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. (more…)
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