Why environmental sustainability needs economics 

Last semester, my public economics professor offered an extra credit assignment in which we could attend a Teale Lecture Series talk on climate change policy. I interpreted it as an easy opportunity for extra grade points—I would stop by the Dodd Center, take a few notes, and submit the write up. Instead, what seemed to be an academic freebie turned out to be deeply impactful on my views of the relationship between economics and climate change policy.  

The lecture was titled “What Can an Economist Possibly Have to Say About Climate Change Policy?” and was given by Harvard Professor A.J. Meyer of Energy and Economic Development. He discussed the fundamental role of economic theory in climate change policy, and the incentive structure that is continually developed in order to mutually accomplish economic and environmental goals. The need for changing our manufacturing processes is overwhelmingly apparent, and the process to do so is complex and requires rigorous policy making systems. 

It is worth noting an often-referenced strawman about economic goals is the maximization of capital; however economics more properly is the study of the movement of resources throughout our modern industry. We can leave capital maximization left to business majors (derogatory). In fact, economics is simply an empirical tool to properly run a collective resource system without necessarily promoting any particular ethics. This subject is intensive enough to be worthy of its own article. 

Economics is in many ways a novel subject, only gaining momentum in the past 100 years, and only more recently has modern economic theory begun to be developed. On the subject of sustainability, we have just begun to construct a modern understanding of the relationship between economic theory and environmentalism. 

Only now has the study of economics been most crucial to the stream of environmental issues that have global attention, to name a few: fossil fuel consumption, plastic and agricultural pollution, deforestation, and rare earth mineral mining. All are byproducts of the ways we consume and produce everything integral to a modern life, and in order to maneuver this issue an economist perspective is fundamental to its solution.  

“We don’t know yet” was a motif the Harvard professor stressed. To see significant impact from environmental protection public policy, the benefits often are spread out and we will not see the policy’s efficacy until, potentially, decades into the future. Thus, environmental policy is often experimental and constantly is being improved in order to optimize industry and environmental impacts, and as well is dependent on technological advancement to accomplish many of its goals. 

The Biden Administration introduced policies like the CHIPS and Science Act and Inflation Reduction Act that fuel money into greener industry. The government is providing many incentives for businesses to invest in healthier products, like hydrogen products where companies can qualify to get a piece of the $10 billion the Inflation Reduction Act offers.  

Policies like these demonstrate the shift in policy making, where we will see their benefits over the course of multiple generations. This should not be demotivating, but it is the necessary feat to accomplish to sequester where many modern ramifications manifest, and is where the story of the modern economy unfolds.  

Fossil fuels may be the most difficult head of the pollution Scylla to slay. Virtually the entire international economy is based on fossil fuels, and 79% of energy is sourced from fossil fuels in the United States. Phasing these out will be an arduous process and will take significant efforts in research and development in order to properly transfer from harmful industries to more sustainable modes of production, while avoiding a threatening whirlpool of economic collapse. 

We must face a policy shift from short term economic incentivization and planning towards long term trends, designed to serve the interests beyond a single generation. In the present time, we must establish the status quo of long term economic thinking in order to protect the environment.