New Zealand May Go Bust Over Global Warming

As America seems to be heading whole-hog into embracing the idea that global warming is going to ruin the earth and that America is the one to save it, it is worth looking into what this gamble is going to cost us. We cannot trust the wildly-divergent numbers various economists throw around as they seem to be able to manipulate the numbers to suit their purpose. Instead, we can look to what is happening in other countries who have already adopted Kyoto and are about to pay the steep price tag of compliance.

Here, from one of our regular contributors Dennis Avery, is a look at the cost of climate change mandates in New Zealand.

Emperor of Global Warming Has No Clothes
No country in the world would risk as much for “global warming” as New Zealand if it goes ahead with the cap-and-trade energy taxation installed by Helen Clarke’s now-departed Labour Government.

New Zealand’s economy is almost completely dependent on its farm exports: lamb, dairy products, beef and high-end white wines. Half of New Zealand’s carbon emissions come from cattle and sheep. If New Zealand taxes its cows and sheep hundreds of dollars per animal for methane emissions and manure handling fees, Argentina would almost immediately displace New Zealand’s farm exports. Argentina has more grass, more cattle, the potential for more lambs, a surging wine industry--and no Kyoto obligations.

Based on U.S. and Australian “discussions,” a 500-cow dairy might have to pay $250,000 per year for cattle emissions and manure handling permits, plus a hefty increase in its costs for low-carbon electricity and diesel. An Argentine dairy would pay none of these increased costs--and every dollar of cost differential would be a further incentive for Argentine dairymen to expand their exports at the expense of New Zealand.

That would leave Kiwi cities like Auckland and Christchurch without visible means of support.

I said this recently to several New Zealand government ministers and business leaders at a private dinner in Wellington. My message was not welcomed. John Key’s new government seems to understand that New Zealand’s economy would be at terrible risk from carbon taxes--but its voters apparently don’t realize it.

The Clark government told New Zealand voters that the cost of “leading the world” with a carbon tax would be about $150 per year. That figure is laughably low. The British government now admits its new carbon tax law could cost as much as $27,000 per UK family.

The Key government has temporarily suspended the cap-and-trade, but has not dared repeal it. Meanwhile, Australia’s Prime Minister Kevin Rudd is installing his own cap-and-trade, and playing footsie with President Obama on “solidarity” with a U.S. carbon tax. If Australia and the U.S. agreed on some benchmark carbon tax, most New Zealanders would expect their country to join in.

Never mind that the earth’s global warming stopped after 1998 because the sun has gone into a startling quiet period. That’s why New Zealand’s many glaciers have been growing recently instead of receding. Never mind that even full member compliance with Kyoto would “avoid” only about 0.05 degree C of warming over the next 50 years--by the alarmists’ own math.

The urbanites in New Zealand don’t really appreciate the sophisticated management that juggles pastures and feed crops that produce milk, cheese and Merino wool. They love the wine, but don’t understand the massive per-acre investments needed to turn their grapes into award-winning vintages.

Meanwhile, Obama’s U.S. government has just punished New Zealand with trade-distorting dairy export subsidies--because our corn ethanol program has pushed our cost of dairy feed too high. World corn prices have doubled in real terms, and may go higher as our ethanol mandates keep rising. That jacks up the U.S. cost of “alternative fuels” even further--while New Zealand will have to file a well-justified case against America under the World Trade Organization rules.

Ah, what a tangled web we’re weaving, rather than admit the Emperor of Global Warming has no clothes.

Dennis T. Avery is an environmental economist, and a senior fellow for the Hudson Institute in Washington, DC. He was formerly a senior analyst for the Department of State. He is co-author, with S. Fred Singer, of Unstoppable Global Warming Every 1500 Hundred Years, Readers may write him at PO Box 202, Churchville, VA 24421 or email to cgfi@hughes.net.