NCPA - National Center for Policy Analysis

Economic Consequences Of The Kyoto Treaty

April 26, 1999

The treaty signed at Kyoto, Japan -- requiring industrialized nations to reduce their greenhouse gas emissions by one-third starting in 2008 in order to combat "global warming" -- would impose enormous costs on the U.S. economy, analysts warn.

  • While the White House estimates the cost at a mere $1 billion over five years, the Energy Department says the figure would be $378 billion.
  • Most economists put it in the $50 billion to $300 billion range.
  • The Department also foresees a 4.2 percent loss to gross domestic product if the U.S. approves and implements the treaty.
  • Estimates show that costs for gasoline could jump as much as 53 percent, while electricity costs could rocket up 86 percent.

The added costs would be particularly harsh on the poor. A study by Gary B. Yohe of Wesleyan University found that cutting carbon dioxide to 1990 levels, which the treaty requires, would lower incomes for the poorest fifth of all Americans by as much as 9 percent. Overall, wage growth would slow by an average of 5 percent to 10 percent, he found.

In addition, projected federal budget surpluses would shrink along with productivity, and the U.S. standard of living would suffer. Analysts question whether any of this is worth trying to anticipate the effects of the unproved and controversial global warming theory.

Source: Macroscope, "It's Not Easy Being Green," Investor's Business Daily, April 26, 1999.


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