Over the weekend John posted a series of posts on the predicted costs of the IPCC-3 recommendations. Attention seems to be focusing on the 3% reduction in GDP in 2030*. Since I'm not clairvoyant and have trouble imagining what money in 2030 (when I'm 60) means, I decided to try to bring that cost back to today. So here's my take on what a 3% reduction in GDP in 2030 will cost me in today's dollars. Cheap pot-shots and shoddy math corrections are expected.
According to the Bureau of Economic Analysis website, current U.S. inflation adjusted (real) GDP--in 2000 dollars--is $11.549 Trillion. Post WW-II growth in real GDP has averaged 2.6% per year. So based on that growth rate, real GDP in 2030--in 2000 dollars--will be $20.842 trillion.
If the IPCC estimates are correct,then implementing their recommendations will result in a U.S. GDP of $20.216 trillion in 2030. So what is the reduction in annual growth rate that would result in a $20.216? Turns out that an annual reduction of 0.135% will do the trick. Sounds small right? But what does it mean to the average U.S. citizen.
According to my simple spreadsheet calculations, a 0.135% decrease in per capita GDP per year will result in a $52 decrease in income next year, a $105 decrease in income in 2009 and that will grow to a $1,686 decrease in 2030**. Discounting the stream back to today, the 3% decrease in GDP in 2030 (.135% annual decrease) will cost you--the average U.S. citizen--the equivalent of between $6,504 and $11,353*** in today's money.
Now you can decide whether that's big or not. Are you willing to give up $6,504 to reverse global warming/climate change?
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*I agree with John that the stories covering this are all confusing.
**For these calculations I've assumed a constant .9% annual population growth rate and a current U.S. population of 300,000,000.
***The lower number assumes a 7% discount rate and the higher number assumes a 3% discount rate. For those who don't like discounting, the total cost over the 23 years is $18,059 per person.
