Environmental Protection vs. Economic Growth

This essays is from a previous L-D release by Dr. Minh Luong.  I thought it might be helpful for those debating the January-February L-D topic so I’m posting it here.

The conflict between environmental protection and economic development actually goes back to the times of ancient civilizations. According to researchers at Radford University in the UK, air pollution from large towns in the form of wood smoke, tanneries, animal manure, and other particulates affected the quality of life in these centers of trade. The Roman Empire, perhaps best known for its distant trade routes and economic development, suffered from sewage-filled streets and over logging of timber for fuel and housing. This resulted in a high disease and mortality rate as well as forcing the Romans to build their cities to take advantage of passive solar energy.

The pattern of timbering to fuel economic development left much of England, France, and Germany barren by the mid-1500s and early 1600s, forcing a switch to coal which accelerates environmental problems for emerging European cultures. During the Enlightenment period, economist Thomas Malthus warned that population growth would lead to shortages of food and other resources necessary to sustain human life. Thus, economic development was outstripping the ability of humans to feed themselves. Chemical processing and rubber vulcanizing plants accelerated economic development but affected the quality of life and health of people living in the surrounding areas, particularly downwind and downstream.

 

The industrial revolution in the mid-1800s ushered in a sustained era of exponentially increasing economic development but environmental problems increased by the same factor. On both sides of the Atlantic, living conditions in large cities such as New York and London plummeted as industrialization grew. Problems such clean drinking water and typhoid and cholera epidemics plagued large cities. Industrialization that grew without regard to environmental harm resulted in massive “smog attacks” which killed large numbers of children and elderly people in heavily industrialized cities as well as towns downwind from the factories. London counts over 1,000 dead from smog in 1892.

 

By the end of the 1800s, environmental protection was on the forefront of the political agenda. In Europe and the United States, prioritizing environmental protection at the expense of economic growth emerged as a politically attractive policy. The widespread damage to the environment and human life sparked the “Progressive Era” in which food quality, sanitation, air and water pollution, and preservation of natural resources were all addressed. President Theodore Roosevelt used his popularity and power as president of the United States to set aside millions of acres of forests and designated other natural resource areas to “wise use.” But popular sentiment was so strong against the industrialists and pollution that early environmentalists such as John Muir fought the idea of “wise use” and wanted all wilderness areas to be free of economic development. Environmentalists and women’s groups formed numerous environmental protection and conservation organizations such as the Sierra Club.

 

President Calvin Coolidge’s famous quote from the 1920s, “The business of America is business” embodied the overconfidence and unabated growth of American industry during the post-World War I era. Ironically, the Great Depression witnessed only mixed results in environmental protection. The economic depression led to some improvement in air and water quality and while Atlantic coastal cities were successful in the passage of an international oil dumping treaty in 1924, there were numerous failures by environmentalists in the face of “big business.” Perhaps the most stunning defeat was suffered by Harvard University physician Alice Hamilton, who called Charles Kettering, head of General Motors and supporter of leaded gasoline, “nothing but a murderer.” Kettering used the vast financial and public relations resources of GM to convince consumers and government officials that there were no viable alternatives to leaded gasoline, despite the fact that Henry Ford was working on a biologically-fueled automobile, and leaded gasoline became the fuel of choice until the 1980s. Environmentalists in the chemurgy movement attempted to replace petroleum-based fuels with farm-sourced alcohol and other crop-based fuels. The movement abruptly stalled, however, when nearly all of the leaders of the movement died under somewhat suspicious circumstances and the leaders who replaced them were later found to have had covert connections with the petroleum industry.

 

The administration of Franklin Roosevelt was focused on reviving the economy and by the start of World War II, economic development and producing war munitions outweighed nearly all environmental concerns. After the war, however, there were a series of scandals involving pollution and lead poisoning at munition plants and shipbuilding yards. The post-war economic boom produced a surge of water, land, and air pollution and throughout the late 1940s and 1950s, there were a series of deadly smog attacks along the East Coast and Europe. By 1955, the world’s first international air pollution conference was held.

