Saturday, March 2, 2013

Environmental Initiatives and Economics (Naked Capitalism)


Environmentalists Need to Make Being Green Keynesian

Jonathan Harris of the Global Development and Environment Institute has a new post at Triple Crisis, Green Keynesianism: Beyond Standard Growth Paradigms, in which he argues that pro-growth policies need to find a way to deal with environmental/resource constraints. On the one hand, a lot of NC readers will find that argument to be welcome, if a bit overdue, since quite a few members have been arguing that growth-oriented economic policies need to acknowledge environmental constraints.
Having read Harris’ well-intended post, I’m increasingly convinced that environmentalists have it backwards. If you read Harris’ list, you’ll see his pro-environment recommendations are weak tea. For instance, he argues for green energy investments and “large scale building retrofit”. I know from the paper industry, and I suspect it is true for a lot of other industries, that retrofitting old, environmentally unfriendly plant is costly and not very effective, while building new and clean is actually pretty cheap once you’ve figured out how to do it. (One really important exception is water distribution, where municipal systems lose a huge percentage of potable water due to leaks, and patching and selective rebuilds would make a big difference. I hope readers will flag other big exceptions).
But the problem with “building new: is you get the Prius problem (that what looks environmentally friendly really isn’t). For instance, consider the idea of building light rail. How many neighborhoods do you have to rip down? How much does it take to get the materials to the sites? How much material, anyhow? How long does it take to build? How long does it take to get the needed usage level to have an impact? I assume we are talking a 15 year time horizon and we don’t have 15 years to start changing habits in a big way.

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