Environment Or Economy Is A Nonsensical Question

04/13/2017 08:34 pm ET Updated Apr 14, 2017

Our belief systems are one of the most powerful forces in existence. As history has shown this is true whether or not those beliefs are accurate. Inaccurate but firmly held beliefs fuel racism, sexism, Nazism and genocide.

One of the most dangerous, self-destructive beliefs alive and well in America and beyond is that protecting the environment damages the economy. Environmental regulations are said to cost too much, slow economic growth, hurt businesses, cost jobs and give other less-environmentally sound countries a competitive advantage.

The belief that environmental protections harm our economy is at the heart of the Trump Administration’s economic growth approach. Trump’s team is rolling back environmental protections from slashing clean air and water programs to allowing dumping of coal mining waste into rivers to loosening the environmental and human health regulations related to fracking. Their reasoning is that these types of environmental protections are harming the U.S. economy.

That reasoning is not supported by factual evidence. First, the costs of environmental regulations are not as high as right-wing pundits claim. Second the costs of lack of regulation aren’t factored into the total costs equation. Third, environmental programs and clean economy sectors produce jobs and economic activity in and of themselves.

So what do environmental protection and regulation programs actually cost? A common drumbeat in the political discourse is the need to shrink the size and cost of government. If that is the goal, dismantling or slashing the Environmental Protection Agency (EPA), which is the current strategy of the Trump administration, isn’t going to work.

Here’s why. According to the U.S. Office of Management and Budget (OMB), the total U.S. federal budget for 2015 was approximately $3.8 trillion. $2.45 trillion of that was in the category known as mandatory spending which is comprised primarily of entitlement programs including Medicare, Social Security and veterans’ benefits. $1.11 trillion of the total budget was allotted to discretionary spending which includes the military, food and agriculture, another chunk of veterans’ benefits programs, another chunk of Medicare, all general government administration costs and the energy and environmental regulation programs.

In sum, Social Security, Medicare, military expenditures and veterans’ benefits account for three quarters of the total federal budget. Payment on national debt is another 10%. That means everything else – education, transportation, science and space, housing, energy and environmental programs make up about 20% of the total budget. Energy and environmental protection programs account for less than 5% of total governmental costs. To make a direct comparison, the total annual EPA budget is approximately $8 billion. The budget for military and veterans’ benefits is approximately $758 billion. In fact, the EPA accounts for less than 1% of total federal spending. And yet, the Trump administration is planning to add approximately $50 billion to military by slashing the EPA. That math doesn’t work.

The other piece of the argument that environmental protections harm the economy is the belief that such regulations are so burdensome they drive businesses to failure. There isn’t a lot of research on the economic impacts (bad or good) of environmental regulation. The research that does exist doesn’t support the argument that regulations are a significant cause of industry failure.

Consider the coal industry. Anti-regulation proponents wail that clean air and water protections are to blame for the huge downturn in the coal industry. That’s just not true. The coal industry is falling victim to market forces including the unexpected influx of cheap natural gas from fracking and the rapidly dropping costs of renewable energy options. Sources including the New York Times, Time, and Reuters all document the market conditions that are the real culprits in coal’s demise. Recently, at a rally in coal country Trump promised to, “turn the EPA from a job killer into a job creator.” That same day Dayton Power & Light announced plans to close two of its coal-fired plants by next June, stating that “without significant changes in market conditions,” the plants would not be economically viable beyond 2018.

Consider also the automobile industry. General Motors didn’t tank because of regulation. It tanked in large part because Japanese automakers perfected smaller, more highly fuel-efficient cars to meet customer demand and GM failed to follow suit. This was coupled with the crippling costs of the ridiculously expensive U.S. health care system and GM’s contractual agreements to provide health care to employees. Foreign automakers do not deal with the burden of such expensive private health care costs. Whether or not you agree with the Obama Administration’s bail out of GM (and Chrysler) it worked and the companies are now going strong. It’s rarely pointed out that right in the midst of the bail out the government mandated significant increases in vehicle fuel-efficiency standards. Obviously those regulations weren’t too burdensome. Possibly, they contributed to the kind of innovation necessary for GM to redesign itself.

Now, Trump’s team has rolled back the most recent required increases in fuel-efficiency standards. This will add more profits to Big Oil but it likely won’t strengthen the U.S. automobile industry. The rest of the world is moving ahead with increasing efficiency and a burgeoning electric vehicle market. Failing to match these innovations will just make U.S. auto companies stagnant again.

So, there’s little evidence to suggest environmental regulations hammer the economy. Meanwhile there is strong evidence showing lack of regulation can be extremely costly, right now in the near-term. According to EarthJustice, despite significant progress in addressing the air and water pollution issues, air pollution still kills 1 in 20 Americans and more than 4 million women of childbearing age are exposed to levels of mercury that can harm fetal brain development. There is substantial evidence that growing asthma numbers, especially in children, are linked to toxins and particulate emissions from coal-burning power plants.

The health and human suffering concerns are clear but the direct economic costs have been less so. However, the Washington Post recently reported several new studies assessing the direct economic costs of pollution caused by energy production in the United States. In the year 2011 alone, those costs amounted to a staggering $131 billion. That’s a big number but it’s also a sign of progress because in 2002 those costs were even higher at $175 billion. During that decade the U.S. certainly didn’t consume or produce less energy, but there was a decrease in the amount of pollution associated with energy production. Regulations and pollution abatement technologies have been working.

EarthJustice notes that, according to the OMB, the benefits of all major environmental rules over the past 10 years have outweighed the costs by at least 2 to 1 and in some cases as high as 14 to 1. As high as these returns on investment are they cover only health care savings. If costs of environmental clean up efforts were factored in the benefit to cost ration would be even higher.

The third piece of the regulatory cost-benefit equation typically overlooked by anti-regulation proponents is that environmental protection and regulation programs are jobs generators in and of themselves.

A recent study by the OMB estimated that an EPA-mandated clean up of the Chesapeake Bay, which is on the chopping block under the proposed Trump budget, is “anticipated to create 35 times as many jobs as the proposed construction of the Keystone XL pipeline”, and “jobs in the coal industry actually increased by 10 percent after the EPA cracked down on mountaintop-removal mining in 2009” since more workers were required to do the extraction. Pollution abatement and control products and construction and environmental restoration projects create jobs.

In Gravity’s Rainbow, Thomas Pinchon noted, “If they can get you asking the wrong questions, they don’t have to worry about answers.” The question is not whether we should and can grow jobs – the question is what kind of jobs do we want to grow? And perhaps the most important question of all is, do we really believe we can have a thriving economy on a decimated, depleted planet? At the end of the day the economy is a wholly owned subsidiary of the environment that sustains us. To believe and act differently is not rational, but ideological.

These kinds of important questions will be addressed at the New Economy for Social Innovation forum in Spain in late April.

 

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