Comments on: Brookings: Fears that cap and trade will hurt farmers are baseless

By: djrabbit

djrabbit — Tue, 16 Jun 2009 23:39:59 +0000

To rephrase in a less snarky way, a major flaw with many of the cost-projections surrounding this debate is that they look only at “first order” effects. That is, they assume (against experience and standard economic theory) that in response to new and different price signals, economic players make zero changes to their behavior. That is silly, dishonest, and frankly quite insulting.

If cost go up for all farmers (first order effect), farmers will pass the higher cost on to their customers (second order effect) or change their operations in ways that avoid those cost increases (another second order effect). Customers will then change their behavior in response (third order effect), which will cause farmers to respond in kind, and so on.

By: djrabbit

djrabbit — Tue, 16 Jun 2009 22:13:01 +0000

@SamB: Farm income is expected to decrease 94% by 2035.

At which point all US farms will shut down because it’s not profitable enough, right? Despite the rising demand of some 8 billion hungry, increasingly meat-eating consumers worldwide… (Crazy alternative scenario: rising demand increases farm-output prices, preserving farmers’ profit margin.)

By: gmo

gmo — Tue, 16 Jun 2009 17:08:12 +0000

re: SamB June 15th, 2009 at 6:16 pm – “Looks like we have some actual numbers.”

Ha, “actual” numbers! At least we thus know we need not worry about SamB being one of those who would trash climate models as being inaccurate.

re: MikeN June 15th, 2009 at 11:17 pm

My suspicion is that in your scenario there would also be a real Waxman-Markey option out there too that would be much stronger in pushing us toward lower carbon emission levels faster so that what we see now in reality would look relatively like a sham and a sellout.

By: MikeN

MikeN — Tue, 16 Jun 2009 04:17:30 +0000

I have a suspicion that if Waxman-Markey had been Kasich-Pence, supported by George Bush, all these environmentalists would be calling it a corporate sellout and a sham bill, and the reaction on this blog would be quite different.

By: Matt Dernoga

Matt Dernoga — Tue, 16 Jun 2009 00:16:36 +0000

because the Heritage Foundation is a non-partisan organization that would never fudge numbers

By: SamB

SamB — Mon, 15 Jun 2009 23:16:36 +0000

Economists at The Heritage Foundation’s Center for Data Analysis are digging deeper into the effects of the Waxman-Markey climate change legislation that includes a cap and trade plan to reduce carbon dioxide by 17 percent below 2005 levels in 2020 and by 83 percent below 2005 levels in 2050. Today’s victim: Farmers. Our CDA analysts found that Waxman-Markey would adversely affect farmers in a number of ways:

• Farm income (or the amount left over after paying all expenses) is expected to drop $8 billion in 2012, $25 billion in 2024, and over $50 billion in 2035. These are decreases of 28%, 60% and 94%, respectively.
• The average net income lost over the 2010-2035 timeline is $23 billion – a 57% decrease from the baseline.
• Construction costs of farm buildings will go up by 5.5 percent in 2025 and 10 percent by 2034 (from the baseline).
• By 2035, gasoline and diesel costs are expected to be 58 percent higher and electric rates 90 percent higher.

Looks like we have some actual numbers. The economists are wrong on unemployment. Biden admitted it. Waxman is not up on farming or agriculture costs for some reason. Even CAFE standards tax a farmer buying a good sized work truck. You can’t haul a 2,000 pound hay bale on a tiny Fiat pickup with a 4 cylinder engine.