Our guest blogger is Tom Kenworthy, a Senior Fellow at the Center for American Progress.
“Citing a new study by the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri,” Sen. Kit Bond (R-MO) today warned of the “disastrous effect” clean energy legislation would have on Missouri farmers. Using data from CRA International, FAPRI found that the Waxman-Markey American Clean Energy and Security Act “will cost the average Missouri farmer an additional $11,000 a year in 2020 and more than $30,000 a year by 2050.” During an Environment and Public Works Committee hearing on climate legislation and the agriculture sector, Bond claimed:
Missouri farms will face tens of thousands of dollars each year in new, higher energy costs from the House cap and trade bill.
This study is a classic example of “garbage in, garbage out.” FAPRI itself concedes some of the limitations of its study, which “hinges directly on the energy price effects” predicted by CRA International in its May 2009 study prepared for the National Black Chamber of Commerce, an ExxonMobil-funded offshoot of the U.S. Chamber of Commerce. Sen. Bond specifically pointed FAPRI to the CRA study in his request for an analysis of possible impacts on Missouri farmers.
CRA has a history of flawed work, grossly overestimating the costs of compliance with pollution standards. In 2008 it did an analysis of some of the economic impacts from the Warner-Lieberman climate change bill on behalf of the Edison Electric Institute. Members of the electric utility lobbying group subsequently had to ask for revisions to assumptions used by CRA.
“This report is not a full analysis of the impact of H.R. 2454 on Missouri crop producers,” the FAPRI report’s introduction admits. The FAPRI study does not consider the positive economic impact on Missouri farmers of selling carbon offsets under Waxman-Markey, nor does it include possible gains from biofuels production. Under Waxman-Markey farmers can also take advantage of energy efficiency credits to improve their bottom line.
In the 2009 study used as the basis for the FAPRI report, CRA estimates electricity rates will rise by 16 percent by 2020. An EPA study of Waxman-Markey concluded that consumer utility spending, when the benefits of efficiency measures are included, would be about 7% lower in 2020. A separate analysis by the Natural Resources Defense Council found that Missouri households would save $6.32 a month by 2020 under Waxman-Markey.
In a separate analysis of the impacts of Waxman-Markey on farmers, the head of Iowa State University’s Center for Agricultural and Rural Development wrote that “the negative impacts on agriculture will be relatively small.” According to the Des Moines Register’s Green Fields blog, director Bruce Babcock predicted the production cost increase for soybean and corn farmers would be $4.52 an acre.
The FAPRI study also fails to consider the costs to farmers of inaction on climate change, which numerous studies have shown will be significant.
Last month’s comprehensive report on the impacts of climate change by the U.S. Global Change Research Program, for example, predicted that U.S. farmers will face daunting challenges in a warming world. They include increasing downpours, floods, droughts, and crop damage from insects and diseases:
Even moderate increases in temperature will decrease yields of corn, wheat, sorghum, bean, rice, cotton and peanut crops.
Farmers are already paying some of the costs of climate change. A 2000 study by the Harvard Medical School’s Center for Health and the Global Environment showed that extreme weather events have “caused severe crop damage and have exacted a significant economic toll for U.S. farmers over the past 20 years.”
Update:
At Prime Buzz, Dave Helling notes that for Bond to claim that cap-and-trade has a $11,000 cost, he relies on FAPRI’s “representative” 1,900-acre farm in Lafayette County, MO:
But most Missouri farms are nowhere near 1,900 acres. In fact, the USDA says, more than 87 percent of Missouri farms are 500 acres or less. Less than 4 percent are between 1,000 and 2,000 acres.
The average Missouri farm, in 2007: 269 acres.
So let’s do some math.
$11,649 in added costs, divided by 1,900 acres comes to about $6.13 per acre. Multiply that by the average Missouri farm — 269 acres — and the average annual impact for Missouri farmers comes to $1,648.97, or about $137 a month.
Bond’s estimate is seven times higher.