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Tuesday, September 6, 2011

A Debate Arises On Job Creation And The Environment

Click here to read the full article from Motoko Rich and John Broder at the New York Times

Spencer Weitman, president of the National Cement Company of Alabama, said the environmental regulations were a moving target.

Republicans and business groups say yes, arguing that environmental protection is simply too expensive for a battered economy. They were quick to claim victory Friday after the Obama administration abandoned stricter ozone pollution standards.

Many economists agree that regulation comes with undeniable costs that can affect workers. Factories may close because of the high cost of cleanup, or owners may relocate to countries with weaker regulations.

But many experts say that the effects should be assessed through a nuanced tally of costs and benefits that takes into account both economic and societal factors. Some argue that the costs can be offset as companies develop cheaper ways to clean up pollutants, and others say that regulation is often blamed for job losses that occur for different reasons, like a stagnant economy. As companies develop new technologies to cope with regulatory requirements, some new jobs are created.

What’s more, some economists say, previous regulations, like the various amendments to the Clean Air Act, have resulted in far lower costs and job losses than industrial executives initially feared.

For example, when the Environmental Protection Agency first proposed amendments to the Clean Air Act aimed at reducing acid rain caused by power plant emissions, the electric utility industry warned that they would cost $7.5 billion and tens of thousands of jobs. But the cost of the program has been closer to $1 billion, said Dallas Burtraw, an economist at Resources for the Future, a nonprofit research group on the environment. And the E.P.A., in a paper published this year, cited studies showing that the law had been a modest net creator of jobs through industry spending on technology to comply with it.

The question of just how much environmental regulation hurts jobs is a particularly delicate one as leaders in Washington debate the best ways to address the nation’s stubbornly high unemployment rate. As President Obama prepares for an important speech on Thursday focusing on job creation, Republicans are pushing for a rollback in environmental regulations that they say saddle companies with onerous costs that curtail jobs without leading to significant improvement in environmental or public health.

Part of the problem in evaluating the costs of regulation is that there have been few systematic studies of such costs after regulations are imposed.

“Regulations are put on the books and largely stay there unexamined,” said Michael Greenstone, an economist at the Massachusetts Institute of Technology. “This is part of the reason that these debates about regulations have a Groundhog’s Day quality to them.”

Mr. Greenstone has conducted one of the few studies that actually measure job losses related to environmental rules. In researching the amendments to the Clean Air Act that affected polluting plants from 1972 and 1987, he found that those companies lost almost 600,000 jobs compared with what would have happened without the regulations.

But Mr. Greenstone has also conducted research showing that clean air regulations have reduced infant mortality and increased housing prices, and indeed many economists argue that job losses should not be considered in isolation. They say the costs of regulations are dwarfed by the gains in lengthened lives, reduced hospitalizations and other health benefits, and by economic gains like the improvement to the real estate market.

Business groups also tend to cite regulation even if other factors are involved, critics say. The cement industry is currently warning that as many as 18 of the 100 cement plants currently operating in the United States could close down because of proposed stricter standards for sulfur dioxide and nitrogen oxide emissions, resulting in the direct loss of 13,000 jobs.

An E.P.A. analysis of the proposed rules projects a much smaller effect, ranging from as few as 600 jobs lost to 1,300 jobs actually added in companies that make cleaner equipment.

Some cement plants could be at risk simply because of the economy. With the housing market on its knees, demand for cement is down by about 40 percent from its prerecession peak. According to Andy O’Hare, vice president for regulatory affairs at the Portland Cement Association, a trade group, about a third of the cement plants in the country are being shut off every other month.

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