The economic case for environmental rules

In recent months, some in Congress have been waging a whole-scale war against the Environmental Protection Agency. By now it has reached comical dimensions, with three separate bills aimed at preventing a so-called EPA "dust rule" that has never even existed.

The spectacle would indeed be funny, if it wasn't deadly serious. Republicans in Congress and in the GOP presidential debates are seeking to defund an already cash-strapped EPA under the pretense of caring about the federal deficit and are trying to hamper the agency by arguing that its rules hurt the economy.

Quite to the contrary. We have 40 years of data to show that a cleaner environment goes hand in hand with solid economic growth.

Harvard Professor Dale W. Jorgenson, one of the deans of macroeconomic modeling who has been honing his model of the U.S. economy for decades, calculates that gross domestic product in 2010 was 1.5 percent higher because of the Clean Air Act of 1970. It turns out that protecting children from foul air leads to more productive adult workers.

That's the moral equivalent of arguing for child labor laws by saying that keeping kids in school will increase their earnings as adults. But even this reductionist argument, focused only on a narrow definition of dollars and cents, works to show the benefits of cleaner air.

Overall, benefits of the 1970 Clean Air Act exceed costs by a factor of 30 to 1. The 1990 Clean Air Act Amendments match that ratio: $1 of investments led to $30 in benefits—fewer children sick or dying, more productive workers, and healthier environs.

In a 2010 analysis of rules passed in the prior decade, the non-partisan Office of Management and Budget calculated benefits-to-cost ratios across various government agencies. The EPA came out on top with the highest ratios by far, with benefits from its regulations exceeding costs by an average of more than 10 to 1. If you care about well-functioning, free markets, the EPA would be the last federal agency you'd want to cut.

None of this is magic. It's something much more mundane: honest accounting.

Continue reading at Yale Environment 360.