This year’s commemoration of Earth Day comes when policy makers are paying close attention to how they can promote a healthy and sustainable environment. During the first Earth Day 39 years ago, activists were focused on a range of concerns like pollution and the preservation of wildlife and their habitats. Today’s Earth Day events, at least in the United States, are focusing on climate change, decreasing our reliance on (imported) fossil fuels, and interestingly, the macroeconomic benefits that can occur by investing in the environment.
It has taken a deep and prolonged recession to awaken policy makers to the notion that addressing our most pressing environmental issues can also be a way to create an engine for economic growth. Simply put, investing in “green” initiatives can add a substantial number of good jobs to the labor force, and give businesses and consumers relief from volatile swings in energy prices.
Policy makers must use a variety of approaches, and be willing to adjust them when necessary, to achieve the high-minded goals of reducing America’s carbon footprint and enhancing environmental sustainability. We need to employ direct incentives to encourage renewable energy investment and production-a strategy that has helped produce dramatic improvement in the viability of harnessing the wind and sun for energy consumption. We also need to increase direct spending on energy efficient durable goods, as was done in the American Recovery and Reinvestment Act. And we must also be willing to take the steps necessary to discourage carbon use by increasing its cost relative to clean energy and by imposing standards on our most energy inefficient industries.
Critics deride such direct spending as wasteful, and proclaim that the imposition of standards will burden businesses, cost jobs, and hurt consumers. These are tired rejoinders that typically accompany any effort to have the government move boldly to meet our critical needs even when times are good. But in times of recession, the government’s responsibility is to facilitate new markets for jobs that will result in real wage and benefit growth, and to lay the foundation for a recovery that is prolonged and sustainable.
The job creation that is possible by investing in a green economy is particularly encouraging. EPI calculates in a recently released report that each dollar of green investment will produce $1.60 in output. This kind of “spending” is among the most effective forms of stimulus (far more so than tax cuts). For each $100 billion dollars invested, over 1 million jobs are created. Furthermore, these jobs-which will largely be open to those without four-year college degrees-will reduce income inequality by raising wages and creating the opportunity for more workers to organize. If nurtured carefully, these good jobs can sustain generations of careers as green industries mature. Green investments, which often involve retrofitting existing structures, can typically be realized more quickly and tend to be more “labor intensive” (i.e., create more jobs) than investments in new construction.
Even in the business community- which has been historically resistant to the activism of environmentalists-there is a growing understanding of the urgent need for these investments and the opportunities they afford. The Sustainable Business Network of Washington, one of hundreds of similar organizations across the country, has as its tagline: “For People, Planet, and Profit.” Responsible and forward-thinking businesses realize that citizens and governments want to do business with good companies, and they also recognize the measurable bottom line can also benefit by restoring stability and predictability to energy costs.
Just last week, the Environmental Protection Agency released preliminary findings that six key greenhouses gases are at atmospheric levels that threaten this and future generations. It is likely the EPA findings will encourage Congress to partner with the Obama administration to further pursue emissions-reducing policies. If done properly, a blend of incentives and restrictions can incubate an economic recovery that leads to energy efficiency and environmental sustainability.