In March 2001, President George W. Bush declared that "Kyoto is dead" and that the United States would not move to ratify the Kyoto Treaty.
Arguing that the treaty would harm the U.S. economy and deprive Americans of millions of jobs, Bush firmly rejected the global warming protocol that the majority of the world supported. From Bush's short-term economic perspective, withdrawing from the Kyoto Treaty was a sound economic decision. However, from a long-term economic perspective, the withdrawal from the treaty will inevitably lead to long-term economic problems and missed economic opportunities.
In Bush's words concerning the Kyoto Protocol, "I won't support a plan that will harm the American economy and hurt American workers." Bush's description of the plan, to an extent, is quite true. Low pollution emission standards placed on coal, oil and nuclear power plants throughout the country would have immediately increased the price of energy. As a result, many industries would have been forced to raise prices to compensate for higher energy costs.
Thus, households, businesses and even the government would have then had to begin paying much more not only for energy, but for goods and services as well. This is not to mention how the prices of gas, heat, air conditioning and other vital sources of power and comfort would increase.
Because companies, firms and businesses would have had to reduce inventory due to higher costs, they would have had to eventually decrease wages and cut jobs. For example, if it had become more expensive for Gillette to produce razors because of higher energy costs, the company would have been forced to reduce the amount of razors produced and eventually fire workers.
Overall, according to Environmental Protection Agency statistics, the Bush administration estimated that signing the Kyoto Treaty could have resulted in up to 5 million unemployed workers, as well as reducing the U.S. Gross Domestic Product (GDP) by one to four percent in the next 10 years. Signing the Kyoto Treaty could have created a situation like the 1970s OPEC oil shocks, in which everyone would have been affected, not simply one industry. So Bush's choice to pull out of the Kyoto Treaty was a sound economic decision.
However, the administration's analysis of the economic impact of the Kyoto Treaty is flawed because it has only been viewed from a short-term perspective of 10 years at the most. Long-term economic analysis of the Kyoto Treaty is necessary for a complete comprehension of the protocol's economic effects.
The United States is the world's greatest economic power, as well as the world's greatest pollution producer. As global warming worsens annually, the frequency of hurricanes, erratic weather, droughts, floods and other bad weather conditions increases. These atmospheric conditions have the potential in the next century to seriously damage the farming and crop-holding industries and any industry that relies on water transportation, as well as coastal cities. Not to mention that the recent hurricanes have caused billions of dollars in damages.
Withdrawing from the Kyoto Treaty did not help ameliorate this potentially devastating economic situation. Unless U.S. industries are forced to reduce emission rates today, as the Kyoto treaty would have done, long-term economic problems will occur due to a vastly erratic weather system.
The U.S. withdrawal from the Kyoto Treaty was also a problem from a theoretical economic point of view. One of the keys to economic growth is technological innovation. Signing the treaty would have forced the U.S. government and American firms to urgently invest and search for new energy sources and fuel-efficient technologies. This will be costly in the short-run, as was investing in the auto industry at the end of the 19th century or Thomas Edison's system for electric lighting. But this will create jobs in itself, result in revenues for businesses and profits for investors and introduce new services to consumers.
Just as the development of electricity helped our economy grow significantly 100 years ago, so will the development of new sources of energy and fuel-efficient technologies help our economy grow. Withdrawing from the treaty created less urgency to develop new, innovative energy technologies and sources and thus will take much longer to develop.
This leads to the final long-term economic problem that withdrawing from the treaty created. As the supply of fossil fuels gradually decreases in the future and may even run out in the next 100 years, the price of energy will rise significantly and pose a serious problem for the U.S. economy. Catastrophic economic conditions will occur when the supply of coal, oil and natural gas runs out; that is, unless there is an alternate source of energy or fuel-efficient technology available.
So, though Bush may have helped our economy today by not signing the Kyoto treaty, he may be destining the long-term U.S. economy for failure by creating little urgency to develop new energy sources and technologies.
The effects of withdrawing from the Kyoto Treaty are difficult to quantify and determine, as there are many factors to measure and analyze. Yet it is clear that the United States' withdrawal from the protocol was a good short-term economic decision but a bad long-term one. If America had adopted the Kyoto Treaty today, it may have put many people out of work and hurt an already sluggish economy at first, but ensured a strong, innovative future economy, not to mention a far healthier environment.
Signing the Kyoto Treaty could have created a situation like the 1970'sOPEC Oil Shocks in which everyone would have been affected.
ed: leah
Stephan Vitvitsky is a junior majoring in Economics and Political Science. He can be reached via e-mail at Stephan.Vitvitsky@tufts.edu.
