Reflections on an Economist’s Earth Day Lecture

On April 22 the Alexander Hamilton Institute hosted Dr. Mike Rizzo, a lecturer in economics at the University of Rochester and a senior fellow of the AHI, to discuss American environmental economics on what happened to be Earth Day. The event was part of the AHI continuing education course, “Science and Government.”

In his lecture, “Conserved by Capitalism,” Rizzo discussed the impact of the free market on the environment, offering an alternative to the conventional wisdom about their relationship. Rizzo explained capitalism’s ability to provide a strong incentive for conservation of land and habitat, and for efficiency in the use of resources (for example, vehicle fuel efficiency reduces both emissions and costs). Rizzo also noted such examples of environmental progress as the improvements in air quality in recent decades.

At the same time, he pointed out certain difficulties in environmental policy, such as the “green paradox,” in which environmental restrictions that will be tightened in the near future may lead to more pollution. (After the announcement of enforced emission reductions, for example, consumers may pollute more, by consuming more, during the lead-up to that policy change.) Similarly, in the “Jevons paradox,” consumers use high-efficiency products or services, such as heat, more heavily because the energy bill is now lower -- and the greater usage may keep energy consumption as high as it would have been without the efficiency gains. In addition, Rizzo noted that polls indicate the public does not consider action on the environment one of its highest policy priorities, despite widespread environmental activism.

By relating Americans’ economic incentives and behavior to both favorable and unfavorable outcomes for the environment, the lecture displayed a refreshing, pragmatic perspective on environmentalism. It suggested that Americans can and often do improve their environmental stewardship by choosing economic behavior that, while still in their self-interest, is better for nature. The power of the free market cannot be neglected as a positive factor in the pursuit of environmental goals.

Most important of all, Rizzo’s lecture was an example of intellectual humility and intellectual fairness -- traits the AHI continuously fosters and values -- in the environmental debate. This policy arena has long suffered from the influence of dogmatic ideology, coming from both the left and the right. The comprehensive use of evidence to analyze the intersections between America’s economy and its environment, especially by a speaker like Rizzo who cares a lot about the environment, provided a fair-minded evaluation without excessive optimism or pessimism about the future of environmental quality and sustainability, including climate change. It showed that those of us who are concerned about protecting the environment can still argue persuasively without being ideologues, recognizing both the encouraging and the discouraging factors in environmental progress.

In the American system of separation of powers and co-equal branches of government, only the formation of a political consensus through an examination of all available evidence on an issue (not just that which is convenient for one side) can produce a forceful effort to address our problems. Forming a consensus based on a body of facts, while guided by the North Star of noble desire to serve the public good, can perhaps ease current political divides not just on the environment, but on a variety of other issues such as gun safety, health care, and criminal justice reform. Perhaps only then can we start to fulfill the Constitution’s famous promise “to form a more perfect Union.”