Arnold Schwarzenegger is a proponent of the all-gain-and-no-pain school of public policy, especially when he peddles the notion that California can radically reduce its greenhouse gases while reaping immense economic benefits.
Schwarzenegger's Air Resources Board, or CARB, is poised this week to implement his vision by adopting far-reaching policies aimed at reducing the state's emissions of carbon dioxide.
It amounts to a huge wager, involving countless billions of public and private dollars, on an outcome that will only become apparent many years after Schwarzenegger has left the Capitol. And it's coming amid what may be the worst economic recession since the Great Depression.
Simply put, Schwarzenegger wants to bet that by embracing greenhouse gas reduction, California will be ensuring its economic future. But if he's wrong, he could be saddling the state's residents and businesses with enormous costs that would make it an economic wasteland, incapable of attracting investment capital.
CARB appears bent on acting even though some very credible analyses – including those by distinguished economists whose input was solicited by the state – are finding serious fault with CARB's "scoping plan" to reduce California's carbon output to 1990 levels under Assembly Bill 32.
The Legislative Analyst's Office, in a report prepared for Republican Assemblyman Roger Niello, declares that "the plan's evaluation of the costs and savings of some recommended measures is inconsistent and incomplete." And economists recruited for a "peer review" come to similar conclusions.
"While I support the Governor's broad AB 32 goals, I am troubled by the economic modeling analysis that I have been asked to read," UCLA professor Matthew Kahn, one of the sharpest critics, wrote. "AB 32 is presented as a riskless 'free lunch' for Californians. These economic models predict that this regulation will offer us a 'win-win' of much lower greenhouse gas emissions and increased economic growth."
Kahn continues: "I would like to believe this claim but after reading through the economic analysis and the five appendices there are too many uncertainties and open microeconomic questions for me to believe this."
Kahn's critique that the plan tends to puff up benefits and minimize costs is echoed by another peer reviewer, Harvard University's Robert Stavins, to wit:
"I have come to the inescapable conclusion that the economic analysis is terribly deficient in critical ways and should not be used by the state government or the public for the purpose of assessing the likely costs of CARB's plans. I say this with some sadness, because I was hopeful that CARB would produce sensible policy proposals analyzed with sound scientific and economic analysis."
These are devastating critiques, and one would think that the questions they raise would be answered before CARB engraves into law the shaky assumptions of the scoping plan.
Call The Bee's Dan Walters, (916) 321-1195. Back columns, www.sacbee.com/walters.
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