Statement by leading economists

December 7, 2005

The signatories below are all senior economists with expertise in the application of economics to environmental policy. We believe it important that the United States should move to control greenhouse gas emissions. There is now no credible scientific doubt that the composition of Earth's atmosphere is changing, that this change is driven in part by the emission of greenhouse gases from human activities, and that this change in atmospheric composition is changing Earth's climate. The United States' emissions of greenhouse gases constitute a major contribution to this process. The consequences of the climate change can be expected to be disruptive. Specific details of these effects at this stage remain uncertain. Nonetheless it is clear that any delay in the pace of change reduces the costs of adjustment. It serves as public insurance against more dramatic impacts and damages that can be expected when opportunities to adapt are limited.

It is important that greenhouse gas emissions be managed using an incentive based policy, such as a market-based approach to capping and reducing such emissions. This type of strategy provides clear incentives for changes in business practices and the development of new technologies. It assures that economic forces are directed to keeping the cost of reducing emissions as low as they can be. Many industrial nations have now adopted policies intended to limit greenhouse gases. As a result we can expect that the market for clean technologies will continue to grow over time. Adding industries in the United States to the other sources of these demands will help to reinforce this process.

George Akerlof ^
University of California at Berkeley

Kenneth J.Arrow ^
Stanford University

Edward Barbier
University of Wyoming

Robert T. Deacon
University of California at Santa Barbara

Walter P. Falcon
Stanford University

Hossein Farzin
University of California at Davis

Anthony C. Fisher
University of California at Berkeley

A. Myrick Freeman III
Bowdoin College

Lawrence H. Goulder
Stanford University

Theodore Groves
University of California at San Diego

Peter Hammond
Stanford University

Michael Hanemann
University of California at Berkeley

Geoffrey Heal
Columbia Business School

Gloria Helfand
University of Michigan

Larry S. Karp
University of California at Berkeley

Paul R. Kleindorfer
Wharton School of Business, University of Pennsylvania

Charles Kolstad
University of California at Santa Barbara

Roz Naylor
Stanford University

Jason F. Shogren
University of Wyoming

V. Kerry Smith
North Carolina State

David A. Starrett
Stanford University

Joe Stiglitz * ^
Columbia University

David J. Vail
Bowdoin College

Jeffrey Vincent
University of California at San Diego

James E. Wilen
University of California at Davis

* denotes a former member of the President's Council of Economic Advisers

^ denotes Nobel Laureate in Economics