11/4/11
In recent months, some in Congress have been waging a whole-scale war against the Environmental Protection Agency. By now it has reached comical dimensions, with three separate bills aimed at preventing a so-called EPA “dust rule” that has never even existed.
The spectacle would indeed be funny, if it wasn’t deadly serious. Republicans in Congress and in the GOP presidential debates are seeking to defund an already cash-strapped EPA under the pretense of caring about the federal deficit and are trying to hamper the agency by arguing that its rules hurt the economy.
Quite to the contrary. We have 40 years of data to show that a cleaner environment goes hand in hand with solid economic growth.
In a 2010 analysis of rules passed in the prior decade, the non-partisan Office of Management and Budget calculated benefits-to-cost ratios across various government agencies. The EPA came out on top with the highest ratios by far, with benefits from its regulations exceeding costs by an average of more than 10 to 1. If you care about well-functioning, free markets, the EPA would be the last federal agency you’d want to cut.
As any economist worth his or her professional crest will tell you, regulation solves problems that markets ignore. For example, they ensure that the costs of those who pollute show up on their own books, rather than increase the costs for others — either those left with cleanup costs or the healthcare expenses of those who live downwind or downstream.
Those who create costs pay for them — that simple idea is the logic behind the Clean Air Act and most other environmental regulations. It forces markets to reckon with the true costs of doing business, to be more efficient, and to innovate. And it does so at a great benefit to society, even boosting GDP in the long run by making us all healthier and more productive.
But is now the right time to strengthen environmental rules? No major piece of U.S. environmental legislation has been passed when the unemployment rate was above 7.5 percent. (U.S. unemployment currently stands at 9.0 percent.) Environmental protection, after all, costs money that we don’t currently have, or so the story goes. Wrong again: smart environmental regulation creates long-term policy certainty and mobilizes capital in the short term.
Leave it to the CEO of one of the largest U.S. utilities to set the record straight. Michael Morris, the CEO of American Electric Power, said during an investors’ conference call last month that EPA’s proposed tighter mercury and toxics standards would be anything but a job killer: “Once you put capital money to work, jobs are created.” Someone needs to install the scrubbers and modernize the existing energy fleet.
As Josh Bivens from the Economic Policy Institute put it in a recent congressional hearing on the same EPA toxics rules: “In short, calls to delay implementation of the rule based on vague appeals to wider economic weakness have the case entirely backward — there is no better time than now, from a job-creation perspective, to move forward with these rules.”
“Green growth” isn’t just a catch phrase. It’s the only way to reconcile our relentless pursuit for material wealth on a finite planet with an atmosphere at the boiling point. The fact is that sound environmental regulations — whether they address dirty air or an overheating planet — can create jobs and be a boost, rather than a burden, for the economy.
