What are Environmental Regulations?

Environmental regulations work to achieve environmental goals that markets are unable to meet. They manage and monitor environmental risk to achieve good environmental practices. In order to prevent pollution, such regulations may raise the cost of production, and more broadly, of environmental services in order to influence both producer and consumer behaviour. Environmental regulations can increase employment in certain sectors of the economy, such as the clean energy, waste management, and environmental consulting industries, as companies in these industries must hire workers to comply with the regulations. For example, the implementation of renewable energy sources such as wind and solar power can create jobs in construction, maintenance, and manufacturing. Jobs in the opposing sectors, however, will see decreased employment as regulations increase production costs, reduce workload and restrict operability.

Environmental regulation strategies that help to reduce unemployment

Additionally, environmental regulations can also spur innovation and lead to the creation of new, eco-friendly products and technologies, which in turn can create jobs in research and development, marketing, and sales. These include:

• Renewable Energy: The implementation of renewable energy sources, such as wind, solar, and hydropower, requires significant investments in new infrastructure, which can create new jobs in construction, manufacturing, and maintenance.
• Energy Efficiency: Improving energy efficiency in buildings, transportation, and industry can create jobs in design, engineering, construction, and retrofitting of existing systems.
• Waste Management: The proper management of waste and recycling can create jobs in waste collection, transportation, processing, and recycling.
• Clean Water and Air: Implementing regulations to protect clean water and air can create jobs in monitoring, testing and cleanup of hazardous material.
• Restoration and Conservation: Efforts to restore and conserve natural habitats and ecosystems can create jobs in planting, monitoring, and managing new growth.

However, it’s important to note that regulations can also lead to job losses in traditional industries such as fossil fuel production, as companies may be required to adopt new technologies or close down operations that are harmful to the environment.

Overall, the net effect of environmental regulations on employment is complex and can vary depending on the specifics of the regulation and the industries affected.

The Economic Effect of Environmental Regulations

According to economists, as long as demand remains strong, inflation remains low, and the population grows, economic and employment growth will generally continue. If these factors revert, growth slows and employment falls. The focus of environmental regulation is on regulated firms. Economic studies on the effects of environmental regulation have yet to provide a satisfactory answer to the question of how regulation will reduce unemployment. However, when the government erects an artificial barrier through regulation, conservatives’ and economists’ faith in markets fades.

The economy-wide models find that environmental regulations have little to no effect on long-term aggregate employment. They may result in fewer jobs in one sector, but as long as macroeconomic conditions are favourable, those jobs will simply shift to other sectors. Pollution standards, for example, may reduce employment in coal mining and coal-fired power, but demand for electricity will draw those jobs into pollution remediation or alternative sources. Environmental regulation laws frequently result in job transfers from one industry to another or from one region to another. They frequently have only a short-term employment impact.

Governmental Regulations

Government regulations are frequently framed as extensions of employment policy that take into account the social (public health) impact.  A regulation’s effects on employment are frequently minor in comparison to the net social benefits. The health benefits of an environmental rule, such as avoiding premature death, are usually much greater than the costs for industries to comply with the rule or the potential job impacts. In 2010, for example, the US Environmental Protection Agency (EPA) proposed controls for hazardous air pollutants such as mercury from industrial boilers. The EPA estimated that the rule would generate between $25.2 and $65.5 billion in annual net benefits, including up to 8,000 fewer premature deaths.

Environmental regulatory frameworks include:

1. The Clean Air Act Amendments (CAAA)
2. National Environmental Policy Act (NEPA)
3. Clean Water Act (CWA)
4. Federal Water Pollution Control Act (FWPCA)
5. Endangered Species Act (ESA)

Environmental regulations are still vastly debated In academic circles

Research work on environmental regulations and employment can be broadly classified into three branches:

• The first branch believes that environmental regulation encourages job creation. The collection of pollution taxes had a positive impact on employment in less polluting industries. The implementation of environmental regulations played a significant positive role in promoting employment upgrading in the region.
• The second branch believes that environmental regulations stifle job creation. It is a statement often reiterated by lobbyists of the fossil fuel sector and the ‘far right’ but has yet to be conclusively proven in any case.
• According to the third branch, environmental regulation and employment are either irrelevant or have a non-linear relationship. This branch believes that there is no correlation between the creation of environmental regulations and a change in the amount of overall jobs available.

There appear to be differences in consensus depending on the point of view.

An examination of the impact of environmental regulations on labour Market outcomes

Environmental regulations, such as air quality standards, can result in significant improvements in ambient air quality and related health benefits. However, they impose additional production costs on firms and may reduce productivity, earnings, and employment. This is particularly true in trade-exposed, labour- and energy-intensive industries. Growing empirical evidence suggests that environmental regulations generally increase production costs by requiring pollution abatement equipment in specific industries or increasing the cost of energy inputs. Workers displaced by regulations in polluting industries may lose long-term earnings as they transition to new jobs.

why are Environmental regulations important in reducing unemployment?

As mentioned above, environmental regulations can have a negative impact on employment in some industries, however, jobs created by environmental regulations are likely to offset job losses in other sectors. There is the potential for an increase in jobs with the transition to renewable energy although the final outcome is still debated. Environmental regulations are, in this way, important for the transition to clean energy and creating a more sustainable world.

The Sustainable Development Goals

A number of Sustainable Development Goals (SDGs) are applicable to this topic. SDG 7 (affordable and clean energy), SDG 8 (decent work and economic growth), SDG 9 (Industry, innovation and infrastructure), SDG 11 (sustainable cities and communities) and SDG 13 (climate action).

A Thrivable Framework

At its core, sustainability simply means the ability to continue, to survive. ‘Thrivability‘, by contrast, is the next step, beyond sustainability. THRIVE believes that humanity can do better with the knowledge currently available to us. We want to instil the notion that thrivability not only prevents disaster, but offers the potential for societies to flourish.

The THRIVE Framework examines issues and evaluates potential solutions in relation to this overarching goal of thrivability. It is about making predictive analyses using modern technology that support environmental and social sustainability transformations.

We recognise that human happiness can sometimes compete with environmental well-being. This is why we use our Ciambella chart to illustrate the ‘thrivable zone’. This is the area between a ‘social floor’ (the minimum required for people to live happy lives) and an ‘environmental ceiling’ (the maximum damage that we can do to the environment before it becomes unsustainable).

Overlaid on these thrivable zones are visual measurements that show impact – where something sits in the thrivable zone. To learn about how The THRIVE Project is researching, educating and advocating for a future beyond sustainability, visit our website. You can follow our informative blog and podcast series and listen to live webinars featuring expert guests in the field. Sign up for our newsletter for regular updates.