National Center for Policy Analysis
(NCPA is a nonprofit, nonpartisan public policy research organization whose goal is to develop and promote private alternatives to government regulation and control, solving problems by relying on the strength of the competitive, entrepreneurial private sector.)
DALLAS -- Kyoto misses targets, hits poor instead
by Christopher L. Dodson
In March 2001, President Bush announced that the United States would not be a party to the Kyoto Protocol on Global Climate Change. Although Canada is on the fence, and Australia has rejected the Protocol outright, the European Union, Russia, Japan and other countries are poised to implement it in the near future.
In order to reduce the alleged impact of human activities on the climate, the Protocol requires signatories to cut carbon dioxide emissions an average of 5 percent below 1990 levels between 2008 and 2012. Developing nations are exempt from emission reductions.
Economic and scientific studies indicate that Kyoto will harm economies worldwide and only minimally -- if at all -- reduce global warming. More than 4,000 scientists, including 72 Nobel Prize winners, signed the Heidelberg Appeal warning industrialized nations that no compelling scientific evidence exists to justify mandatory cuts in greenhouse emissions.
Kyoto demands that the United States reduce its overall greenhouse gas emissions by 43 percent, according to Patrick Michaels of the Cato Institute. According to an NCPA study by Dallas Federal Reserve economist Stephen Brown, if the United States met Kyoto's standards by 2010, its gross domestic product would be 3.6 percent to 5.1 percent lower than otherwise. But the earth's temperature would decline only 0.07°C to 0.19°C over the next 100 years as a result, according to the National Center for Atmospheric Research.
Kyoto imposes costs on all signatory nations, but it especially harms the poor. According to the U.S. Department of Energy, any policy to reduce carbon emissions will significantly affect the entire U.S. energy market. Kyoto will raise energy costs, increasing the price of housing, heating and cooling, electricity, transportation and consumer products.
According to recent studies by the Heritage Foundation and the Competitive Enterprise Institute, by 2010 the Protocol is likely to increase gasoline prices as much as 66 cents per gallon, electricity 52 percent, household fuel 50 percent, grocery bills 9 percent and housing costs 21 percent.
-- Direct energy price hikes alone could cost the average U.S. household an extra $1,000 per year.
-- Including effects on all consumer prices, the Heritage Foundation found that increased energy costs could reduce average household income by $1,620 per year.
-- Cumulatively, Heritage found that by 2020 the Protocol could cost the average household $30,000 in today's dollars -- equivalent to an income tax increase of 14.5 percent.
The effects of rising energy prices are regressive. Low- and fixed-income households spend a larger portion of their incomes on such necessities as heating and cooling, food, transportation and laundry. Also, they use relatively more energy and more energy-intensive products per capita. For instance, energy costs are higher for people who live in older homes and own older appliances than for those living in newer homes with more efficient technology.
The portion of income consumed by energy costs could increase 10 percentage points for the poorest 10 percent of Americans, according to the Department of Energy. Families with annual incomes of less than $10,000 spend, on average, nearly $1,000 each year on energy. Kyoto could double this cost to 20 percent of disposable income, or almost $2,000 per year.
Research indicates that mandatory cuts in greenhouse gas emissions would also reduce economic output, causing wages and living standards to fall. In his NCPA study, Brown found that under Kyoto the GDP loss for the United States in 2010 would be between $330.2 billion and $467.8 billion in 1992 dollars, or $1,105 to $1,565 per person. That would make GDP losses between 2001 and 2012 more than $4,000 per person and nearly $11,000 per household.
Reduced wages coupled with inflationary price increases would be an additional impediment to economic progress for those already struggling to make ends meet. The large economic decline spurred by Kyoto would also increase unemployment. The National Black Chamber of Commerce and the United States Hispanic Chamber of Commerce estimate that as many as 3.2 million Americans could lose their jobs.
Low- and moderate-income workers in blue-collar industries would suffer most of the job losses, with almost half of these jobs being lost by Hispanic and African American workers. High-income Americans would be largely shielded from the job cuts.
The Kyoto Protocol will affect the worldwide economy, including developing nations not required to cut emissions. By shrinking the economies and energy markets of Kyoto signatories, mandatory emission cuts will seriously curtail trade between industrialized and developing countries.
In 1998, the United States imported $800 billion in goods from developing countries, more than any other nation. Any economic downturn caused by Kyoto will decrease U.S. demand for imports. According to research conducted by Charles River Associates:
-- Most developing nations conduct 60 percent to 75 percent of their trade with industrialized nations.