 

The 1960s and 1970s mark a renaissance in environmental protection. Environmentalist Rachel Carson’s book, Silent Spring (1962) raises the consciousness of Americans and Europeans. Scientist Clair Paterson dropped a bombshell during her Senate hearing testimony about deliberate attempts to conceal the harms associated with the use of leaded gasoline by oil industry executives and researchers since the beginning of the 20th century. Perhaps the most powerful image of the excesses of economic growth and the need for environmental protection comes on June 22, 1969 when oil and chemicals catch fire in the Cuyahoga River near Cleveland, Ohio. The poisonous plume of smoke can be seen for miles and the flames themselves are over five stories high. American and world media broadcast the disaster and demands to regulate the petroleum and chemical industry grow stronger. Heeding the call for a unified policy response, President Nixon establishes the Environmental Protection Agency in 1970 and for the next 20 years, environmental protection programs mandating a switch to unleaded gasoline, reduction in particulate emissions, and increasing water quality improve heath in the U.S. Disasters such as Union Carbide’s toxic chemical leak in Bhopal, India; the massive oil spill from the tanker Exxon Valdez in Alaska; and Allied Chemical’s toxic waste dump in Love Canal, near Niagra Falls, New York, prompted significant regulation of the oil and chemical processing industries.

 

By the 1980s and 1990s, there was sufficient scientific evidence to suggest that damage to the ozone layer would result in global warming. Even conservative skeptics Margaret Thatcher, Prime Minister of Great Britain and President Ronald Reagan of the U.S., sign the Montreal Protocol, a first step in an effort to limit greenhouse gasses, in 1987. The Reagan administration relied on industry self-regulation to maintain pollution standards. Wanting to get “government off the backs of people,” and arguing that the free market would prevent businesses from doing anything to harm their customer base, federal investigations were limited to the most egregious of violations. Environmentalists hoped that with Vice President Al Gore as their poster child for the environment, the Clinton administration would usher in a new era of environmentalism. Over the following eight years, the Democratic administration was checkmated by a Republican-controlled Congress and most substantive accomplishments were increased stewardship of federal lands and maintenance of budgets that were reduced by the Reagan administration. This was hardly the record that environmentalists had hoped for in 1992.

 

By 2000, pro-business oil industry executives President George W. Bush and Vice President Richard Cheney were sworn in and promised wide scale domestic and international programs to increase economic development to benefit American businesses. Environmentalists protested the Bush administration’s position allowing mining companies to reclassify mine waste as “fill” as to permit the waste to be dumped in rivers and streams. In announcing the Bush administration’s pro-growth 2003 federal budget, the president calls for a reduction in the EPA’s budget from $8.1 billion to $7.6 billion, elimination of incentives to reduce dependence on foreign oil and gas, and continuation of lucrative tax breaks of up to $100,000 to small businesses for buying the heaviest sport utility vehicles with a gross vehicle weight rating of over 6,000 lbs, many of which get only 8-12 miles per gallon. Several senior EPA officials have resigned, saying that it had become impossible to carry out their duties and Eric Schaeffer, who recently resigned as the head of the EPA’s civil enforcement division, said “The E.P.A. is in the back seat, or maybe even riding the bumper, and the energy industry is having a field day.” (Elizabeth Kolbert, New Yorker, May 2002). Administration officials point to the Clear Skies Initiative as evidence that the Bush administration is serious about protecting the environment. (http://www.whitehouse.gov/infocus/environment/)

 

What are the points of conflict between environmental protection and economic development?

 

  • The environment ought to be protected at all costs with economic development allowed only if it does not negatively impact the environment.

 

  • The environment ought to be protected and businesses which negatively impact the environment should be allowed to operate provided that they pay heavy taxes or fines

 

  • The environment should be protected by the government and economic growth should be promoted by businesses, yielding a division of labor between government and the private sector with the government in the superior regulatory position.

 

  • Time element: Since protection of the environment is a long-term, if not infinite obligation, the government is in the best position to ensure lasting protection. Even if the government also takes responsibility for economic development, policies are made on much shorter time frames and if businesses are responsible for economic development, those time frames can be as short as quarterly or annually.

 

  • Sustainable economic development is a concept which emphasizes economic growth as long as it is sustainable, meaning that it does not negatively impact the environment. Thus protection of the environment is the primary priority with economic growth permitted as long as it does not represent a negative environmental impact.

