As I write this in early August 2015, the Greek financial debacle is still dominating the news. Will Greece implode? If it does, how much of the rest of the world’s economy will it take with it? Knowledgeable economists are predicting ruin for the Greek economy no matter what path the country takes. Others are predicting at best, a very long and protracted road to recovery. Closer to home, the EPA recently promulgated a new regulation under the Clean Water Act, and some are arguing it will ruin the economy. Cost-benefit analysis has been required for some time for all new federal environmental regulations, and that inquiry always leads to the very interesting question of how to value the benefits of, say, clean air. The EPA and the environmental groups will always argue that the value is high and industry will equally as often take the counter position. Both sides will be armed with piles of data.
There has long been a vigorous debate about the economic impacts of environmental regulations, with many arguing that the cumulative regulatory burden is weighing down the economy. Yet Gross Domestic Product (GDP) has tripled since the early 1970s when most of the federal environmental regulations were enacted. Would it have quadrupled or quintupled without all of those new laws? Or would GDP have gone down? Would our regulation-free-but-degraded environment be a drag on the economy? Meanwhile, energy use increased in the United States by 26 percent from 1980 to 2014, but GDP increased 149 percent during that same period. Energy use clearly became more efficient over time. How much of that change was market-driven, and how much was the result of government energy-savings programs?
And the list goes on. These are some of the real and very important questions that economics helps us understand. Law and economics are very tightly bound in the area of natural resources and the environment. Economics helps us understand the consequences of our decisions. It enlightens our often-politics-fueled debates in a much more objective, empirical way. While not perfect, economics focuses an objective lens on these debates. We can argue the subjective merits of different policy options all day, but the economists can attach numbers to the debate that often make the rest of the arguments seems weak and unsupported. They bring some hard data to the fuzzy policy conversation. Even when the data are not as solid as we would like, they inform us in a way our political leanings may not.
This issue of NR&E is a continuation of this grand inquiry. The authors in this issue dissect, among other things, whether effluent trading is a good thing, the costs of conservation easements, and how will handing over federal lands to the states effect the states’ economies. These are important questions to ask, and to keep asking. We will never have the right balance between law and the economy if we don’t do the economics necessary to understand the consequences of our policy schemes. So enjoy this issue, and if you know an economist, give him or her a hug. They’re helping us understand the big picture.