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Environmental Dilemmas

by Elaine Schwartz    •    Sep 8, 2011    •    273 Views

The environment or employment?

Smart meters:

  • Environmentally superior, they automatically transmit data about electricity usage. As a result, we can better manage our demand for energy.
  • The tradeoff? Even including smart meter R & D, IT services, manufacture and installation, we would have a net job loss. 
  • The 2009 Stimulus Act’s $4 billion allocation to a smart grid was primarily for smart meters. According to recovery.gov, more than 5 million smart meters have been installed.

Emissions reduction:

  • Reducing CO2 emissions could have a substantial long-term impact on the well-being of millions of people.
  • The Tradeoff? In the short-term, faced with new emissions control regulations, businesses tend to diminish investment and job creation. Discussed in this CBO report, emissions reduction from cap-and-trade tends to increase government spending, reduce government revenue, increase energy prices, and diminish jobs in industries that are high carbon emitters.
  • President Obama reversed an EPA directive that sought to reduce ground level ozone levels.

You see where this is going. Discussed by NY Times columnist David Brooks here, environmental initiatives create dilemmas.

The Economic Lesson

You might want to listen to a good discussion of environmental dilemmas from a panel with diverse perspectives during this NPR Diane Rehm show podcast. As the discussion unfolds, it becomes increasingly evident that our environmental positions depend on our own incentives. For politicians is it votes? For industry, is it profits? For labor, jobs? And, you can see in this post, that during the recession, consumers bought fewer environmentally superior products because they were more expensive.

An Economic Question: For smart meter and current ground ozone level reduction, explain why you agree or disagree with the Obama administration.

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