Is Richer Greener? A Comment on Posner on Tierney:

Eric has an interesting post commenting on John Tierney's recent column on wealth and the environment. Eric notes that Tierney's argument is overly simplistic, and that basic arguments about the correlation between economic growth and environmental performance may not apply in the context of global climate change. Fair enough, but I would also like to qualify some of Eric's remarks.

First, I think it is important to note that one of Tierney's primary claims is that the formula of environmental impact advanced by Paul Ehrlich, John Holdren, and others -- the so-called I-PAT formula -- is incorrect. Ehrlich, et al., asserted that overall environmental impact (I) is a function of population (P), affluence (A), and technology (T), such that increasing P, A or T leads to an increase in I (and impact is presumed to be negative. Thus, as Tierney summarizes, "protecting the planet seemed to require fewer people, less wealth and simpler technology." Yet, as Tierney notes, wealthier societies are more able and willing to pay for environmental protections. Moreover, technology can enable us to satisfy human wants and needs with less environmental impact, as occurs when technology increases agricultural productivity, enabling us to feed more people on less land (and set aside more land for nature).

What about population? Is the relationship between population and environmental impact still a positive one? Not necessarily. As economist Seth Norton has shown, economic institutions have a greater effect on some measures of environmental quality and human well-being than does population growth. Specifically, Norton looked at measures like access to safe drinking water, water pollution, and deforestation rates. As Norton found, "compared with other forces, the purely adverse effects of population are very small." Moreover, as it happens, the institutional arrangements which improved environmental performance in Norton's study (and tend to correlate with, although almost certainly do not explain, reduced fertility rates), are also those that tend to encourage economic growth.

In his post, Eric makes the important point that the Environmental Kuznets Curve (EKC) depends upon "legal institutions to translate people's preferences into outcomes." He further criticizes Tierney for not acknowledging the role of government, in particular the role government plays in enacting people's environmental preferences. He writes: " As I get richer, I am willing to pay more for clean air. But I can't buy clean air at the store. I have to lobby my legislator for regulation that increases the price of goods that I buy. . . . What Tierney misses is that the Kuznets curves assume the government doing something at the behest of citizens." I agree with Eric on the importance of institutions, and I accept that government intervention is sometimes necessary for environmental improvement, but I think it is wrong to suggest that the positive aspects of the EKC are solely (and perhaps even primarily) the result of such governmental intervention.

Some improvements in environmental performance brought about by increased wealth and technological advance are somewhat independent of people's preferences. That is, some technological changes have dramatically positive, albeit unintended (and certainly not governmentally mandated) environmental effects, and there are reasons to expect such changes to be common. So, for instance, replacing copper wire with fiber optics has substantial positive environmental effects. Insofar as increased wealth and market institutions are necessary for such technological change, these are changes that are dependent upon our legal institutions, but are not dependent upon governmental intervention.

A really good example of an EKC effect that is not the result of legislative action is reforestation in developed nations. Let's take the United States (about which I wrote an article "Poplar Front: The Rebirth of America's Forests" about a dozen or so years ago). For most of the 20th century, the U.S. underwent dramatic reforestation -- and legislative action of the sort Eric describes had almost nothing to do with it. Indeed, if anything, it may have slowed down the process. Why did reforestation occur? Many things contributed. First, increased agricultural productivity meant less land was necessary for agriculture. No less important, agricultural production had migrated from the eastern U.S. into the midwest, allowing forest regrowth in areas formerly under plow. Whereas the eastern U.S. was once farm country, it is now quite forested. Even areas that we like to think of as "wilderness," such as portions of the Adirondacks, had been previously cleared and farmed.

Other technological factors leading to greater forest growth were things like improved sawmill technology (e.g. thinner sawblades so there is less waste in timber production) and the development of the internal combustion engine. As cars and tractors took over for horses, much land formerly farmed for animal feed went back to nature.

What about government efforts to protect forestland? Well, much of the "protected" forest land, particularly in the east, was only protected after it had undergone the forest regrowth I describe above. Second, rates of forest growth in the 20th century appear to be greater on private than on government land. Rates of replanting and regrowth after cutting appear to be greater on private land than on federal land.

My point is not that government intervention is never necessary for environmental improvement. Rather, it is the more modest point (with which Eric might agree) that many of the forces that drive EKC effects are more dependent upon the underlying legal institutions of a liberal market order (e.g. property rights, rule of law, etc.) than upon legislative action. I would also suggest that, in many cases, greater reliance upon such institutions might actually produce superior results than legislative intervention. so, for instance, building upon common law protections of property might produce stronger EKC effects than legislation. Work like Elizabeth Brubaker's Property Rights in Defence of Nature, on the history of the use of common law property protections to protect water quality in Canada -- and the eventual sabotage of such protections by legislatures -- is highly suggestive on this point.

Finally, let me note that I agree with Eric with regard to the application of the EKC to climate change. First, although there is evidence of market-driven improvements in energy efficiency and per-GDP greenhouse gas emissions, we have yet to see an EKC effect with greenhouse gases. Further, there are reasons to doubt that such effects will occur on a national level due to the global nature of the atmospheric commons. That said, meeting the climate challenge -- whether through controlling atmospheric carbon, adapting to anticipated climate changes, or (as will almost certainly be necessary) both -- will require increased wealth and technological advance, so it is worth remembering that environmental policies which reduce economic growth can hamper our ability to meet present and future environmental challenges.

Related Posts (on one page):

  1. Is Richer Greener?
  2. Is Richer Greener? A Comment on Posner on Tierney:
  3. Tierney on Using Energy, Getting Rich, and Saving the Planet