Environmental protection, the economy, and jobs: National and regional analyses

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Abstract

The relationship between environmental protection (EP), the economy, and jobs has been an issue of harsh contention for decades. Does EP harm the economy and destroy jobs or facilitate economic growth and create jobs? We address this issue by summarizing the results of the Jobs and the Environment Initiative, research funded by nonprofit foundations to quantify the relationship between EP, the economy, and jobs. We estimate the size of the US environmental industry and the numbers of environment-related jobs at the national level and in the states of Florida, Michigan, Minnesota, North Carolina, Ohio, and Wisconsin. This is the first time that such comprehensive, detailed estimates have been developed.

Our major finding is that, contrary to conventional wisdom, EP, economic growth, and jobs creation are complementary and compatible: Investments in EP create jobs and displace jobs, but the net effect on employment is positive.

Second, environment protection has grown rapidly to become a major sales-generating, job-creating industry—$300 billion/year and 5 million jobs in 2003.

Third, most of the 5 million jobs created are standard jobs for accountants, engineers, computer analysts, clerks, factory workers, etc., and the classic environmental job (environmental engineer, ecologist, etc.) constitutes only a small portion of the jobs created. Most of the persons employed in the jobs created may not even realize that they owe their livelihood to protecting the environment.

Fourth, at the state level, the relationship between environmental policies and economic/job growth is positive, not negative. States can have strong economies and simultaneously protect the environment.

Finally, environmental jobs are concentrated in manufacturing and professional, information, scientific, and technical services, and are thus disproportionately the types of jobs all states seek to attract.

Section snippets

Introduction: the issue

The relationship between environmental protection (EP), the economy, and jobs has been an issue of harsh contention for decades. Analysts and policymakers of all points of view seem to agree that a strong relationship exists between EP and jobs; the debate is over the sign of the correlation coefficient. Does EP tend to harm the economy and destroy jobs or to facilitate economic growth and create jobs? If the latter is the case, can the positive affects be quantified and estimated at a

Previous studies

Numerous studies have been undertaken over the past two decades to estimate the economic and employment effects of EP. These can be grouped into three types: (i) theoretical analyses and cases studies, (ii) econometric simulations of policy alternatives, and (iii) empirical estimates derived using historical data. Below we review some of the major studies in each category.

Methodology

The economic and employment effects of EP expenditures were estimated using the Management Information Services, Inc. model, database, and information system. A simplified version of the MISI model as applied in this study is shown in Fig. 1.

The first step involves translation of environmental expenditures into per unit output requirements from every industry in the economy. Second, the direct output requirements of every industry affected by the expenditures are estimated, and they reflect the

Ambiguities and questions

As discussed below, we estimate that EP created nearly 5 million jobs in the US in 2003, and these were distributed widely throughout all states and regions within the US But how many of these are “environmental jobs” or “green jobs?” More specifically, what constitutes an “environmental job?” While a definitive analysis of this important topic is outside the scope of this report, our review of the literature indicates that there is no rigorous, well-accepted definition of an environmental job.

Findings at the national level

We found that, contrary to general public perception and public policy understanding, since the late 1960s, protection of the environment has grown rapidly to become a major sales-generating, profit-making, job-creating industry. Expenditures in the US for EP have grown (in constant 2003 dollars) from $39 billion per year in 1970 to $301 billion per year by 2003—increasing more rapidly than GDP over the same period—see Table 3. If “EP” were a corporation, it would rank higher than the top of

Findings at the state level

As part of the research initiative we have thus far estimated and assessed the environmental industry and jobs in six states: Florida, Michigan, Minnesota, North Carolina, Ohio, and Wisconsin.11 Our findings are summarized in Table 4, Table 5.

Comparison to other estimates of environmental spending

Aside from the estimates presented here, the only other comprehensive, consistent time series of estimates of US environmental expenditures over the past four decades are those developed by Environmental Business, International (EBI).13

Findings at the national level

Our first major finding is that EP, economic growth, and jobs creation can be complementary and compatible: Investments in EP can create jobs, not destroy them.15

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    This paper finds that, contrary to the conventional wisdom, environmental protection has evolved into a major US industry, that most of the 5 million jobs created are for occupations not related to the environment, and that detailed economic and employment impacts can be estimated for individual states.

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