The below post summarizes an economic argument for regulation pollution. It’s a good argument, one many of us have seen before in the great halls of academia. The purpose of the post is to mainstream this argument - that regulating pollution has more (far far more) economic benefits than does deregulation.
Buutttt (it seems lately I have a lot of “buts.” Anyway…) I have to preempt the below post with two questions: We are dependent on constant economic growth. And it seems there’s no alternative - we have to grow, grow, grow forever and always or there will be no jobs, etc… Thus, how much growth do we really want? Second, is economic growth the only winning argument that wins over the hearts and minds of policy makers to regulate pollution?
Pollution is Not the Secret to Job Creation
"Paul Krugman’s column in the New York Times this morning laments one of the many ironies of our time: politicians in Washington are finally talking about job creation but Republicans (and some Democrats I’m sure) pin their hopes for employment on environmental deregulation. As Krugman points out, “Serious economic analysis actually says that we need more protection, not less.”
By serious economic analysis, Krugman means peer-reviewed articles published in academic journals over the last few decades that have probed the relationship between environmental regulations, employment, and economic growth. He doesn’t mean the American Petroleum Institute’s latest report that purports to show job growth potential through….wait for it…relaxing restrictions on oil and gas extraction. He means the latest findings by Yale University economist, William Nordhaus, published in the American Economic Review (the top ranked journal in economics) that finds that the economic cost of air pollution exceeds the value added of coal-fired electric generation by a factor of nearly 6 to 1. And this estimate doesn’t include the economic damages from climate change. Pollution related costs impede productivity and growth in the U.S. economy. Imposing more of these costs on society through deregulation is not only undesirable, it is bad economic policy.
So let’s review what economists do know about the relationship between environmental regulation and jobs. The oft-cited concern is that environmental regulations will increase production costs, raising product prices and decreasing the quantity of goods and services demanded. The good news, however, is that empirical evidence finds little support for wide-scale job losses or relocations arising from strengthening of environmental policies in the U.S.
The economics research on this topic extends back over the last few decades. The Clean Air Act Amendments of 1990 marked the last significant package of environmental regulation passed in the U.S. and the creation of NAFTA in 1994 presented new opportunities for U.S. firms to relocate abroad to avoid environmental regulations. Thus, there is an extensive literature that covers a long time period that evaluates how environmental regulations impact businesses, employment, and income.
The economics literature covering this history supports three conclusions. The first conclusion is that…”
Read the rest: Real Climate Economics
H/T: Mohandas Gandhi.Tumblr