Terry Anderson On Economic Growth And The Environment

Terry Anderson of PERC is one of my favorite people on the planet. He’s a good economist and an effective communicator of an optimistic vision of the positive relationship between economic growth and environmental quality. As such, he’s always been a role model for me.

Terry’s got a commentary on this subject in Front Page magazine that is worth a read. A teaser:

Because of a combination of market forces and technological innovations, we are not running out of natural resources. As a resource becomes more scarce, prices increase, thus encouraging development of cheaper alternatives and technological innovations. Just as fossil fuel replaced scarce whale oil, its use will be reduced by new technology and alternative fuel sources.

Market forces also cause economic growth, which in turn leads to environmental improvements. Put simply, poor people are willing to sacrifice clean water and air, healthy forests, and wildlife habitat for economic growth. But as their incomes rise above subsistence, “economic growth helps to undo the damage done in earlier years,” says economist Bruce Yandle. “If economic growth is good for the environment, policies that stimulate growth ought to be good for the environment.”

He then goes on to discuss research with evidence that countries with higher GDP also sequester more carbon, and thus may produce less net carbon. I have a lot of detail questions about the analysis (is it GDP/capita? GDP growth rates? etc.) that will make me go find McCormick’s analysis and read it. But this is thought-provoking.

I like how Terry says “richer may well be cooler.” I hope he’s right.