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CHAPTER 24

DO TREE HUGGERS DETER GROWTH AND EMPLOYMENT?

Myths, Labor Markets, and Environmentalism

Time and time again, U.S. citizens working to clean up the environment . . . banged into the same argument: cleaner and safer production standards will hurt U.S. business competitiveness and cost jobs.

—Robert Weissman, The Multinational Monitor¹

¹ See http://multinationalmonitor.org/mm2005/012005/weissman.html.

It is crucial for decision makers to profoundly understand the possible repercussions of sustainability policies on the global employment profile.

—-Harn Wei Kua, World Student Community for Sustainable Development²

² See www.wscsd.org/ejournal/article.php3?id_article=58.

The U.S. debate about environmental protection often assumes that saving natural resources means losing jobs. . . . Our survey of the environmental-protection employment climate led to the opposite conclusion.

—Roger Bezdek and Robert Wendling, Management Information Services³

³ See www.nature.com/nature/journal/v434/n7033/full/nj7033-678b.html.

As these quotations indicate, there is considerable disagreement about the existence and extent of trade-offs between jobs and the environment. This chapter highlights myths and realities in the debate about economic growth and environmental protection.

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Julia “Butterfly” Hill spent 738 days living in the canopy of an ancient redwood tree to try to prevent the Pacific Lumber Company from harvesting a forest that had stood for 1,000 years.⁴ Similar struggles concerning deforestation are taking place around the globe. The issue came to a head in the United States when President George W. Bush signed the Healthy Forests Restoration Act in 2003, allowing loggers more freedom to harvest trees in national forests.⁵ What appears to be a simple trade-off between lumber-related jobs and protection of wildlife is, in fact, a far more complicated situation. To begin with, many types of employment in addition to those that rely on lumber are involved. Forests and wildlife are a major draw in the global tourism industry, which directly provides 76 million jobs and indirectly supports 145 million more.⁶ The national park system in the United States generates 273 million visits per year,⁷ creating employment in restaurants, gas stations, and hotels along the way, not to mention jobs for people making and selling recreational vehicles and camping equipment. It is said that one-quarter to one-half of all medicines contain rainforest products,⁸ making forests integral to jobs in hospitals, doctors’ offices, pharmacies, pharmaceutical companies, and research labs everywhere. Then there’s the fact that, through a process called carbon sequestration, trees absorb carbon dioxide pollution that would otherwise contribute to global warming⁹ and release the oxygen people breathe to survive.

⁴ See www.circleoflife.org/inspiration/julia/.

⁵ For two perspectives on this law, see www.whitehouse.gov/infocus/healthyforests/ and www.sierraclub.org/forests/fires/healthyforests_initiative.asp.

⁶ See www.world-tourism.org/tsunami/news/67.pdf.

⁷ See www2.nature.nps.gov/stats/abst2005.pdf.

⁸ See, for example, www.dnr.state.mn.us/forestry/rainforests.html.

⁹ For more on global warming, see www.climatecrisis.net/thescience/.

An honest assessment of the value of trees cannot discount the facts that humans need a critical mass of vegetation in order to live another day and work another shift, and that the planet is currently experiencing a period of rapid deforestation. Because standing trees are so important to life on earth, the World Bank and the Global Environment Facility are working with several clients in South and Central America to develop payment mechanisms for the “global environmental services” provided by forests that are left intact.¹⁰ It is the job of environmental and natural resource economists to bring to light all the potential costs and benefits of environmental policies so that efficient decisions can be made. The next section provides a case study of policy dilemmas that pit employment against the environment.

¹⁰ See www.thegef.org/ and http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTARD/EXTFORESTS/0,content MDK:20869381~menuPK:985797~pagePK:64020865~piPK:149114~theSitePK: 985785,00.html.

In 1972, officials began closing the beaches on Lake Pontchartrain near New Orleans because of harmful levels of pollution in the water. Jobs in the neighboring chemical and oil industries gained precedence over the environment, but with the environmental decline came a commercial decline as well. In 1983, the Pontchartrain Beach Amusement Park, with its famous Zephyr ride, closed, as had the Lincoln Beach Amusement Park years earlier. These and related losses of enjoyment and jobs led to the formation in 1989 of the Lake Pontchartrain Basin Foundation to remediate the environmental damage. The policymaking pendulum swung toward health and wildlife and away from jobs in 1992, when new leases for oil and gas drilling in the lake were banned in a move to prevent further harm from oil spills, dredging, and habitat destruction. By July of 2005, swimming was again allowed in some areas, and large groups of endangered manatees swam in the waters.¹¹ Then on August 29, Hurricane Katrina devastated the Gulf Coast, and Lake Pontchartrain bowed once again to greater needs. After the storm, billions of gallons of toxic floodwater were pumped into the lake to help make New Orleans livable and commercially viable again.

