In Economics, 'Green' Is Gold

EMERGING from the shadows of the current recession in the United States is one startlingly favorable point of light. Surprisingly, it comes from a source that Americans have long regarded as an alternative to, rather than an engine of, economic growth - the environment.

For the last two decades, the US economy has been undergoing a vast environmental restructuring. Initially brought about by thousands of new environmental laws, regulations, and court cases, this process has been reinforced in recent years by a dramatic "greening" of consumer preferences.

Equally important, as the world economy has become ever more competitive, greater efficiency has become the hallmark of successful producers. Since waste and pollution are just other ways of saying inefficiency and poor management, marketplace imperatives increasingly favor those companies (and countries) that pollute less in their manufacturing.

The economic restructuring brought about by environmental regulations, changed consumer tastes, and improved efficiency is more advanced in the US than anywhere else in the world for the simple reason that it began here earlier and has been pursued with greater vigor. In consequence, we stand to benefit from a greening world economic order.

The most obvious benefit is the striking growth of a domestic environmental-services industry, whose components now generate $130 billion in annual revenues and employ an estimated 2 million people. This industry is one of the few American business sectors that has not been obliged to "downscale" during the economic downturn.

As Western Europe and the tigers of Asia toughen their own environmental policies, as the pollution-wracked countries of Eastern Europe, Mexico, and Thailand seek to reclaim their natural environments, our lead in environmental services is opening vast new export markets for US "green goods."

The worldwide market for pollution-control products and services, according to the US Department of Commerce, was about $370 billion last year. Some $50 billion took the form of trade among nations. Of this latter sum, the largest single exporter ($6 billion) was the US. The environmental tax levied on Americans through regulations in the 1970s and 1980s, in other words, is becoming a job and profit boom for US exporters in the 1990s.

BEYOND the specialty area of environmental services, one key to virtually all successful international trading in years to come will be how well exports meet environmental requirements of importing countries.

New packaging, recycling, and content regulations taking hold in the European Community and other major trading blocs make it clear that consumer goods of all kinds will be held to ever higher environmental standards. Here, again, because whole classes of American-made products became environmentally sensitized earlier to accommodate tough environmental regulations, we enjoy a selling edge.

Viewed from the ecological perspective, the world is moving into a period of endemic disasters generated by the cumulative effects of too much industrialization and too many people. Viewed from the perspective of national and international economics, however, we are on the verge of an opportunity.

In decades to come, as much wealth will accrue to individuals, companies, and nations learning to cope with new and nastier man-made environmental realities as was made in all centuries past creating these realities. The economies of nations that "green" faster than their competitors will benefit most.

The environment is thus no longer an economic problem for Americans, but a redeeming and regenerative economic vision. Pursuing this vision merits serious consideration today. In many respects, it embodies the best economic future we can reasonably hope to enjoy.