Environment - Global Climate Change

Global Climate Change

Climate Change Facts
June 3, 1998

Issue 8 U.S. House of Representatives

Minority Staff, Committee on Government Reform and Oversight

Evaluating the Critic's Economic Predictions for the Kyoto Protocol:
Economic Forecasts for the Clean Air Act in Retrospect
Although some major industry leaders have recognized the effects of greenhouse gas emissions and have called for greenhouse gas reductions, the biggest greenhouse gas emitters have formed a powerful coalition to fight efforts to control global warming. They have steadfastly predicted disastrous economic effects if coordinated efforts are taken to reduce greenhouse gas emissions.

It is useful to view these statements in light of previous environmental debates. When Congress considered reauthorizing the Clean Air Act in the late 80's, opponents of air pollution control similarly predicted massive economic downturns. As many observers have noted, these predictions never materialized. Instead, the United States has significantly improved its air quality while enjoying a period of robust economic growth. In fact, many areas that have done the most to reduce air pollution have been more prosperous than less polluted regions.

Ozone nonattainment areas. The Clean Air Act requires the areas which fail to meet the Clean Air Act's health-based standards to be designated as "nonattainment areas." These nonattainment areas must then develop and implement a plan to achieve healthful air. New information compiled by the Environmental Protection Agency from independent economic and census data sources reveals that since the passage of the 1990 Clean Air Act Amendments, nonattainment areas across the country have enjoyed falling unemployment, thriving new businesses, and growth in personal income -- all while air quality has improved.

Employment. Opponents of environmental protection have often claimed that protecting the environment will stall creation of new jobs. For example, in the Los Angeles Times in 1990, Pat Buchanan asked "can we afford risking 4 million jobs for marginal gains in air quality and fighting bugaboos like acid rain?" Recent history demonstrates that this was a false choice:

Nationwide, there has been a net gain of 2,223,237 jobs in ozone nonattainment areas from 1990-1995.

The average total increase in employment in these years was 6% for ozone nonattainment areas, with growth in individual areas reaching as much as 20%.
In addition to the job growth achieved relative to a national average, comparisons with regional growth rates were also impressive.

Sixty-five percent of ozone nonattainment areas had average annual employment growth rates greater than that of their region of the country.

Ozone nonattainment areas in Boston, MA, Washington, DC, Pittsburgh, PA, Portland, OR, and other areas had average annual employment growth rates that were more than two times the growth of their region.
Business Growth. Claims that regulations will hurt small businesses also recur in the context of environmental challenges. In August of 1990, the National Association of Manufacturers vice-president Richard Siebert, said "This [Clean Air] bill will put millions of American workers at risk, put thousands of small companies out of business, further weaken our economy and limit our capacity to become energy independent." Yet in the years following the passage of the Clean Air Act requirements, small businesses not only stayed in business, in many cases, they thrived.

Since 1993, more than 2.5 million new businesses were created in ozone nonattainment areas.

From 1993-1997, the number of new businesses in severe, serious, and moderate ozone nonattainment areas increased, on average, by 14%, 16% and 39%, respectively. Marginal areas, which have less strict ozone regulations, experienced slower growth (less than 8% on average) in the number of new businesses. Over 90% of all new businesses have less than 10 employees.

There are on average more new businesses created per capita in the moderate, serious, severe, and extreme categories of ozone nonattainment than there are in the marginal category of nonattainment.

According to the Bureau of the Census, almost two-thirds of ozone nonattainment cities experienced greater growth in the number of new businesses from 1991-1994 than the U.S. average.
Personal Income Growth. Polluters and naysayers also predict that environmental regulations cause companies to pass along higher prices to consumers, leading to drastic losses in personal income and declining standards of living. Before the Clean Air Act Amendments passed in 1990, Richard Siebert of the National Association of Manufacturers said "American consumers and businesses will face sharply higher prices if the current proposals become law." But again, in the years 1990-1995:

The average total increase in per capita personal income for ozone nonattainment areas was 22%, with growth in individual areas reaching as high as 30%. This rate is consistent with, and slightly above, the national average growth of 21% in per capita personal income.
The facts revealed by our experience with the 1990 Clean Air Act Amendments demonstrate that environmental protection can be achieved in tandem with growing a strong, clean economy.