Warner Pacific College
August 10, 2014
Contrary to ‘common knowledge’, environmental regulation is vital for the economic development of the United States. Rick Melberth, from the Center for Effective Government, says that studies and reports from economists, business strategists, Office of Management and Budget, Congressional Research Service, and the Clean Air Council illustrate that “industry messaging on the regulations is misleading and that the benefits of key public protections far outweigh their costs to business.” (2011). Studies show that environmental regulation in fact, does not harm the economy, but rather aids it, spurring innovation and new sectors growth.
Studying the economic impact of environmental regulations is difficult given the complexity of both the environment and the economy. Stephen Meyer (1995), Professor of Political Science at MIT, notes that nation level studies have a variety of methodological issues as we cannot control for “coincidental political, economic, technological, and social changes” (p. 2). Meyer goes on to explain that state studies, however, control for many of the variables in national studies. Thus Meyer’s hypothesis that environmental regulation does not negatively impact the economy focuses on state economies with and without strong environmental regulations. His findings support that while specific environmental regulations do have real effects on individual businesses, “these effects are limited in scope and duration and are fewer in number than popular political mythology allows. They do not rise above the background noise of state economies either singly or cumulatively” (p. 15).
We do have tangible evidence of national environmental regulation and its impacts on a national economy as well. Focusing on the Clean Air Act (CAA) we can see the very real implications of environmental regulation on the economy. The CAA was originally passed in 1963 and was a research program but major regulatory amendments were passed in 1970, 1977, and 1990. The act was created to control air pollution nationally and throughout the years has been amended to focus on emissions from various sources and different chemicals as well as ozone protection. A peer-reviewed 2011 EPA report looking at the results of the CAA from 1990 to 2020 found the “central benefits estimate exceeds costs by a factor of more than 30 to 1” (2011). The CAA has been found to protect from pollution-related health problems and premature death, thereby improving the health and productivity of the U.S. workforce. The CAA has been a good investment as well showing that the benefits exceed costs on average by a factor of 30 to 1. With 40 years of experience we can reasonably predict that cleaner air and a healthy economy go together and are not exclusive of one another. We also see that the CAA has encouraged technology investments that have put unemployed or under-employed Americans to work. And lastly, environmental technology and services has grown exponentially giving the United States a head start in new industries. (2011)
We have demonstrated that with thoughtful planning paired with a thorough understanding of the intricacies between our actions and the environmental consequences, we can create environmental regulation that does helps out economy.
Melberth, R., (2011). Business economists: Current regulatory environment good for business and economy. Center for Effective Government. Retrieved from http://www.foreffectivegov.org/node/11832
Meyer, S., (1995) The Economic Impact of Environmental Regulation. Journal of Environmental Law and Practice. Retrieved from http://crywolfproject.org/evidence/economic-impact-environmental-regulation
Environmental Protection Agency. (2011). The benefits and costs of the Clean Air Act from 1990 to 2020: Summary Report. Retrieved from http://www.epa.gov/air/sect812/feb11/summaryreport.pdf