Green jobs

In response to an email asking about climate policy and green jobs:

I know of no mainstream economist who thinks that green jobs will lead us out of recession (or reduce the unemployment rate during periods of economic growth). I think many of us agree that a greener economy is a good thing in terms of improved health and environmental quality. A greener economy will result is more green jobs and fewer brown jobs but it is hard to imagine how government policy that constrains business firms will result in improved macroeconomic performance.

The only avenue for the latter is if improved local air quality improves health to such an extent that labor productivity improves. This transmission would occur only in the long run ... not in time to lead us out of recession. On the other hand, much of the health benefits of improved local air quality have occurred since the passage of the Clean Air Act. I think that diminishing returns set in awhile ago.

I'm happy to be wrong about my first sentence (or any of it for that matter). Any suggestions?

Comments

[Mike Hammock]

What about a double-dividend argument? If we were to replace distortionary taxes (say, payroll taxes) with pigovian taxes, couldn't the net effect be both higher employment and a "greener" economy?

Granted, this too would probably be a long-run effect, rather than something to get us out of recession.

[Brian]

I've wondered about this a lot. In the global recession context, creating incentives for green jobs doesn't seem like a way to recovery (and look, before it gets any further and becomes extremely obvious, I'm not an economist - I was a French major, and am a fan of this blog).

What seems plausible to me, however, is: we can probably assume that greenhouse-gas-emitting energy technologies are en route for a long-term decline. So the brown collar jobs are going away no matter what. If that's true, then the question becomes 'do we buy the Vestas turbine or the GE turbine?'

In that scenario creating incentives for green jobs either directly creates jobs/growth, or at worst is a brake on the destruction of jobs that is inevitable in a world where brown collar jobs are lost regardless.

I've been hoping one of you guys would deconstruct this argument for me...

Thanks
Brian

[Thomas Masterson]

About your last sentences, I think that may be true in general, although there are a lot of locations (the Hudson and Connecticut river valleys come to mind because of personal experience) where there are still increasing returns to air clean up.

[odograph]

If there are certain "green" expenditures that we will make sooner or later, why not accelerate them to the down part of the business cycle?

I'm quite confident that we are not so green (or healthy to use another term) that we'd be reduced to green busy-work at this point.

Solar thermal power plants would generate power for decades and reduce greenhouse gas emissions over that time.

[odograph]

"I'm happy to be wrong about my first sentence"

Were you wrong in focus? The best time to be choosing an answer true in "periods of economic growth"?

[David Morton]

I don't think "green jobs" is the important factor here. It's deficit spending aimed at creating a cleaner energy sector. Compared to the existing fossil fuel system (which will be around for quite some time), Green™ has more economic growth opportunities: research & development, infrastructure, construction, manufacturing, retail, etc.

Just looking at the Green New Deal (which I assume you're referring to) through the Jobs lens misses the bigger picture. The endgame isn't just jobs or limiting carbon. The endgame is an entirely new market and industry married to environmental benefits as opposed to working against it. That's my understanding at least.

[Christopher Lutz]

While not an economist by trade, I too am a fan of this blog.

This idea of "Green Sector Growth" is REAL. Business are buying environment friendly consulting services today for two reasons:

1) to save real dollars (standard cost / benefit) and
2) to be good corporate citizens

I'm not convinced business would be too keen to spend if they only received benefit 2 above.

I have a follow on question to the above...If we assume (econo-speak) we'll have some form of national health care in the near future - what is the current cost of environmentally induced health issues.

While I don't believe there are true "productivity" gains to be had - I do think we might enjoy cost avoidance? (healthier citizens = lower national health care costs?)

Does Nuclear count as "green"?

At the very least, if we deficit spend to improve our infrastructure and become more independent - at least we have a remaining asset.

As opposed to 700 billion in worthless "derivitives" :)

[C]

I don't believe that most firms do anything "to be good corporate citizens", as Mr. Lutz suggests. They do it because consumers like the idea of buying from 'green' companies. It's hard for me to imagine that most CEOs would forgo profit in favor of the greater good. They do something green, advertise like hell, and hope for a return on their investment.

[Rob Elliott]

This article links to a good paper on this topic.

http://globalisation-and-the-environment.blogspot.com/2008/09/environmental-protection-economy-and.html

Bezdek, Roger (Lead Author); Tom Tietenberg (Topic Editor). 2008. "Environmental protection, the economy, and jobs." In: Encyclopedia of Earth. Eds. Cutler J. Cleveland (Washington, D.C.: Environmental Information Coalition, National Council for Science and the Environment).

Environmental protection, the economy, and jobs

The relationship between environmental protection, the economy, and jobs has been an issue of harsh contention for decades. Analysts and policymakers of all points of view seem to agree that a strong relationship exists between environmental protection and jobs; the debate is over the sign of the correlation coefficient. Does environmental protection tend to harm the economy and destroy jobs or to facilitate economic growth and create jobs? If the latter is the case, can the positive affects be quantified and estimated at a meaningful level of detail?

Here we address this issue by summarizing the initial results of the Jobs and the Environment Initiative, a research effort funded by nonprofit foundations designed to quantify the relationship between environmental protection, the economy, and jobs. We estimate the size of the U.S. environmental industry in 2003 and the numbers of environment-related jobs created at the national level and in the states of Florida, Michigan, Minnesota, North Carolina, Ohio, and Wisconsin.

[yuan]

I just found this - check it out:
http://evidentlyeverywhere.wordpress.com/2008/11/20/try-this-out-its-addictive/

[Joe Otten]

I wonder - would promising a raft of big prizes for environmental technology advances, act like a fiscal stimulus, but, crucially, deploying private capital for a change.

Sure the bills will come in eventually, along with the benefits, but this might be a better way to "borrow".

[christopher lutz]

Please note, I list 2 benefits stating that I didn't believe corporate america would be a "good citizen" unless the cost / benefit were in place.

At the end of the day, there is simply no large sustainable cost/benefit (at the individual consumer level) for "green" products.

In fact, it's costs more to be green.

If we as a society want to be "green", we've got to place some collective value on energy independence. I'm not really sure how to do this...

If you don't drive a 40mpg car today - why?
If you don't have solar power today - why?
If you don't recycle rainwater today - why?

The answer to the above (and really all similar questions on the topic) is: "it's not worth it for me"

Do I want to live in a country where the air is clean and the environment is vibrant - absolutely.

My personal question is: how much am I will to do without?

And, yes - I'd have to do without because the personal cost/benefit of going green isn't there for me.

Circular thought process - great thread, thanks