-- Developing countries face economic losses averaging 10 percent of the losses of Kyoto signatories.
Kyoto also will severely depress the international market for fossil fuels, causing energy-exporting countries to lose revenue. Some energy importing counties, such as South Korea, India and China, could enjoy lower energy costs than the industrialized nations with which they compete in world markets. However, in very few countries would the benefits of lower energy costs offset shrinking export markets.
In fact, some of the world's poorest countries, such as Algeria, Congo, Venezuela, Nigeria and Angola, face losses in GDP of 1.75 percent to 3 percent. Burdened by very low GDPs, developing nations cannot afford additional drops in their economies. Kyoto signatory nations are also likely to erect barriers that shield their domestic industries from rising energy prices and low-cost foreign competition, causing even more economic harm.
Thus the world's poor -- who are concentrated in developing nations -- would suffer the most from Kyoto through higher trade barriers, greater energy costs, lower energy demand and fewer job opportunities. The already shaky economies of many developing nations will shatter. And as economies of the industrialized nations also contract, pleas for aid will likely fall on deaf ears.
The costs of Kyoto will be borne disproportionately by the poor and the poor of the United States will not be the only victims: the Kyoto Protocol will deny the poor in developing countries a chance to raise their standards of living. While Kyoto will miss its global warming target, it will score a bull's-eye on the world's poor.
(Christopher L. Dodson is an intern with the National Center for Policy Analysis.)
The Foreign Policy in Focus Project
(FPIF -- a collaborative project of The Institute for Policy Studies and the Interhemispheric Resource Center -- is a "think tank without walls" composed of an international network of more than 650 policy analysts and advocates. It seeks to make the United States a more responsible global leader and global partner and, unlike traditional think tanks, is committed to advancing a citizen-based foreign policy agenda rooted in citizen initiatives and movements.)
WASHINGTON -- Powell's visit needs to focus on Asia's problems as well as terrorism
Starting this weekend Secretary of State Colin Powell will visit Pakistan, India, Indonesia, Malaysia, Thailand and the Philippines to bolster regional support for America's war on terrorism. But he will also be confronted with more pressing issues that threaten the peace and stability of the region: the ongoing conflict in Kashmir; ethnic and religious conflict in Indonesia and continuing human rights abuses by the Indonesian armed forces; political repression in Malaysia; and increasingly popular unrest over the American military presence in the Philippines.
Coupled with vast social and economic inequalities in the region, can the United States afford to concentrate solely on the terrorist threat in Asia? The following FPIF experts comment:
-- John Gershman is the Asia/Pacific Editor of Foreign Policy In Focus and author of "Is Southeast Asia the Second Front," Foreign Affairs (July/August 2002).
"Secretary of State Powell faces the challenge of demonstrating the State Department's relevance in the region, as it has been largely marginalized by the Pentagon as the primary agency driving the Bush administration's policy in Asia. While the Pentagon is expanding a web of military aid and alliances under the guise of fighting the war on terrorism, the security challenges facing the United States in Asia are not military.
Widespread economic and political grievances in Asia require a focus on strengthening democratic governance and fighting poverty. Powell's predicament is how to bring diplomacy back into U.S. foreign policy with an administration committed to militarizing U.S. policy in Asia."
-- John Miller is Outreach and Media Coordinator for the East Timor Action Network.
"If Secretary of State Powell is serious about opposing terrorism, he must forcefully speak out for genuine military reform, democratization, and justice for crimes against humanity committed by the Indonesian military, known as the TNI, in East Timor and Indonesia. Ongoing abuses against civilians in Aceh and West Papua must end, as well as assistance to radical Islamic groups such as Laskar Jihad. Powell must make clear that the Senate Appropriations Committee's decision to restore IMET military training to the TNI is not an endorsement as business-as-usual in Indonesia."
-- Sumit Ganguly is Professor of Asian Studies and Government at the University of Texas at Austin, and has just returned from India.
"Secretary of State Powell will find he will have to smooth ruffled feathers in India. There is growing impatience with Pakistan's inability or unwillingness to stop the infiltration of Islamic guerrillas into Kashmir. Many also felt that the American decision to pull out its citizens for fear of nuclear war was yet another sanction against India. Powell will need to reassure India that progress towards a stronger bilateral relationship is not in danger, and the United States needs to realize that there are people in New Delhi waiting to derail it. While Powell has to get tougher with the Pakistanis over infiltration, he also has to get Indians to think more creatively over Kashmir."