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October 06, 2010
The Brattle Group Completes Updated Report on the Effect of California Climate Policies on Small Businesses

Economists at The Brattle Group completed an update to their 2009 report The Economic Impact of AB 32 on California Small Businesses, which was a first of its kind economic analysis to determine how California’s Global Warming Solution Act (AB 32) is likely to impact small businesses across the state. The Global Warming Solutions Act requires the state to reduce its global warming pollution approximately 12 percent below current levels by 2020. In their 2009 report, Brattle economists found that potential changes in energy prices caused by AB 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 is used as a real world example to examine the effects of AB 32. To ensure a conservative estimate (or even overestimate) of AB 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 AB 32 will not significantly impact small businesses. In the Mercado case study, despite the fact that grocery stores are a highly competitive sector, the entire impact of AB 32 could be completely offset by retail price increases of, at most, 0.1 percent—so small as to be virtually unnoticeable to customers. The analysis was released today by the Union of Concerned Scientists. Brattle principals Jurgen Weiss and Mark Sarro led the study. Please follow the links below to download both the 2009 and 2010 versions of the report.