Estimates of Decadal Cost to the United States of A Potential War in Iraq

(in billions of 2002 dollars)

These costs are the total for the decade following the conflict (e.g., 2003-2012). Negative numbers are benefits.

Notes:

[1] Protracted conflict assumes that the monthly cost is 50 percent greater than the CBO estimate and that the conflict lasts 8 months longer.

[2] The low and high numbers assume, respectively, peacekeeper costs of $200,000 to $250,000 per peacekeeper per year, with the numbers from 75,000 to 200,000, and for periods of 5 to 10 years.

[3] This includes, at the low end, reconstruction costs of $30 billion and minimal nation-building costs. At the high end, it adds a “Marshall Plan for Iraq” as described in the text.

[4] These estimates refer to a full-employment economy. The high estimate is based on Perry’s “worse” or middle case, which assumes a production decline of 7 mbpd offset by withdrawals from reserves of 2½ mbpd. The “happy” case assumes that OPEC increases production by 2/3 mbpd in the five years after the end of hostilities and that production stays at the higher level. The sign is negative to indicate a benefit or negative cost.

[5] The macroeconomic impact excludes the full-employment impacts in [4] and includes only the first two years of a cyclical impact.

Source: William D. Nordhaus, “The Economic Consequences of a War With Iraq,” in Carl Kaysen, Steven E. Miller, Martin B. Malin, William D. Nordhaus, John D. Steinbruner, War with Iraq: Costs, Consequences, and Alternatives, American Academy of Arts and Sciences, Cambridge, MA, 2002.