It's Only $300 Billion

By Cass R. Sunstein
Wednesday, May 10, 2006

For the United States, the cost of the Iraq war will soon exceed the anticipated cost of the Kyoto Protocol, the international agreement designed to control greenhouse gases. For both, the cost is somewhere in excess of $300 billion.

These numbers show that the Bush administration was unrealistically optimistic in its prewar prediction that the total cost would be about $50 billion.

And the same numbers raise questions about the Bush administration's claim that the cost of the Kyoto Protocol would be prohibitive, causing (in President Bush's own words) "serious harm to the U.S. economy."

With respect to the Iraq war, careful estimates come from Scott Wallsten, a former member of the President's Council of Economic Advisers who is now at the American Enterprise Institute. Writing at the end of 2005, Wallsten estimated the aggregate American cost at about $300 billion. With the costs incurred since then, and an anticipated appropriation soon, the total will exceed $350 billion.

With respect to the Kyoto Protocol, the most systematic estimates come from William Nordhaus and Joseph Boyer of Yale University. Writing in 2000, they offered a figure of $325 billion for the United States, designed to capture the full costs of compliance over many decades. This staggeringly large figure helped support Kyoto skeptics in the Bush administration and elsewhere, who argued that the benefits of the agreement did not justify its costs.

For the world as a whole, the comparison between the Iraq war and the Kyoto Protocol is even more dramatic. The worldwide cost of the war is already much higher than the anticipated worldwide cost of the Kyoto Protocol -- possibly at least $100 billion higher.

The worldwide cost of the war now exceeds $500 billion, a figure that includes the cost to Iraq (more than $160 billion) and to non-American coalition countries (more than $40 billion). For the Kyoto Protocol, full compliance is projected to cost less than $400 billion, because the United States would bear most of the aggregate costs.

Of course, legitimate questions can be asked about these numbers. For the Kyoto Protocol, the estimates require a lot of projection and guesswork; much depends on issues of implementation, which could drive costs up or down. Many environmentalists believe that the $325 billion figure is inflated. Perhaps technological innovations would significantly reduce that cost.

Congressional appropriations for the Iraq war will soon exceed $300 billion and counting (generally at a rate of more than $4 billion per month). But to obtain an adequate total, it is necessary not only to take account of appropriations but also to consider the full range of costs, which include more than 2,000 deaths and many thousands of injuries to U.S. servicemen and women. Specialists disagree about how to monetize these costs; some people object to the whole exercise.

In addition, a full assessment would have to look at benefits as well as costs. The Kyoto Protocol would reduce emissions that contribute to climate change, but to evaluate the agreement we need to know how much good it would actually do. What would the United States get for its $325 billion investment? Scientists agree that the Kyoto Protocol would make only a small dent in climate change by 2100. Its defenders respond that the agreement would spur new technologies and provide an international framework for major reductions.

By the time it ends, the war in Iraq is expected to cost the United States at least $500 billion and possibly $1 trillion or more. But if the war leads to a large decrease in the risk of terrorist attacks and to a wave of democratization in the Middle East, perhaps the money will have been well spent.

The central point remains. For the United States, the economic burden of the Iraq war is on the verge of exceeding the total anticipated burden of the Kyoto Protocol. Because the price of the war increases every day, its total cost, for America as well as the world, will soon dwarf the expected cost of a remarkably ambitious effort to control the problem of climate change.

The writer is a professor of law and political science at the University of Chicago and the author of "Risk and Reason."

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