could be, once Kyoto would be ratified, mandated reductions in energy consumption or mandated transfer to more energy-efficient technologies in order to reach those goals. Ms. YELLEN. Well, that is not a conclusion that I would endorse. I've indicated that the President's policy relies centrally on flexibility mechanisms, both domestically and internationally. He's proposed an emission trading system which provides maximum domestic flexibility and a set of policies leading up to that that we think are win-win and that have been very clearly specified and presented in the budget. Mr. MCINTOSH. Right. And I understand that, but I also want to say in closing that I do think in this "right to know" that we ought to also disclose to the American people what happens if we move forward and sign the protocol and ask the Senate to ratify the treaty, and it ratifies the treaty and those policy goals are not able to be met. I mean, what does it mean to move forward if those policy goals can't be met? And my understanding, although I haven't read it directly, is that the treaty would be binding law and would require us, in the absence of trading, to meet the reductions domestically through some mechanism that would be mandated from the government. Ms. YELLEN. It is a perfectly reasonable and important set of concerns to ask what happens if the administration's policy isn't carried out as we've explained it. Our emphasis has been to not attempt to calculate the likely impact of a treaty under a huge number of hypothetical conditions, but to focus on analyzing what is the President's policy, not what is not the administration's policy. Mr. MCINTOSH. And you have said that very eloquently. And I guess I want to be careful and not make this overly partisan, but I am very concerned that when the Vice President signed the treaty and they left out even the voluntary participation clause, that perhaps some of the emphasis on those policies of trading, by others at least-and I don't expect you to be able to agree to thisis less vigorous than your adherence to the need to have trading. And that gives me trouble in looking at this whole-that's one of the reasons I want to know what happens if something else occurs. But having worked in an administration, I understand that there are multiple people and that you are doing a good job of representing their position. I have nothing more for Dr. Yellen. Thank you, we really will insist on getting the answers to our inquiries and we will be down to look at the documents. Ms. YELLEN. We are working very hard on getting the answers. Mr. MCINTOSH. My perspective is that that should also be widely available for others to look at. Thank you for coming today. Let me call forward our second panel. These are two outside economists, people who are not part of the government, who have looked at these questions. One is Dr. David Montgomery, who is Vice President of Charles River Associates. And you will have to pardon me, but I am looking for my materials. Who is the other witness? Dr. Austin, who is with World Resources Institute. Welcome, Dr. Austin. Mr. AUSTIN. It is Mr. Austin. Mr. MCINTOSH. Let me now request once again, as I mentioned to Dr. Yellen, there are a couple of requirements that our committees have. One, for all witnesses to agree to be sworn in, and then-so let's do that. [Witnesses sworn.] Mr. MCINTOSH. Thank you. Let the record show that each of the witnesses answered in the affirmative. Another House rule-go ahead and be seated-is for witnesses that represent an organization prior to the testimony, or if you want to do it in writing afterwards that is fine because it is not intended to be something that is playing "gotcha," but that you disclose for the record any grants or contracts that you would have with the government or any government agency. Do either of you know if your organizations do? And if you need time to find that out, then disclose it to us, that is fine too. Mr. Montgomery. Mr. MONTGOMERY. I can answer for Charles River Associates, we have received no Federal Government funding of any kind for climate change research during-as I think I remember this from a previous appearance during the current or previous past 2 fiscal years. To the best of my knowledge, CRA has never sought or received any Federal funding in this area. We do have some amount of work that is done for the Federal Government in entirely unrelated areas, and if that's of interest to the committee, I could provide that for the record. Mr. MCINTOSH. Yes, sir, I believe the rule requires it to be any type of government contract. So if you could provide that for the record, that would be helpful. [The information referred to follows:] WORLD RESOURCES INSTITUTE 1709 New York Avenue, N.W., Washington, D.C. 20006, Telephone: 202-638-6300 # May 21, 1998 The Honorable David M. McIntosh Chairman Subcommittee on National Economic Growth, Dear Hon. McIntosh: Thank you for the opportunity to testify at Tuesday's hearing on the economic impacts of climate protection. In response to your request, I attach a breakdown of funding sources for the World Resources Institute. In FY97, WRI received $3,170,692 from U.S. Government agencies, just less than a quarter of our total budget. Sincerely, Dunca Austi Duncan Austin Associate Economics and Population Program Recycled Paper Mr. MCINTOSH. Mr. Austin. Mr. AUSTIN. We do receive money from the government both for our climate work and other development work. I don't know what sort of magnitude those figures are, but I can make these available for the committee. Mr. MCINTOSH. That would be good and I ask unanimous consent that we hold the record open for 10 days to make that available. And there may also be followup questions to the panels, which the members would address to you, and you could include the answers at that same time. Let me now turn first to Mr. Duncan Austin, if you would present-we have your written testimony-present a summary of it for us. We will allot you 5 minutes for that. And then get into the panel discussion afterwards. STATEMENTS OF DUNCAN AUSTIN, ASSOCIATE, WORLD RESOURCES INSTITUTE; AND DR. W. DAVID MONTGOMERY, VICE PRESIDENT, CHARLES RIVER ASSOCIATES, INC. Mr. AUSTIN. Good afternoon. Thank you for giving me the opportunity to present a summary of the findings of a report that I prepared with Robert Repetto, called "The Costs of Climate Protection: A Guide for the Perplexed.' This seeks to address a single, key question which is what will be the effects on the long-term economic growth rate of the United States from making greenhouse gas emission reductions? And to highlight my conclusions at the outset there are three main conclusions. First, the predictions of economic models as we have seen today are largely dependent on their assumptions. In fact, six key assumptions explained much of the observed variance in different model results. The second key conclusion is that models offer insight into key policy decisions. And third, under a reasonable set of assumptions about the economy and with carefully designed policies, the government can make sure that climate protection will have little adverse effect on the long-term economic growth in the United States. As negotiations have proceeded over the last 5 to 10 years, there has been a spate of economic research, some of which has been referred to today. Even with all that work that has gone on, there has been little consensus that has emerged. And if I can draw your attention to exhibit 1 on the left-hand side, this demonstrates the lack of consensus. It is a picture of 162 separate results from 16 widely used models in the economy. Just to clarify, the X axis measures degrees of carbon reduction, starting from the left, with little or no carbon reduction, moving across to the right to really quite high levels of reduction in greenhouse gases. The Y axis measures the overall economic impact measured relative to GDP in the terminal year. At the bottom of the page, there are quite adverse effects to the economy. And as we move up, they become negligible and eventually positive. This picture demonstrates clearly the lack of sort of a single agreement on results. Some models predict really quite small reductions in carbon emissions will be quite expensive to obtain, |