Everyone will exaggerate costs, understate benefits

June 25th, 2013 · 1 Comment

Today, the President will be giving a speech at Georgetown University on climate change issues, with announcements of initiatives that will be taken leveraging the powers of the Administrative Branch because the Congress is unable (and, to a large extent, unwilling) to take meaningful action to address climate change: whether mitigation or adaptation.

There are two things that we know, without question, before the President opens his mouth …

  1. Those in denial on climate science will scream that the President is doing too much and those who understand climate risks will be concerned that the actions are inadequate.
  2. Everyone — EVERYONE — will overstate the costs of action and understate the benefits of climate change mitigation and action.

As to the second, there are a myriad of reasons why people get the cost-benefit calculation wrong that range from outright deceit to cautiousness about the power of innovation.

As to that last, Ramez Naam’s the Infinite Resource: the power of ideas on a finite planet is a powerful discussion of how innovation can enable us, even at this stage, to address climate change successfully. Naam presents a strong version of what I describe as ‘pessimistic optimism’ — he is quite clear as to the extent of our challenges and problems while also providing cogent arguments as to why and how unleashing innovation can enable a transformation of American (and global) society toward a prosperous, climate-friendly future.

Naam has, among other things, an excellent discussion of how opponents and proponents have gotten the cost-benefit equation wrong on past policy discussions of addressing environmental issues (pages 201-204).

  • Addressing Acid Rain
    • Industry groups predicted annual costs of $25 billion per year, EPA projected $6 billion per year, over the past 20 years the costs habe been “only $3 billion per year, just one-eight of the industry estimates, and half of what the EPA estimated.”
    • Benefits:  “regulations saved an estimated $118 billion per year in reduced health expenses”.
    • And … Americans still have electricity for their big-screen TVs.
  • Ozone layer
    • “Don Hodel … [Reagan] secretary of the interior after James Watt argued that any near-term risk of thinning ozone layer could be handled by telling people to wear hats and put on more sunscreen. … [DuPont] warned that phasing out CFCs could cost the United States more than $130 billion and “that entire industries could fold.” … the Competitive Enterprise Institute … phasing out CFCs would cost the countgry between $45 billion and $99 billion. … The EPA expected the phase-out to cost a total of $28 billion. …. the actual cost across the entire US economy turned out to be less than $10 billion … less than a tenth of what DuPont had estimated, less than a quarter of the lowest cost estimates from the Competitive Enterprise Institute, and only slightly more than a third of what the EPA itself had estimated.”
    • While opponents of action had warned that refrigerators would become a thing only multi-millionaires could afford, “the country’s air conditioning and refrigeration kep on working without disruption.”
  • And …
    • Benzene: When putting limits on benzene emissions at industrial sites, chemical companies forecast costs of $350,000 per plant.  Within a few years, changed processes that eliminated benzene entirely (beating the regulations) reduced this cost to … zero.  Health benefits > $billions.
    • Asbestos:  OSHA estimated costs of $150 million to end asbestos use in insulation and the costs turned out to be $75 million.  Health benefits > $billions.
    • Reduced coke oven pollution:  EPA estimated costs of $4 billion in 1987 learning by 1991 led to revised cost estimates of $400 million. Health benefits > $billions.

“Everywhere we look, the cost of reducing either resource use or pollution drops through innovation.  Even the cost estimates of regulators turn out to be too high.” (205)

Much will (and should be said) about the President’s speech and the 21 page plan released at 0600 this morning.  That the President is speaking — seriously — about climate change matters is good.  That President Obama is demonstrating a willingness to take — in wide public view — Administration action in the face of a do-nothing Congress is good.

What is not good is that, inevitably, the entire discussion will exaggerate the costs of action and understate the benefits of action.


  • Cannot afford to get the cost-benefit equation wrong any more.
  • Should understand that there are bad (very bad) and good reasons that this error occurs.
  • Must fight to turn the discussion toward a closer understanding of the situation.

We are already facing massive costs due to inaction and inaction will increase costs.

Action is not a “cost” but an investment.

Because the “benefits” from action will be almost incalculably huge.

Related posts:

Advocates for climate mitigation again understate case?

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Tags: analysis · climate change · Obama Administration · political symbols · politics · President Barack Obama

1 response so far ↓

  • 1 Morris Dixon // Jul 17, 2013 at 3:34 am

    Unless we combine to take decisive action, climate change will ravage our planet, and with it our prosperity and security. The dangers have been becoming apparent for a generation. Now the facts have started to speak: 11 of the past 14 years have been the warmest on record, the Arctic ice-cap is melting and last year’s inflamed oil and food prices provide a foretaste of future havoc. In scientific journals the question is no longer whether humans are to blame, but how little time we have got left to limit the damage. Yet so far the world’s response has been feeble and half-hearted.