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There are no good environmental economics textbooks on the market. Not only do most not even mention the name of Julian Simon, or discuss the political economy of regulation for more than a paragraph, but they are littered with this sort of thing:

Widespread fears of job loss from environmental protection, however, need to be understood in the context of a “deindustrialization and downsizing” process that became increasingly apparent to U.S. citizens during the 1980s and 1990s. Over the last couple of decades, the United States lost millions of manufacturing jobs, due primarily to increased import competition both from First World nations and newly industrializing countries. At the same time, U.S. manufacturers increasingly began to “offshore” production, investing in manufacturing facilities in low-wage countries rather than at home …

My emphasis added. Perhaps it is because this author went to my alma-mater’s arch-rival. Granted, he has done nice work on the relationship between environmental regulation and job loss (finding that there is virtually no job loss due to environmental regulations), but this paragraph so utterly violates the economic truth that I wonder whether he thinks the sun rises on the West Coast and sets on the East. For one, the United States is in no way deindustrializing. They are the world’s leading manufacturer, by a large margin, and manufacturing output in the United States reached its peak way back in … 2007.

Yes there have been job losses in manufacturing, but these have been happening steadily since World War II and have everything to do with improved productivity and technological advancements in that sector, and very little to do with offshoring manufacturing jobs. The US was shedding manufacturing jobs for 25 years straight before it ever ran a manufacturing trade deficit. But why would we want that little piece of data to get in the way of a nice story?

On a more wonky note, I would add two points:

  1. It seems to me that there should not be an a priori case to think that environmental regulation should negatively impact the number of jobs. My suspicion (and I am NOT an expert here) is that the majority of environmental regulation has in effect increased the cost of capital to firms, and this should have two impacts. The first impact is that there should be a harmful scale effect from these increased costs, whereby firms will reduce all investments in labor and capital. On the other hand, these regulations do seem to make the relative cost of labor LOWER than it was prior to regulation (perhaps this is one reason this sort of thing gets greased through Congress), which results in companies substituting labor for now more expensive capital. So, the scale effect tells us employment should fall while this substitution effect tells us employment should rise. The theoretical effect is therefore a prior indeterminate. So I am not at all surprise by the author’s empirical work
  2. It is pretty widely accepted that the annual costs of environmental regulation exceed $250 billion (direct and indirect), even the author acknowledges this fact in the text. OK. so these costs do not fall on employment levels, has the author looked for where the incidence does fall? Keeping my job is much less of a big deal if all of the goods and services I buy are more expensive.

One thing is for sure, the existence of environmental regulation has created a great number of jobs for people like me who are to analyze it, teach about it, write about it, and complain about it. I am not sure these are the green collar jobs everyone keeps talking about.

One Response to “Why I Do Not Assign a Textbook in Environmental Economics”

  1. Michael says:

    This is another subject I think about a lot. I’ve heard from all kinds of environmental economists (really green, light-green, etc.) and there is universal agreement that there are no good basic env. econ textbooks. (It’s made me think about writing one.) Why is this? There are plenty of economists I thought.
    One of my thoughts is that it is such a politically and emotionally charged issue, that any books that goes against a certain belief isn’t liked and that the issue is almost too big to be basic. Take an issue like global warming. If we ended up saying that we can’t really get a good idea of the marginal benefits or costs, so there isn’t a way to evaluate a program, we end up alienating the green group. If we said to just at least do something, then we’re arbitrary and not doing a good job of econ. As far as being too big, I think a good book would cover compliance costs, government failures, etc. and actually be a fairly in-depth book – too much for a semester for people who never had econ. Just my unorganized thoughts, though.

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