¹¹ See www.saveourlake.org.

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Halfway between Lake Pontchartrain and the French Quarter of New Orleans is the former Agriculture Street Landfill, where a century’s accumulation of industrial wastes, including lead, arsenic, dioxin, and DDT, were buried beneath a mat barrier and 2 feet of topsoil. Hurricane Katrina’s floodwaters surrounded this and other toxic repositories; picked up fuel, paint, and cleaning solvents from approximately 168,000 homes; and swept through countless vehicles and industrial sites. After weeks of being submerged under water that contained heavy metals and other toxins, environmentalists said, the soil in New Orleans would be laden with dangers. Having decided to use Lake Pontchartrain to support jobs rather than endangered species, policymakers now had to decide when to allow seafood, livestock, and other agricultural products to be harvested from the area. If they can’t be sold and eaten, potentially tainted shellfish don’t create jobs for fishers, truckers, wholesalers, and restaurant workers.

Policymakers also had to decide when to permit residents to return, when to allow businesses to reopen, and how much to spend to restore the safety of the land in and around New Orleans.¹² The city’s mayor, Ray Nagin, and President Bush disagreed over when to allow people to return to the city, with Nagin wanting to give the green light sooner rather than later. In mid-September business owners were allowed back into the French Quarter and other areas of the city that had not been flooded, and residents of some neighborhoods began to return in late September. The area became one of the most expensive cleanup sites ever, with the total price tag estimated at about $200 billion.¹³ Of course, every dollar spent on cleanup was a dollar earned by an employed worker. The decision to return New Orleans to the ways of cleaner days was both a boon to health and environmental concerns and a boost for an economically depressed area.

¹² In the landmark 1979 case that incited the Comprehensive Environmental Response, Compensation, and Liability Act, the Environmental Protection Agency spent $101 million (later reimbursed by parent company Occidental Petroleum Corp.) to clean up the Love Canal dumpsite of Hooker Chemical Co. near Niagara Falls in western New York. After homes and a school were built over the dumpsite, at least 82 toxic chemicals had seeped into the soil, causing severe health problems and displacing 700 families.

¹³ See www.msnbc.msn.com/id/9358118/.

The discussion of the value of human lives in Chapter 15 is relevant to environmental policy debates, although there is no consensus on a particular value among current decision makers. The Environmental Protection Agency (EPA) has valued each life at $4.8 million when evaluating Clean Air Act amendments¹⁴ and at $6.3 million in the assessment of deaths caused by viruses in contaminated groundwater.¹⁵ Other government agencies use a range of values between $1 million and $7 million per life.¹⁶ Tammy Tengs and a team of other researchers estimated the cost of saving 1 year of a human’s life via 500 actual or potential regulations, many involving the environment, such as limits on chloroform releases from paper mills. They reported a range of costs from 0 to $99 billion per year of life saved.¹⁷ This vast range highlights the fact that policymakers can’t simply set priorities in the order of, for example, human lives, jobs, and the environment. Our entire national income would not be enough to save all the threatened human lives at billions of dollars per person each year. Where individuals draw the line in terms of willingness to trade dollars for lives and the environment determines which regulations are deemed appropriate by cost–benefit analysis. (Economists’ recommendations for this value—about $9 million per life—are discussed in Chapter 15.)

¹⁴ See www.cato.org/pubs/regulation/reg19n4c.html.

¹⁵ See www.ers.usda.gov/publications/mp1570/mp1570d.pdf.

¹⁶ See http://aei-brookings.org/admin/authorpdfs/page.php?id=973.

¹⁷ T.O. Tengs et al., “Five Hundred Life-Saving Interventions and Their Cost-Effectiveness,” Risk Analysis (1995), 15, 369–390.

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One would think that environmental dilemmas, such as the prospect of drilling in the Arctic National Wildlife Refuge, would be straightforward because the environmental threat is farther from tourists and unlikely to cause human injury, but diverse sources of human happiness make such issues complex in ways that are important to understand as well. Humans place value on more than work and health. Use values come from the firsthand enjoyment of natural resources and their by-products. Users of forests benefit from hiking trails and natural beauty. Some people never enter a forest or see a particular animal species but nonetheless place a nonuse or passive-use value on them. Passive-use values can be divided into the option values that people place on the option to use a resource in the future and existence values that are unrelated to any possibility of ever using the resource or its by-products. Existence values include the bequest value of knowing that preservation allows others to use a resource and the sympathy value of knowing that a resource is alive and well. Bequest values are evident in the efforts of recyclers, conservationists, and environmentalists, and they are epitomized by the work of Johnny Appleseed, who planted trees to benefit another generation. Sympathy values drive the establishment of nature preserves with no human access and motivate protests against the cutting of trees in remote areas. The cost–benefit analysis of any environmental policy should include all losses of employment and convenience among the costs and all types of values among the benefits.

