The Economics of the Environment

Since the recession first began, a long series of writers, activists, and thinkers have all been asking a similar question: what, exactly, is the relationship between a strong economy and a healthy environment? Are we experiencing a crisis of consumerism that will forever decrease consumption, they ask? Will the rise of the middle class throughout the developing world strain energy resources more than the world can handle? And, most of all, can we stimulate job growth without plundering our natural resources in the process?

I’ve spent most of the summer working in my hometown of Chicago for a nonprofit economic accelerator, the Clean Energy Trust, and thinking about all of these questions. There are certainly no easy answers, but a better economy by design would make them all a lot simpler.

When economists talk about the power of the free market, they generally have a handful of assumptions in mind. People, for one, need to have perfect access to information, and nobody should be making purchases that affect anybody else. But what we’ve found in the Midwest is that these assumptions usually don’t hold up very well within the realm of clean energy. Investors don’t know how to evaluate new technologies, consumers don’t understand what will save them money, and policymakers haven’t quite realized how it all affects the public. The result is that the gears of the market are stiff, and there are neither as many jobs nor as much renewable energy as there should be. At the Clean Energy Trust, we spend most of our time thinking about what a better economy by design would mean—who would need to know what, and what resources would need to exist that don’t right now. Our hope is that the result will be a better and more efficient free market for everybody.

There are a lot of problems with the economy right now, and many of them are pretty complex. But every bad jobs report ought to be met not only by bureaucratic wrangling, but also by designers thinking about how to build a better economy. It won’t just lead to more jobs, but more good jobs, in every sense of the word.


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