There are times when specially commissioned economic forecasts are a useful contribution to debate on emissions reductions, and times when they are not. The latest, commissioned by the Business Roundtable and the Petroleum Exploration and Production Association (Pepanz) from Adolf Stroombergen at Infometrics, is a fine example of the latter. The numbers allow Roger Kerr to rumble ominously [Stuff, Herald, original BR press release (PDF)]:
“The impact on numerous industries would be devastating – reductions in output of the order of 30 per cent to 40 per cent are reported in the case of sheep and dairy farming – and major industrial firms could face complete closure,” Mr Kerr said.
Even worse, households could be $19,000 a year worse off by 2025 and the government would still fail to meet a notional target of reducing emissions to 1990 levels by 2025. Sounds dire. Better do nothing then…
But, as is usual with these things, when you look at the assumptions that underpin the forecast, you find that they have been carefully designed to produce the result the sponsors wanted. Take a look at the method used (see PDF linked above): they define a “business as usual” case against which they will measure the costs of emissions reductions – and they shoot for GDP growth of 4.5 – 5% per annum. I don’t have the figures to hand, but I can’t think of any period in the recent past when GDP growth has been that high – and certainly not for 17 successive years. And the costs? They use very high carbon prices (up to $300/tonne). So, when you artificially inflate both long term growth and the costs of action, you discover that action’s expensive.
Why am I not surprised?
And I’m not entirely surprised by news (Radio NZ) that 15 iwi leaders, chaired by Tuku Morgan and meeting at the Waitangi Treaty grounds say they oppose all climate-change legislation – because it has no regard for Treaty rights. But I’d like to know more about why. Forestry interests are one thing, geothermal sensitivies another, but what are the Treaty implications?
Wow. That’s some strapped chicken.
Most of their “result” comes straight from the difference between their fantasy growth rates and more realistic ones.
DPF’s not too keen on looking under the hood, but I’m sure he’ll see sense in the end… 😉
If anyone’s interested, there’s some brief jousting with Owen McShane, “eminent scientist” and NZ CSC policy supremo on that thread at Kiwiblog (link in comment above). And he is being funded by Heartland to attend the conference in New York (linked in the latest Newman post). It’ll be interesting to see if he answers my second question… 😉