One of the key arguments against government policies designed to curb climate change or against much environmental policy in general, is their impact on economic growth. It is argued that emissions regulations damage growth in traditional industries such as refining, mining, and manufacturing, leading to job losses. Also, some might claim that by devoting capital to relatively expensive environmental projects, it starves other industries of growth funding.

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According to a study released today and conducted by Nicholas Muller and Akshaya Jha, environmental policy does not impact economic growth. Specifically, the study, titled “Does environmental policy affect scaling laws between population and pollution? Evidence from American metropolitan areas ” finds that well-designed, actively enforced environmental policy reduces pollution emissions in American cities without adversely affecting GDP per capita.

To arrive at their conclusion, the authors compared the pollution levels and economic growth rates of US counties with more stringent environmental protection agency quality standards with counties subject to less stringent standards.

The paper employs scaling analysis to explore the association between urbanization, pollution, and economic output, using county-level data for the United States for the following five years: 1999, 2002, 2005, 2008, and 2011. Local pollution data is taken from the EPA’s National Emissions Inventory released for the years above.

environmental policy
JanCernek / Pixabay

Environmental policy and GDP

This paper is the first to empirically quantify how local pollution scales with population and economic output using annual data from across the US and it is also the first to consider monetary damages from emissions.

The first significant conclusion to be drawn from the data is that emissions of local air pollution scale sublinearly with the population. Previous research has found that CO2 emissions scale linearly with population growth. The important implication of this finding is that as populations continue to urbanize, emissions of local pollutants will not keep pace. According to the researchers, the figures indicate a tenfold increase in population yields just a 5.6 times increase in local emissions. The findings also imply that emissions per person scale at roughly negative one-quarter power with population, so even though aggregate emissions may increase for the city, on a per capita basis, urbanization reduces emissions.

When it comes to economic growth, the authors find that for US counties between 1999 and 2011, both Metropolitan GDP and personal income scale super linearly with population size, regardless of whether or not the counties fall in or outside the attainment of National Ambient Air Quality Standards introduced by the EPA. Therefore, “it appears that policy can dramatically reduce the adverse environmental consequences of urbanization while not stifling society’s furnaces of production, innovation, and growth.”

Put simply; the study argues that environmental policy is limiting the adverse effects of urbanization without interfering with economic growth and the productivity benefits that manifest in cities.

Article Source: Does environmental policy affect scaling laws between population and pollution? Evidence from American metropolitan areas
Muller NZ, Jha A (2017) Does environmental policy affect scaling laws between population and pollution? Evidence from American metropolitan areas. PLOS ONE 12(8): e0181407. https://doi.org/10.1371/journal.pone.0181407

Funding: This publication was developed under assistance agreement no. RD83587301 awarded by the U.S. Environmental Protection Agency. It has not been formally reviewed by EPA. The views expressed in this document are solely those of authors and do not necessarily reflect those of the Agency. EPA does not endorse any products or commercial services mentioned in this publication.

Competing interests: The authors have declared that no competing interests exist.

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