Economic development and environmental regulation have long been pitted against each other as historic foes: with one present, the other cannot exist.
This simply is not true.
There is such a thing as smart environment regulation that also allows for economic development. In fact, studies show that at a certain point, economic development correlates with greater environmental protection. According to the Environmental Kuznetsk Curve, “as GDP per capita rises, so does environmental degradation. However, beyond a certain point, increases in GDP per capita lead to reductions in environmental damage.” The reason for this trend is at a certain level of wealth, the turning point being $34,000 per capita GDP, individuals begin to favor protecting the environment over further consumption. Once the transition has been made, environmental and economic welfare have a positive correlation. A country whose economy is better developed will have access to more resources and thus also be more likely to implement the necessary technology that cuts down on pollution.
There are some policies that have found the perfect balance that can exist between the economy and the environment, but other pieces of legislation struggle. One example of an environmental policy that limits economic development is the Endangered Species Act (ESA) in the United States. If a species goes on the list, it is prioritized over all other activity in the area, leaving large swaths of land off limits to any kind of development. It is difficult to quantify environmental benefits because they are a public good, but some studies have attempted to do such things. To increase the population of the endangered northern spotted owls from 1,600 to 2,400, for example, it costs $33 billion. Doing this would increase the odds of survival for the species to 91%. If the survival rate was increased to 95%, then the subsequent increase in cost would be $46 billion.
The ESA is in dire need of reform considering that the review process for additions to the list is faulty at best, and less than 2% of the species on the list have been removed in the last 40 years. In the past, the ESA has been used as a tool to explicitly prevent development of certain areas with no scientific basis. With proper reform, the ESA can serve as model legislation for balancing environmental protection and economic development.
Another example of a policy that neglects economic development is the banning of offshore oil drilling in the Arctic. A US Geological Survey found that 30% of the world’s natural gas reserves and 13% of its oil are hidden in the Arctic. It is estimated that annual global consumption of oil is about 30 billion barrels, and there is an estimated 160 billion barrels of oil in the Arctic. The economic benefits of energy development in this region are massive. However, the outright ban on activity in the region denies the development of a nuanced environmental policy that balances economic development with environmental protection. The current administration is developing a plan to reverse the ban on Artic exploration, hoping to balance environmental protection while creating over 300,000 new jobs.
Environmentally friendly and economically beneficial development is not limited to the energy sector. Too often the mining and agriculture sectors as well are mischaracterized as being wholly environmentally destructive. The reality is, however, that there are large scale mining projects around the world that are abiding by international standards of sustainability and environmental protection. Likewise, agricultural development on small and large scales is chiefly concerned with the sustainability of the land where the production is happening. Without sustainable growing practices, entire farms and large scale operations would fail within a few seasons.
Instead of taking opposing sides, the economy and the environment can be partners in unlocking economic growth in the United States and around the world. It is clear the false dichotomy between economic productivity and environmental wellbeing can be rectified by smart policy and productive partnerships with industry.
Ande Troutman has been a blog writer for CID since March 2017 and specializes in energy policy and natural resource development. She has experience working on environmental policy in both state government and the private sector. Ande is currently working as an international consultant for CID in Scotland.