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Business-Managed Environment

Global Warming Consultants

In both the US and Australia, think tank economists and economic consultants have been influential in debate over the costs of greenhouse gas abatement.

In the US a frequently cited computer model of economic costs of climate change, the International Impact Assessment Model (IIAM) was originally commissioned by the American Petroleum Institute, although this is seldom mentioned when referring to the findings of the model. This model predicts large costs if emissions targets have to be met and that it would be cheaper to reduce emissions later rather than earlier. The model ignores the environmental costs of not acting sooner and the possibility of new markets created by alternatives to fossil fuels.

The World Resources Institute (WRI) examined "sixteen widely-used economic models, including the three used by the Clinton administration to analyse climate policy options" and found that they differed in terms of the assumptions they made such as the availability of alternative energy sources, whether nations would cooperate, how energy taxes would be spent, whether fossil fuel consumption reductions would have other benefits such as cleaner air. The WRI found that even with the most unfavourable assumptions the costs would amount to only 2.4 per cent of GDP over the next 22 years: "This means that the economy in 2020 would be 75 percent larger than today's, instead of 77.4 percent larger." Even so, a more likely scenario, they claim, is that sensible policies and international cooperation would ensure "carbon dioxide emissions can be reduced with minimal impacts on the economy".

The emphasis on and exaggeration of costs has long been a tactic of corporations opposing environmental regulation. Invariably the economic disaster forecast by industry never eventuates and the cost turns out to be far less than predicted. For example, when it was proposed that CFCs be banned as propellants in the US, chemical companies predicted terrible consequences to an industry which employed 200,000 people and contributed $8 billion to the US economy. In fact the US economy benefited from the ban.