Economics' Impact on Environmental Policy

A scholarly research article I have found on the web by Robert W. Hahn written in ’99 and entitled “The Impact of Economics on Environmental Policy” is a good read. The author discusses environmental economists’ role in today’s environmental public policy. Hahn asserts that “economists have seen their ideas translated into the rough-and-tumble policy world for over two decades.” Some successes have emerged in areas like the wetlands, lowering lead levels, and “curbing” acid rain. Two things that help explain this are economic incentive based mechanisms, i.e. tradable permits, and economic analytical tools, i.e. cost-benefit analysis.

Still, according to this author, environmental economists’ impact on public policy has been “modest”. Although Hahn does feels that the environmental economists will “play an increasing role in the future”, that does not mean environmental policy that currently costs more than it benefits will become more efficient. “The political economy of environmental policy” restricts greater efficiency. In order for environmental economists to change this he feels that they need to “understand how the political process affects outcome”; that the political process has a dramatic impact on “form” and “content” of policy. He even thinks that he and his colleges should be involved in lobbying. Do less objective theorizing and more judgment based action.

I agree with Hahn in that there needs to be a bridge over “the gulf between the ivory tower and the real world”. Theory is critical, I agree, however it is also not reality and a melding of the two must occur in order for efficiency to begin to take effect. I buy into Hahn’s assessment that more action ought to be taken by environmental economists like lobbying that requires them to make judgments about how to reconcile or even compromise between theory and reality rather than ignoring the impact the process has on policy.