Jewish World Review Dec. 26, 2002 / 21 Teves, 5763

Jack Kelly

Jack Kelly
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Learning from Canada's economic suicide


http://www.NewsAndOpinion.com | Canada may have committed economic suicide last week. Political disintegration could follow. It will take a while before the poison Parliament swallowed when it ratified the Kyoto treaty on global warming to work its way into the body politic, so we'll have some time to figure out how a Canadian meltdown might affect us.

The Kyoto treaty obligates Canada to reduce its emissions of carbon dioxide by 30 percent by the year 2012. The government of Prime Minister Jean Chretien says the cost to Canadians will not be significant, only about half a percent of gross domestic product.

The government of the province of Alberta begs to differ. It estimates that implementation of Kyoto would reduce Canada's GDP by 2.5 percent or more, and would cost Alberta alone up to $40 billion (about $27 billion U.S.), and reducing employment in the province by 40,000 to 70,000 jobs.

Alberta's numbers are in line with estimates done by independent analysts, said Ross McKitrick, an economics professor at the University of Guelph in Ontario. McKitrick estimates implementation of Kyoto would cost the typical Canadian household $2,700 ($1,780 U.S.) a year, mostly in the form of higher taxes and higher prices for electricity and gasoline. Economist Marc Jaccard predicts electricity costs will rise up to 85 percent in some provinces, after-tax gasoline prices by 50 percent.

The costs will be unequally shared. The Kyoto hammer will fall especially heavily on the prairie provinces, where distances are great, mass transit options are few, and there are few sources of hydroelectric power to replace electricity generated by burning fossil fuels.

All the pain would be for little gain. Even if all manmade production of carbon dioxide were stopped entirely, "the amount is so small in comparison with that produced by nature that it is less than the uncertainty in the measurement of carbon dioxide that is transferred in and out of the oceans or the soil and forests each year," said Dr. Tim Ball, who taught climatology at the University of Winnipeg.

"Canada will suffer the worst of both worlds from Kyoto," said the National Post in an editorial. "Ratifying the treaty will discourage investment and invite layoffs. On the other hand, because Ottawa will never actually meet the treaty's stringent carbon emissions targets, we won't help cool the earth, either."

It isn't even clear that global warming is a problem. Computer models show a warming trend, but real world measurements over the last 25 years do not. And such modest warming as has occured has been at night, during winter. Such warming would not be a tragedy in Canada.

The grossly unequal distribution of pain will exacerbate longstanding political tensions between Canada's West and the rest. The original Canadian Confederation was compromised of Ontario, Quebec and the Atlantic Provinces, and the political elite which has governed Canada ever since has had difficulty recognizing (except when it is time to collect taxes) a Canada west of Windsor.

No one does appeasement the way Canadian liberals do appeasement, and concessions Canada's ruling Liberal Party has made to appease the now moribund secessionist movement in Quebec could come back to bite it. The Liberals conceded to Quebec the right to secede under certain circumstances. The Quebecois were never likely to exercise this right, but liked using the threat of it to get attention and federal money.

The western provinces are different. If pressed hard enough, Alberta and British Columbia will hold referenda and be out the door. This outcome is unlikely, but is a distinct possibility if Kyoto hammers the Canadian economy.

Canada could avert catastrophe by doing what some European governments have done: to pay lip service to the Kyoto treaty while ignoring those provisions which would be harmful. If Canada does this and gets away with it, this could be a model for us to follow.

But if Ottawa actually tries to do what it has pledged to do, we need to decide which Canadian provinces we'd be willing to accept into the union.

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© 2002, Jack Kelly