Environmental apocalypse now?

Have environmentalists' predictions of economic decline become a self-fulfilling catastrophe? That's the question economist Craig S. Marxsen pondered while reviewing several academic studies on the economic impact of environmental regulations.

For example, based on a study that concluded environmental regulations reduced U.S. manufacturing productivity by 11.4 percent below what it could have been by 1986 Marxsen estimates:

Regulations reduced U.S. output 22.35 percent below what it otherwise would have been in 1990.

Real gross domestic product would have been 20.65 percent higher in 1990, other things being equal.

Productivity stagnated from 1973 to 1995, but this was obscured by an influx of foreign capital and women into the workplace.

What's the bottom line? According to Marxsen, "ecocatastrophism [his term for the environmental-doom viewpoint] dangerously weakens economic performance in several ways and therefore might bring about a persistently declining global standard of living that would create a debacle not unlike the very one of the catastrophists fear."

Source: Craig S. Marxsen Prophecy de Novo: The Nearly Self-Fulfilling Doomsday Forecast, Independent Review, Winter 2003, Independent Institute.

For text http://www.independent.org/tii/content/pubs/review/tir73_marxsen.html
For more on Environmental Economics http://www.ncpa.org/iss/env/

FMF Policy Bulletin\22 January 2003