Can Environmentalists and Economists Agree?

Can Environmentalists and Economists Agree? The Independent Institute (posted at their request) Art Carden, Mike Hammock

Can environmentalists and economists agree? If so, on what? The answer to both questions is: “It depends.” Philosophically, environmentalism consists of a set of normative beliefs while economics as such is a positive discipline. Practically, there are many issues which economists and environmentalists can reach common ground.

Both have much to learn from one another: economists can learn about political dynamics with respect to environmental policies, and environmentalists with respect to how to exactly analyze policies and issues.

In his book The Armchair Economist, Steven E. Landsburg distinguishes between “the religion of environmentalism” and “the science of economics.” To an economist, individual tastes are given and are neither praised nor condemned. To borrow Landsburg’s example, economists do not judge whether a parking lot is morally superior to a forest. For environmentalists, however, tastes are morally important—some are good, some are evil.

An economist weighs the costs and benefits of pollution. An environmentalist might believe that polluting is wrong, that the optimal amount is zero and that no expense should be spared eliminating pollution.

To economists, this judgment is unproductive. We all pollute, whether at work, by driving, or by consuming goods and services that generate pollution. Economists are not interested in whether we have sinned against the environment. Rather, economists are interested in finding out why people pollute, how much is optimal and the lowest-cost way of eliminating some of it.

The moralist/environmentalist approach can be counterproductive. Consider this example: The Wall Street Journal discussed the backlash against disposable chopsticks in China (Feb. 8). This raises important economic and environmental questions. Is the wood from which the sticks are made privately owned? Are the users of the chopsticks responsible for seeing that they are disposed of without violating others’ property rights? Do disposable chopstick prices approximate the social costs and benefits of their use, or can users externalize some of these costs? What are the sanitation and public health consequences of reusable chopsticks? Are reusable chopsticks really environmentally friendly?

Consider ceramic versus Styrofoam cups: according to some estimates, a ceramic cup must be used 1,000 times before it is energy-efficient relative to Styrofoam. Washing a ceramic mug (or a disposable chopstick) uses energy and resources. Which is more environmentally friendly?

Convenience and labor also matter. The Wall Street Journal article refers to Chinese units of Microsoft and other firms replacing disposable chopsticks with reusable chopsticks in their cafeterias. Is it worth Microsoft’s workers’ time to keep track of reusable chopsticks, or would the world be better served if they were to concentrate on producing newer and better goods and services?

From what we can tell, these questions aren’t being asked by the protesters. The debate is portrayed as a simple matter of right (those who use reusable chopsticks) versus wrong (those who do not). The unintended consequences can be tragic: the article makes a sad reference to a college student whose father worked for a disposable chopstick manufacturer. After learning about disposable chopsticks’ environmental carnage, she returned home and called her father “evil” and “a criminal.”

Philosophically, environmentalism and economics diverge because environmentalism advocates specific moral positions while economic science does not. Economic analysis as such cannot tell us whether recycling, for example, is morally virtuous, but it can teach us how to think about the tradeoffs involved in the recycling decision.

There is common ground, however. Economists believe in externalities. Some of our activities do damage to non-consenting parties, and thus, policies to internalize externalities (that is, make those imposing costs on others experience those costs themselves, instead) may be appropriate.

Economic reasoning offers guidance as to which policies are “best” (or, at least, “least-bad”). For example, many economists oppose Corporate Average Fuel Economy (CAFE) standards on the grounds that they do little to solve the problem they purport to solve, as they may encourage more driving; do nothing to encourage people to buy newer, cleaner cars; and do nothing to encourage other forms of conservation.

Rather than tougher CAFE standards, a more suitable policy might be a tax on the offending activity.

To put it simply, economists agree that there are environmental problems, and that some of them are worth taking action to address. Economists differ in how they approach these problems—with a focus on costs and benefits, rather than right and wrong—but we share a concern for the dangers produced by environmental damage.

Art Carden is an Adjunct Fellow at the Independent Institute in Oakland, California, and an assistant professor at Rhodes College (Department of Economics and Business).

Mike Hammock is instructor of economics and business at Rhodes College.

Comments

[Aurora]

At the lunatic fringe of the environmentalist religion, there are those who would have us living in caves, having no children and eventually mostly dying off as a breed. I don't think these zealots care two hoots about what economists (or any other rational thinkers) have to say about the right way to do things.
Saying environmentalism is a religion is right on the money. And it's a dangerous one at that.

[JS]

Aurora, it is wrong to smear a group of people for the "lunatic fringe." All religions have a lunatic fringe and it is wrong to smear them because of their actions or beliefs. The environmentalism I know is concerned about the ability of future generations to live as well as ours. That seems like a good goal to have.

[JS]

Aurora, it is wrong to smear a group of people for the "lunatic fringe." All religions have a lunatic fringe and it is wrong to smear them because of their actions or beliefs. The environmentalism I know is concerned about the ability of future generations to live as well as ours. That seems like a good goal to have.