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Friday, October 24, 2008

Green Collar Jobs

Green Jobs: iStockphoto

The economy is down and global warming is up. Instead of tackling the two problems individually, some lawmakers are looking to link the two activities together in what is proving to be an opportunity to fix both. In California, they are killing the two proverbial birds with one law, or in this case, many energy-efficiency policies.

California has a reputation for spearheading green policies. The state's energy-efficient ideology dates back to 1978, long before any other state was concerned about greenhouse gas emissions. The study, conducted by David Roland-Holst, an economist at the Center for Energy, Resources and Economic Sustainability at the University of California, Berkeley, focuses on household spending (which amounts to 70% of the gross state product) and is unique because it examines data over a thirty-year span, from 1977 to 2007. Says Holst, "What I wanted to do to support the forward-looking vision is go back and look at the evidence we have in front of us."

This study is timely. As new carbon-cutting initiatives are born, economists, lawmakers, and taxpayers wonder how big a price tag converting to energy-efficient systems will yield. The study shows that, despite the sometimes higher upfront cost of a large appliance—a refrigerator, for example—or building project that meets efficiency standards, the money saved in electricity costs down the road spurs economic growth.

When people don't have to spend their hard-earned dollars on energy costs, they open their wallets elsewhere. As a result, this economic boost is diverse, providing a boon to everything from the light industrial sector ($1.2 billion increase), to wholesale and retail trade ($11.2 billion increase), to the finance and insurance sectors ($7.3 billion increase), to the service sector ($17.8 billion increase). In a trickle down effect, the more people are able to spend on groceries or clothing or a taxi instead of on high energy costs, the more jobs are created in those industries.

Calculations were based on residential spending on electricity and the cost of that same commodity. California's per-capita demand for electricity is 40% below the national average, but its electrical rates are 40% above the national average. Historically, however, the decrease in per-capita demand for electricity is greater than the corresponding rates increases.

Granted, compensation in traditional industries has gone down, as has the number of jobs; however, those numbers gain relativity when compared to what the green movement has generated. Where 25,000 jobs were lost, 1.5 million jobs were created. Where compensation in the electric power industry went down about $1.6 billion, statewide all-around compensation rose by $44.6 billion.

As California and other states move into the future, enacting carbon-capping laws and putting them into practice will cost money. But as the Nobel-prize winning economist Paul Krugman said in a recent New York Times editorial, now is not the time to worry about the deficit. The incurred costs here are relatively slight, and the overarching benefits could not only save you money, but save the Earth as well.

Via: New York Times