Canada’s Budget Officer Admits the Truth About Global Warming’s Impact – Econlib
The Parliamentary Budget Officer (PBO) recently released a report on the effects of greenhouse gas emissions on Canadian GDP growth over the next 80 years. I’ve written previously about the recent economics literature investigating the link (or lack thereof) between global warming and economic growth. It’s a fascinating topic and I’ve been actively working with on it one of our PhD students for several years. While I would quibble with some aspects of the PBO report, the overall conclusions are not out of line with mainstream thinking on the topic. Which is why the findings are so astonishing and radical compared to what the government has been saying.
The PBO estimated what would happen to the Canadian economy between now and 2100 if temperatures and precipitation change as expected due to greenhouse gases. The report’s authors consider two scenarios—first, if emission-reduction policies stall at today’s levels and nobody complies with their Paris commitments, and second if countries comply with all their Paris commitments in full and on time. Under the first scenario Canada’s GDP in 2100 will be 6.6 per cent smaller than it otherwise would be.
Let’s pause there for a moment: 6.6 per cent after 80 years is a very small number. Canada has set out ambitious economic growth plans based on high levels of immigration and continued efforts to boost productivity and income. Suppose this results in 2 per cent real GDP growth from 2021 to 2100. That would mean Canada’s economy will grow by 388 per cent over those 80 years. According to the PBO, if we do nothing about global warming, it will instead grow by about 381 per cent.
This is from Ross McKitrick, “Parliamentary Budget Officer Just Demolished Climate Alarmism,” Financial Post, December 7, 2022, republished by the Fraser Institute, of which Ross is a senior fellow. Ross is also a professor of economics at the University of Guelph.
I hadn’t heard of the Parliamentary Budget Officer before. It turns out that Prime Minister Stephen Harper established it in 2006, when he first came to power. It’s kind of like California’s Legislative Analyst’s Office, in that both are independent of the various parties.
There is one error in the segment quoted above. If in 2100, Canada’s GDP, absent anyone complying with the Paris commitments, will be 6.6 percent lower than it otherwise would be, then Ross gets the overall growth wrong. Here’s the math:
Let x be GDP today. Then, with the Paris commitments complied with, growth will be 2 percent annually.
So GDP in 2100 will be x(1.02^79) = 4.78x. So Ross is right so far. GDP grows by 378 percent.
Now, with the Paris commitments not complied with GDP in 2100 would be 6.6 percent lower. That means it would be 478x*(0.934) = 4.64x. So GDP grows by 364 percent, not his 381 percent. It’s not a huge difference but it’s important to do the math right.
Notice that either way, Canadians would have much higher GDP in 2100.
I think the most important part of the quote from his article is this:
While I would quibble with some aspects of the PBO report, the overall conclusions are not out of line with mainstream thinking on the topic. Which is why the findings are so astonishing and radical compared to what the government has been saying.
It’s nice to see the budget officer not denying the economics of global warming.