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Achieving Economic Gains Through the Setting of Environmental Goals: The Case of California

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The Next Economics

Abstract

Faced with volatile energy prices, rising resource costs, and income uncertainty, Californians (and the USA) are finding new ways to save money and conserve resources. Concerns about climate change are part of this. These changes not only serve as a recessionary buffer but also develop resilience toward growing external shocks for a company, household, or economic region as a whole. Contrary to conventional wisdom, well-crafted regulation can be a market driver and spur business and employment growth. California’s experience, dating back to innovative policies following the 1970s energy crisis, demonstrates that economic growth and environmental improvement can be achieved together.

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Notes

  1. 1.

    Porter and Claas van der Linde (1995).

  2. 2.

    Labor productivity averaged 1.46% annual growth between 1973:Q4 and 1995:Q4 and averaged 2.91% per year over the 1995:Q4-2005:Q3 period. Jorgenson et al. (2005).

    See also Atkinson and McKay (2007).

  3. 3.

    Henton et al. (2008a).

  4. 4.

    Farrell et al. (2007).

  5. 5.

    See Briguglio et al. (2009).

  6. 6.

    Business Roundtable (2010); Forbes (2011).

  7. 7.

    K. Galbraith (2009).

  8. 8.

    Extensive research has examined the compound economic benefits of an innovative economy and the key characteristics of an economy that creates new ideas and products and can commercialize them. See Romer (1990); Ian Morrison (1996); Utterbach (1994); Baumol (2002); Moon-Lee et al. (2002).

  9. 9.

    Bezdek and Wendling (2007).

  10. 10.

    Allen (2011).

  11. 11.

    Clark and Bradshaw (2004).

  12. 12.

    McCarthy (2007).

  13. 13.

    Utility revenues have historically been tied to sales volumes, so companies were rewarded for selling more power and penalized for selling less. Therefore, there was a strong disincentive for utilities to encourage energy efficiency and conservation. The implementation of “decoupling” removes this barrier by assuring investor-owned utilities a fixed amount of revenues regardless of sales volumes. “The result of this simple, but profound, change has been that utilities have been free to aggressively help consumers reduce energy usage without doing financial harm to their business. As a direct result of decoupling and the programs it made possible, California’s per capita energy usage has remained flat over the past 30 years, compared with an increase of 50% for the rest of the country.” Pacific Gas and Electric Company (2006, p. 5).

  14. 14.

    Clark and Bradshaw (2004); Clark (2003).

  15. 15.

    California Public Utilities Commission (2011).

  16. 16.

    See CaliforniaFirst program. http://www.californiafirst.org/.

  17. 17.

    Henton et al. (2012).

  18. 18.

    The Green Establishments Database is a composite database that draws information from multiple sources (including the Cleantech GroupTM, LLC, and New Energy Finance) for the identification and classification of green businesses and also leverages a sophisticated internet search process. CEI designed the parameters of the internet search platform which was engineered by a series of developers of business intelligence tools. The National Establishments Time-Series (NETS) database based on Dun & Bradstreet business-unit data was sourced to extract business information such as jobs.

    This methodology was originally developed on behalf of Next 10, a California nonprofit, as part of the 2008 California Green Innovation Index. Since then, the methodology has been further developed and refined and resulted in the following published analyses: California Green Innovation Index (2009a, 2010, 2012), Next 10’s Many Shades of Green (2009, 2011, 2012), Joint Venture: Silicon Valley Network’s Index of Silicon Valley (2009, 2010), and Cleantech and California’s Growing Green Economy (2008b) prepared for the California Economic Strategy Panel. The analysis completed for the Pew Charitable Trusts’ 2009 US Clean Energy Economy Report provided the most comprehensive accounting of the reaches of the growing clean energy economy across the fifty states and the District of Columbia.

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Author information

Authors and Affiliations

  1. Institute for the Future, Palo Alto, CA, USA

    Tracey Grose (Research Director)

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  1. Tracey Grose
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Correspondence to Tracey Grose .

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Editors and Affiliations

  1. Clark Strategic Partners, ABC, Beverly Hills, 90209, California, USA

    Woodrow W. Clark II

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Grose, T. (2013). Achieving Economic Gains Through the Setting of Environmental Goals: The Case of California. In: Clark II, W. (eds) The Next Economics. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-4972-0_6

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