Environmentalism as Economic Engine

The sky is not falling and the end of the earth is not nigh. And if you think through the current environmental crisis, you’ll see solutions more than problems--and signs of new industries emerging.

First, though, it’s important to understand that environmental problems are in many ways an economic signal, a symptom like fever in the body, pointing to areas where true costs are not being recognized. The environmental movement is not an enemy of the economic system--though it certainly attracts its share of cultists--but a rigorous accountant of it.

By the same token, industry and technology--and not a Luddite retreat--will solve environmental problems. In fact, it’s a fair bet that biotechnology will be a big part of the environmental solution, just as microchips helped alleviate the energy crisis of the 1970s.

But that gets ahead of the story. Today is Earth Day, and concern for the environment is being celebrated everywhere, as it was marked last week by the White House conference on global warming--the theory that carbon dioxide emissions from burning coal and oil have set up a climatic effect that will increase the earth’s temperature and turn farmland into desert, even while melting ice caps and flooding coastlines.


President Bush called for further research on global warming, while European delegates wanted immediate action on the problem. “Bush is right, we don’t know enough about long-term climatic change,” says Allan Kneese, senior fellow of Resources for the Future, a Washington research group that has been studying environmental change for three decades.

Sure, he’s right. For curbing carbon dioxide, the United States already has clean-air laws that are far more rigorous than any in Europe. But the global climate is a new kind of question on which data is either contradictory or incomplete. The problem isn’t new--carbon dioxide has been accumulating in the atmosphere for centuries--but awareness of it is. And at such times we have better questions than answers.

Yet the record is reassuring. The first Earth Day, in 1970, was concerned with polluted rivers and air and came eight years after the late marine biologist Rachel Carson published “Silent Spring.” She said pesticides, such as DDT, and effluent from factories were killing fish and plant life. And though industry and farm groups initially attacked her, Carson was right. Agriculture had failed to recognize side effects in DDT, and industry had failed to account properly for waste disposal. Pollution, in fact, can treble the cost of using water--even for industrial purposes.

Now those problems have been solved, not perfectly perhaps, but Lake Erie is cleaner and edible fish live again in New York’s Hudson River. The sulfur and particulates that were the chief air pollution concerns in 1970 have been sharply reduced.

So we are addressing other problems, longer in time and broader in geography. We now see that a power plant in Ohio can send acid rain to Maine; that garbage leaks poison into soil and water, and toxic waste is lasting.

The problems--holes in the stratospheric ozone layer above Antarctica--often seem beyond our power to affect. But environmental history shows that the human mind comes up with solutions almost as problems appear.

It was that way with energy. In the 1970s, the conventional wisdom said that energy would be scarce forevermore and economic growth would stall because it was believed that a 1% increase in energy use was needed to produce a 1% rise in economic growth.

Then all that changed. Today it takes less than one-half of 1% growth in energy to produce a 1% rise in the economy, and the trend is down.


What happened? A rise in the price of oil made everyone aware of wasteful usage--of less-than-fuel-efficient cars and homes and industrial practices. The solution was conservation and the downsizing of machinery with the aid of memory chips and processors.

The United States uses no more crude petroleum today than it did in 1970, and uses less iron ore and steel, lead and copper. Downsizing caused economic dislocation--people lost jobs, some communities were devastated--but not economic ruin. Instead, a new economy emerged, based on the use of less raw material and more plastics (a derivative of petroleum).

The use of plastic in the United States has gone way up as new wonder materials have reduced the weight in cars and airplanes, drainage pipes and backpacks.

But we are becoming aware of another cost: Plastics do not break down in nature. “Plastic simply accumulates in landfills, leading to toxicity,” says Barry Commoner, a long-time environmentalist and professor at New York’s Queens College.


The problem is economic as much as environmental. Plastics are relatively cheap, but that may be because disposal costs aren’t being recognized. So now plastics prices should go up to account for the cost of making them degradable, and other materials--glass, recyclable paper--will regain some markets.

The trend in environmental policy is to stress economic incentives and preventing pollution as opposed to only reducing it, says James K. Hammitt of Rand Corp., which advises the government on environmental matters. That means consuming different fuels rather than putting scrubbers on power plants, and using recycled or entirely new materials rather than simply cutting back on the use of polluting materials.

And that policy opens the way for advances in biotech--the use of living organisms as commercial products--in both industry and agriculture. There are more biogenetic products than ever up for Department of Agriculture approval, says Alan Goldhammer of the Industrial Biotechnology Assn. in Washington.

They are overdue because the economic and environmental laws of diminishing returns from chemical fertilizers and additives set in a long time ago. Yields in U.S. cornfields, for example, grew 5% a year for more than two decades after World War II--from 45 bushels per acre to 145. But then they stopped growing, and since the mid-'70s the soil has demanded more fertilizer and water to maintain the same yields.


But now environmental accountants are questioning the low prices farmers are charged for federal water, as well as hazards from chemical fertilizers. So enter biological products, which can encourage growth by duplicating the crop’s own hormones while conserving water by giving a crop the water-storing characteristics of a semi-arid plant such as the palm.

Is that tampering with nature? No, it’s in the great tradition of U.S. agronomist Norman Borlaug, who in the 1940s--working in Mexico as the world raged in war--cross-bred shoots of rice and wheat to make them resistant to disease and weather damage. His work, for which he was given the Nobel Peace Prize--brought about the green revolution in Asia, saving millions from famine and bringing Asia the economic growth we see today.

Will environmental concerns stop economic growth? On the contrary, says Oliver Nicklin, head of Chicago’s First Analysis Corp., an investment firm specializing in environmental companies, “you can’t have economic growth without dealing with the environment.”