In his book, Jobs, Competitiveness, and Environmental Regulations (1995), Robert Repetto reports that environmental regulations have not caused the loss of jobs or reduced the international competitiveness of U.S. companies. Although many efforts to protect the environment involve trade-offs between health and employment, it is unfair to characterize environmental policy in general as a threat to jobs. Many types of environmental policies create jobs, and the conflict is over who gets the money. Consider the Clean Air Mercury Rule issued by the EPA in 2005, which permanently caps and reduces mercury emissions from coal-fired power plants, and the National Highway Traffic Safety Administration’s proposed increase in the corporate average fuel-economy standards for smaller light trucks from the 2006 level of 21.6 mpg to 28.4 mpg by 2011. Compliance with these regulations demands that power utilities support workers in the smokestack scrubber industry and that automobile manufacturers hire people to develop more efficient engines and explore alternative technologies, including biodiesel, turbo diesel, and hybrid-electric engines. Opposition to the policies comes because the power and automobile makers don’t want to spend money employing these workers. In essence, it is because they do not want to create new jobs in environmental areas that they fight the policies.

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Most major environmental-remediation efforts are performed by paid workers. Under the Comprehensive Environmental Response, Compensation, and Liability Act, more commonly known as the Superfund, environmental disaster areas across the United States are identified and cleaned up. These cleanups create $1.5 billion worth of income each year through direct expenditures, and the former danger zones become sites for restaurants, supermarkets, and other sources of employment opportunities. The reclamation of any polluted land or waterway, like the production of any smokestack filter or geothermal heating system, creates employment. Roger Bezdek and Robert Wendling have found that environmental protection is to thank for 5.1 million jobs in the United States.¹⁸

¹⁸ See www.nature.com/nature/journal/v434/n7033/full/nj7033-678b.html.

A final myth related to jobs and the environment is that “tree huggers,” who favor less materialism and seek lighter use of natural resources, are inherently seeking the demise of employment opportunities. It is true that current manufacturing jobs rely heavily on the use of nonrenewable resources, including fossil fuels, metals, and plastics. However, the U.S. Bureau of Labor Statistics estimates that service-providing jobs will constitute 18.7 million of the 18.9 million new jobs created between 2004 and 2014.¹⁹ Categories of service-sector jobs that rely less on nonrenewable resources include everything from authors, analysts, and educators to programmers, physicians, and zookeepers. Many more scientists, artists, clergy, historians, massage therapists, chefs, dietitians, police officers, musicians, park rangers, coaches, and museum curators could be employed, and the quality of our lives would improve along with employment opportunities.

¹⁹ See www.bls.gov/oco/oco2003.htm.

Many types of service jobs actually reduce our reliance on manufacturing. When you employ a cobbler to stitch up your old shoes rather than buying a new pair, you support one type of employment rather than another and you spare the resource depletion caused by the production of a new pair. The same goes for any type of repair and for the purchase of a more durable car, lawn mower, or dishwasher. The manufacture of alternative-fuel and energy-efficient vehicles, and the use of recycled products, solar panels, windmills, and compost bins is also proenvironment if these items replace other products that deplete resources at a faster rate.

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You don’t have to hug a tree if you don’t want to, but economists find that standing trees and a healthy natural environment create and support employment in ways that should not be neglected in cost–benefit analyses. Fortunately, “green growth” is not an oxymoron. Environmental cleanups, ecotourism, low-impact construction, and the manufacture of earth-friendly products create millions of jobs, and the service sector of low-resource-use employment is booming. Jobs can be lost if environmental policies make production prohibitively expensive, but evidence suggests that policymakers do not go to that extreme. Although few regulations come free, expenditures on compliance create jobs in cutting-edge industries, and efficiency guidelines require that the benefits of a regulation exceed the costs. In making those comparisons, the astute policymaker will recognize both the importance of jobs and the reliance of businesses on the ecosystem that supports life and provides our productive resources.

Environmental economists argue that the ideal amount of pollution is not 0 but the level at which marginal benefit no longer exceeds marginal cost. The important thing is that all the repercussions of a policy are considered. A recent study by meteorology professor Kerry Emanuel of the Massachusetts Institute of Technology found that global warming—a result of carbon dioxide releases, human-made and otherwise—has caused hurricanes to grow in size and destructive power by 75 to 100 percent during the past 30 years. The effects of environmental degradation, including global warming, should thus be factored into decisions about fossil-fuel policy and use. Similarly, wetlands act as sponges to absorb floodwaters, so by destroying wetlands for development on the Gulf Coast, environmental conditions were created that allowed Katrina to subsequently destroy much of the development. Ultimately, economic efficiency requires an understanding that what goes around comes around.