Study Reaffirms That A.B.32 Would Have Minimal Economic Impact On Businesses

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Economists at The Brattle Group have updated their 2009 report, ‘The Economic Impact of AB 32 on California Small Businesses,’ which was an economic analysis to determine how California's Global Warming Solution Act (A.B.32) is likely to impact small businesses across the state. A.B.32 requires the state to reduce its global warming pollution approximately 12% below current levels by 2020.

In their 2009 report, Brattle economists found that potential changes in energy prices caused by A.B.32 would have only a minor impact on California's small businesses. The update to the 2009 report incorporates newly available energy market data and a new small business case study, which operates in a different economic sector and geographic area than the case study used in the 2009 report.
In the 2010 update, the Mercado International 2000 grocery store in Chula Vista, Calif., is used as a real-world example to examine the effects of the global warming legislation. To ensure a conservative estimate (or even overestimate) of A.B.32's economic effect, the authors used price and cost inputs that reflect a relatively expensive and pessimistic set of outcomes.

The report reaffirmed its previous finding that A.B.32 will not significantly impact small businesses. The Mercado case study found that despite the fact that grocery stores are a highly competitive sector, the entire impact of A.B.32 could be completely offset by retail price increases of, at most, 0.1%, according to the report.

SOURCE: The Brattle Group

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