Green Jobs Don't Grow on Trees

April 5, 2012

At both the federal and state levels, lawmakers have promoted an economic model that says an optimal regulatory scheme can be created, such that green jobs can stimulate growth and preserve the environment.  But the very fundamentals of such a model are misleading, and do not allow for transparent discussion regarding the need and best practices for protecting the environment, says Bryan Leonard, a budget research analyst and fellow at State Budget Solutions.

This form of intervention inevitably distorts incentives and drives market forces to suboptimal ends.  Government-provided subsidies arbitrarily select winners and losers, regulations undercut the competitiveness of effective private-sector participants, and costly green programs undermine the solvency of cash-strapped states.

Statewide regulations have long been a reliable means to promoting environmental protection:

  • Thirty states currently have renewable portfolio standards, which require a certain percentage of the state's energy to come from renewable sources.
  • In response to concerns about global warming, 22 states have enacted greenhouse gas emissions targets since 2000. 
  • Following a model provided by California, 14 states have implemented vehicle emissions standards since 2002.

The costs of such programs are substantial, but they are at least transparent in that they are tallied up on states' expenditure sheets.  However, the newer wave of state tax expenditures in the form of credits and subsidies are troublesome in that their true costs are often difficult to ascertain.

  • The average state had approximately eight programs that provided financial incentives for green businesses and residential green projects; New York leads the pack with, with 22 such policies.
  • Tax credits are particularly detrimental to states' financial health, as they are funded purely through the forfeiture of tax revenues.

Finally, some states have tripled down on the green economy by supplementing regulations and financial outlays with green job training programs.

  • Several states, including California, Michigan and New Jersey, have instituted programs to provide certification and training for employment in green industries.
  • Yet such programs may actually leave participants unemployed in the long run, as they increase the supply of green workers without increasing labor demand.
  • This is a component of the recipe for an eventual pop in the green industry bubble.

Source: Bryan Leonard, "Green Jobs Don't Grow on Trees," State Budget Solutions, March 7, 2012.

For text:

http://www.statebudgetsolutions.org/doclib/20120306_GreenJobsReport.pdf

 

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