Roosevelt Institute | Cornell University

The Case for Green Investment

By Abigail HillerPublished October 24, 2014

Today, the health of our planet has become a priority to many. As has the creation of jobs in our economy. Most consider there to be a trade-off between the two. But, this is not necessarily true; green initiatives are shown to provide the economy with jobs.

By Abigail Hiller, 10/24/14

Compromise is a considerable aspect of policy-making. Spending on education, or spending on defense? Increased equality or increased efficiency? What about environment and employment? As a general rule, the production of GDP, which increases employment, damages the environment through consequences such as air and water pollution, endangerment of plant and animal species, and carbon emission. There is a demand, however, for the goods that are produced through these harmful processes. These goods include energy, plastics, and cheap food. On the surface, it appears that we need to choose between harming the environment while increasing jobs, or ceasing such harmful activities at the expense of employment. This trade off, however, is not necessary. Investing in endeavors has positive effects on the economy, and thus we can increase jobs while also lessening our negative impact on the environment.

Multiple studies have been done that show the positive effects of this green investment on the economy. Green investment includes not only renewable energy production, but also retrofitting buildings and public transportation systems. Economists Robert Pollin, James Heintz, and Heidi Garret-Peltier showed that per $1 million dollars of spending, clean energy production creates 16.7 jobs while the production of oil/natural gas/coal would produce 5.3. Studies have also been done on the potential effects of cap and trade policies, regulations that put a limit on certain types of emissions. The US Department of Energy showed if such policies were put into practice, we would only see a drop in average GDP growth of .03%. Another worst case scenario study done by the National Association of Manufacturers and the American Council on Capitol Formation showed a .1% drop in growth, again minimal. In fact, even with this dip in GDP, the GDP per capita is expected to increase 21% by 2030 to $64,270.

Not only will green initiatives be of little to no harm to the economy, they also have the potential to be beneficial. For example, research by economist Robert Pollin has shown that more of the money invested in clean energy is used to hire workers rather than other capital expenditures such as supplies or energy, than is the case for investments in other areas. This concept is called relative labor intensity, the amount of  people versus all other things that a business uses in its production. This high relative labor intensity for green technology is due to the fact that retrofitting homes and modernizing the electric grid requires more humor labor than activities in other areas, where human efforts can be largely supplemented with technology.

Another reason clean energy investment has positive effects on employment is a result of what Robert Pollin refers to as its relative domestic content per overall spending amount. Because activities such as retrofitting homes or upgrading the electric grid must occur domestically, the clean energy sector imports far less than fossil fuel pursuits. Since the systems being retrofitted exist domestically, these jobs cannot be filled by workers abroad.By relying less heavily on imports, the green industry increases domestic jobs. 

It is statistically evident that investing in clean energy will lead to job increases. Americans often consider which is of more importance to them, the health of the economy or the health of their planet. Such a decision, however, is not necessary, as research has made it clear that it is possible to benefit both our country's economic status, and the status of the environment. The issue at hand then, becomes one of politics instead of economics, as the next step to a solution is the passing of green legislation.