 

The debate in the United States

 

As the leading industrialized economy in the world, the United States has mature industries and relatively strong economic growth. It can use its technological superiority and access to capital to solve environmental problems which are out of reach for other countries. In addition, the U.S. has lost much of its heavy manufacturing capacity due to lower labor costs and weaker environmental regulations in other countries, particularly in Eastern Europe, Latin America, and Asia. Thus the sources of some of the worst pollution have moved out of the U.S.

For the foreseeable future, economic development of the U.S. will be concentrated primarily in the high technology, service, and medium and light manufacturing sectors, all of which result in lower environmental harms. The U.S. is emerging from a three-year plus recession and businesses and workers, battered from heavy stock market losses from 2000 to 2002, are eager to recoup their losses and make profits again.

So the debate in the U.S. could very well focus on how much economic growth should Americans sacrifice to gain incremental benefits in environmental improvements. Given the fact that the U.S. has some of the most stringent environmental regulations outside of Scandinavia and parts of Western Europe, Americans indicate in polls that they support environmental protection but seem not to support them in practice when it comes to purchasing environmentally friendly products. For example, despite the fact that vehicles which offer high fuel efficiency have been available at reasonable prices, sales have been poor compared to more expensive sport utility vehicles which earn low fuel economy ratings. The EPA reported that the overall average fuel economy for vehicles in the United States is at a 20-year low.

The U.S. is at a crossroads going into 2004. Should the government slow down economic development to protect the environment or should it use the revenue from economic development to pay for increased environmental protection?

The debate in the developed world

The debate between environmental protection and economic development is not limited to the U.S. The developed economies in Europe and Asia have been struggling to find a balance between protecting the environment and economic development with little success. Part of the problem has been the competitive pressure of globalization to drive down labor costs while at the same time increase wages and the standard of living at home. Countries with high standards of living such as Germany and France have seen the emergence of strong pro-environmental political parties which have demanded the environmental protection take precedence over economic development. This has resulted in a stagnation of the economy in those two countries as powerful labor unions struggle to keep wages and benefits from eroding. Many large European firms have had to move their manufacturing facilities to other continents where labor costs are cheaper. For example, VW operates a plant in Mexico and both BMW and Mercedes-Benz SUVs are built in the United States to take advantage of lower costs and pro-business regulations.

Indeed, Europeans are paying the price for their environmental policies with higher unemployment and taxes along with lower wages and standards of living as lucrative manufacturing jobs are transferred to countries with weaker environmental laws and lower wages.

The debate in the developing world

Poorer, less developed countries which have large populations and limited economic opportunities see the debate very differently. Countries such as China, India, Indonesia, Brazil, and much of Eastern Europe are prioritizing economic development over protection of the environment because of increasing pressure to feed and educate their populations. The countries of the developing world invested heavily in attracting foreign investment, developing domestic industries, and educating their workforce. These countries wish to develop in a similar manner to the U.S., Japan, and Western Europe which focused on economic development first.

The developing world charges that it is unfair that the developed countries had the opportunity to pursue aggressive economic development polices with little or no restrictions on their growth over the last century while the developing world must try to develop their own economies in a very competitive global marketplace under tight environmental regulations.

The developing world has balked at environmental protections that the U.S. and other developed countries have proposed, stating that the industrialized countries got the world into the current situation and that they should have to bear the burden and expense to make up for that. The block of developing countries point out that the environmental impact of their industries makes up just a small fraction of the industrialized world and that they need to develop their economies before assuming any of the costs involved in environmental protection programs.

The developed vs. the developing world

On an international scale, we see a sharp division between the developed and developing world with regards to prioritizing protection of the environment over economic development. For countries like the United States, Japan, and those in Western Europe, mature productive economies allow for environmental protection programs. But for the rest of the world which is struggling to compete in the global marketplace, there are scant resources available given the priority on economic development. Indeed, many of the nations in the developing world are debtor nations (they spend more than they earn) and have significant loans to repay to the World Bank, International Monetary Fund, and private lenders which leaves little or no funds for environmental protection.