NEWS ANALYSIS : Greening (as in Money) : State’s Environmental Businesses Flourishing Despite Regulations
Even as politicians and economists question the value of many environmental rules 25 years after the first Earth Day, California’s environmental industry has grown into a huge business, supporting an estimated 180,000 jobs and generating more than $17 billion in annual revenues.
The environmental technology and services industry in California is among the largest and most important in the country and it ranks alongside film production and aerospace in terms of economic importance statewide.
Yet in the minds of economists, all jobs are not created equal. So while the Clinton Administration and many “green” business leaders point to environmental job growth as a big plus for the economy, others see many jobs spawned by regulations as coming at the expense of existing jobs--ultimately contributing little to economic growth.
Or they see the latest environmental rules bringing too little benefit at too great a cost, diverting capital from investments that could bring a better return.
Beyond this, even in California, few economists and business leaders agree on a simple answer to the bigger question du jour : Do environmental laws, in the end, bring a net financial gain or loss to the economy?
“These things get to be a problem to measure,” said Donald Perry, director of Trade and Commerce’s office of economic research. “Certainly, excessive regulations hurt the economy,” Perry said, “but new technology helps . . . and certainly as California can sell this technology to the world, this is a boon.”
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A clean environment is necessary and “beneficial to the business climate in California,” said Allan S. Zaremberg, senior vice president of the California Chamber of Commerce, but he and others contend that many jobs created in the environmental era have not been.
“I don’t think it’s ever appropriate to have government regulation just create jobs,” Zaremberg said. “Jobs should be created by the market. . . . I think right now what we’re seeing (in California) is probably a net loss in jobs, because the regulations haven’t been sensitive to a balance between protecting the environment and also protecting people’s ability to earn a livelihood.”
Gov. Wilson’s administration makes a different distinction among environmental jobs.
Jobs created to meet the demands of an environmental rule can be good for the economy, according to Dan Pellissier, a spokesman for Cal/EPA. “We don’t like government jobs that run the bureaucracy that (issues) permits, or (the fact) that jobs are lost in the long and often torturous permitting process,” Pellissier said.
While attempting to streamline the state’s regulatory process, the Wilson administration is also trying to woo environmental-equipment manufacturers from around the globe by setting up a certification process that would put the state’s approval on new technology tested by state agencies.
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This week, the Clinton Administration’s National Commission for Employment Policy released two studies estimating that current federal investments alone in environmental technology have created 68,000 to 80,000 jobs and added up to $3.7 billion to the nation’s gross domestic product. The commission predicted that the industry would generate 184,000 more jobs by 1998, and that the world market for environmental goods and services will reach $300 billion by the year 2000.
The “jobs/environment dichotomy is a fallacy,” said Anthony P. Carnevale, commission chairman.
Certainly, examples do abound of the job-creating power of environmental policies adopted over the past two decades, from new recycling facilities to lawyers who specialize in environmental litigation.
Today, in Fullerton, Minneapolis-based Target Stores is scheduled to reopen a store that has been gutted and refitted with energy-saving, waste-reducing lighting, air-conditioning and other systems in a showcase program organized by the U.S. Environmental Protection Agency.
The project, which a spokesman for the chain said cost “several million dollars,” provided employment for more than 200 workers--from electricians to architects--over the past six months. Target expects to see a payback on its investment within two to three years.
And Friday, in an example of the deal-making that has heated up as California’s 1998 deadline approaches for major car makers to introduce the first commercial zero-emission cars, German engineers and executives from BMW met in Newbury Park with more than 90 U.S. executives developing alternative-fuel vehicle components.
The get-together was sponsored by BMW and Calstart, the public-private consortium attempting to build an alternative transportation industry in the state and designed to help BMW in its search for business partnerships in California.
Calstart itself, in a recent survey of a third of its more than 120 members, said those companies reported creating more than 1,600 jobs in the last two years, with expectations of 11,000 new jobs by 1999.
Environmental industry representatives also believe that environmental rules have so far helped the state’s overall economy.
“My gut level is that it has been a significant net gain,” said Brian Runkel, executive director of the California Environmental Business Council Inc., a San Jose-based trade group. Runkel cited not only jobs, but lower health costs, less pollution damage to buildings and to the state’s infrastructure.
In truth, nobody really knows. There has been little research on the larger economic effect of environmental regulations on a regional or national economy.
In perhaps the best-known study, a political science professor at the Massachusetts Institute of Technology concluded that states with the toughest rules also tend to have the healthiest economies. Stephen M. Meyer compared each state’s regulatory standards with such economic indicators as gross state product growth and overall labor productivity over the past 20 years, including the recession of 1990 to 1992.
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Meyer found in his study, released in 1993, that states with the strictest rules were hardest hit during a recession. But he says they also recovered faster.
More recently, a study of the effects of air-pollution rules on the Southern California economy from the 1960s through 1990 found that even the most stringently regulated industries here had better earnings growth than their competitors in other regions.
The study, directed by the Institute for Economic and Environmental Studies at Cal State Fullerton, brought a skeptically raised eyebrow from many business leaders by contending that “the region’s comparative (economic) performance improved, not deteriorated, over time.”
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* EARTH DAY’S FLIP SIDE
Congressional reformers move to overhaul a generation of environmental policy. A1
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Earth Day Report
* The TimesLink on-line service has a special report on Earth Day’s 25th Birthday that includes a calendar of this year’s activities, stories on the history of Earth Day and other features on environmental issues.
Details on Times electronic services, A8
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Rise of an Industry
Covering work from trash collection to electric-car research, California’s environmental technology and services industry has grown steadily over the past 25 years. While growth has slowed recently, the expansion is expected to continue into the next century. Industry revenues, in billions of dollars:
1970: $1.9
1994*: $18.3
2000: $22.4
* Estimate
Source: Environmental Business International
