Sustainable business, from the bottom up

fishermen-were-supported-by-fao-in-fishing-equipemnt-and-capacity-building

For the most part, corporate sustainability programs drive change from the top down. If Apple wants to improve safety at the factories where its products are made, or Walmart wants to reduce fertilizer runoff in agriculture, or McDonald’s pledges to buy beef raised in environmentally friendly ways, those companies set targets and goals, they deploy a mix of carrots and sticks to bring their suppliers along, those suppliers push further down the chain and, if all goes well, workers, farmers and maybe the planet are all a little better off.

Whatever one thinks of this theory of change–my view is that it works quite well–it does little for the billions of people who are untouched by global supply chains. In my latest story for Guardian Sustainable Business, I write about a project called Fish Forever that is designed to help fishermen and women who work beyond the reach of global supply chains.

I heard about Fish Forever from Brett Jenks, the chief executive of a conservation group called Rare, which is based in Arlington, VA.

Interestingly, Fish Forever is a collaboration of Rare with the Environmental Defense Fund and the sustainable fisheries group at the University of California at Santa Barbara (UCSB). It’s uncommon but welcome to see NGOs working together this way.

Here’s a bit more about the program, from my story:

Fish Forever is launching this year in five countries – Belize, Brazil, Indonesia, Mozambique and the Philippines. It targets fishers with a single boat or two, as well as those who fish from shore. In developing countries, these mostly poor, small-scale fishers account for half of all fish caught, the vast majority of which is consumed domestically….

Each Fish Forever partner brings expertise to the partnership. Environmental Defense has been a pioneer in rebuilding fisheries through what is often called rights-based management. Rare specializes in mobilizing communities in poor countries on behalf of conservation. And the scientists at UCSB are experts in monitoring and measuring the health of fisheries.

Here’s how the program works: with the backing of state or national governments, local fishers get exclusive fishing rights to a community fishing areas – a bay or stretch of coast. The community then has good reason to adopt conservation practices because it will reap the benefits if they work.

Typically, those practices include the establishment of a marine preserve, also known as no-take zone, located inside the community fishing area, or nearby. These no-take zones give fish in the area the opportunity to recover and regenerate themselves. Local fishers enforce the no-take zones themselves.

The idea is to create incentives for the community to think long-term about the value of their natural asset, and take steps to protect it.A sense of ownership leads to stewardship. As a wise man once said, no one washes a rental car.

Rare isn’t a high-profile NGO but it has attracted support from some big names. Michael Bloomberg, Hank and Wendy Paulson and Jeremy Grantham are all donors. Which leads me to conclude that Brett Jenks and his group must be doing something right.

You can read the rest of my story here.

Environmental Defense Fund: Why Walmart’s sustainability index matters

Alisha Staggs of EDF

Alisha Staggs of EDF

Last month, I wrote three blogposts adding up to more than 2,000 words about Walmart’s supplier sustainability index. I did so because I think it’s a big deal, but skeptics remain. Some people simply can’t accept the fact that Walmart can do anything that’s good for its people or the planet.

In a guest post, Alisha Staggs of the Environmental Defense Fund reacts to my blogposts and argues that the Walmart index will, in fact, have a meaningful impact. Alisha works for EDF in Bentonville, Arkansas, where Walmart is based. She works on the supplier index and with The Sustainability Consortium, a broader coalition of retailers, brands and NGOs that is developing ways to identify and measure the most important environmental and social impacts of consumer products. Alisha is trained as a biologist and has an MBA from the University of Arkansas.

Here’s what Alisha has to say, and I’ll offer a concluding comment or two below.

In Marc Gunther’s recent article “Walmart’s index: a real life toy story,” he calls the Walmart supplier Sustainability Index, “the biggest environmental initiative in the company’s history,” and Environmental Defense Fund (EDF) agrees. He also questions whether “Walmart is taking this too far”” and “how the world’s largest retailer is exercising its market power.”

With a 25-year track record challenging companies to make decisions that are good for the environment and the economy, we at EDF are used to asking these types of tough questions.

That’s precisely why we have an EDF office based in Bentonville dedicated solely to working together with Walmart to advance sustainability. Because we don’t take money from the company, we can push hard to achieve the kinds of transformational change of which it is capable.

When it comes to the Sustainability Index, we’re on board. And here’s why: [click to continue…]

Here comes the sun….not

Germany, once the world’s leading market for solar power, is pulling back its subsidies.

Q Cells, once the world’s largest solar company, just went bankrupt.

This isn’t happy news. If the country that birthed the Green Party cannot sustain its support for solar, what does that tell the rest of us?

It should tell us that it’s time (actually way past time) to get serious about energy and climate policy.

This week, as I followed the news from Germany, I talked with a couple of energy-policy experts who I respect–Jesse Jenkins of the Breakthrough Institute and Gernot Wagner of the Environmental Defense Fund. I also watched an interview (below) with Bill Gates from the Wall Street Journal’s Eco-nomics conference. They disagree about some specifics, but they all agree that the US needs to get a lot smarter about how to drive a transition to low-carbon energy. So let’s try to see what we can learn from Germany, and the rest of Europe.

Perhaps the most obvious takeaway is that we should not place expensive bets on any one solution. That’s what the Germans did, with generous subsidies in the form of a feed-in tariff for solar. Even though the costs of solar have dropped dramatically, the subsidies were not sustainable. Remember when people said nuclear was too cheap to meter. Solar PV is too costly to subsidize on a scale that matters. [click to continue…]

McDonald’s: Mainstreaming sustainability?

About 64 million people visit McDonald’s every day. That’s a stunning number. They’ll see changes in the year ahead, some driven by a renewed sustainability push at the $24-billion fast-food giant.

LED lights in new and renovated stores. “Greener” packaging. Eco-labels on fish sold in Europe.

None of this is earth-shattering or, more importantly, earth-saving, but it’s the start of something big, says Bob Langert, McDonald’s v.p. for sustainability.

“We’re on a path to mainstream sustainability,” Bob told me by phone the other day. “This is transformational for us. We want to be bolder, and we want to make a bigger impact.” Most important, he said, the company wants to embed sustainability into its operations and, eventually, into its brand.

Business-friendly environmentalists who work with McDonald’s–groups like the World Wildlife Fund, Conservation International and Environmental Defense Fund–will applaud any sign that the company is ready to integrate sustainability into its core business and dig deeper into its supply chain to find ways to raise beef and chicken that are better for the planet. Skeptics, and there are many, will call this greenwashing, or perhaps “farmwashing,” a term I hadn’t heard until yesterday when I saw this anti-McDonald’s posting in Grist.

In a way, McDonald’s is like Walmart–it’s never going to be beloved in the Whole Foods-shopping, arugula-eating, tony precincts of Berkeley, Brooklyn or Bethesda. But the company is much too big to ignore or wish away.

Today, McDonald’s released its 2011 Sustainability Scorecard. Under the umbrella of sustainability, the company includes environmental responsibility, its supply chain, nutrition and well-being, employees and community grants and programs, albeit in a way that highlights accomplishments and isn’t easily transparent. (Please let me know if you can find an accounting of the company’s carbon footprint or a greenhouse gas reduction goal, because I couldn’t.)  But McDonald’s can feel good about a couple of big initiatives in the year just past. [click to continue…]

Look who’s coming to Brainstorm Green

Next April, FORTUNE will again bring together some of the smartest people we know in sustainability for Brainstorm Green, the magazine’s annual conference on business and the environment.

This is will be our 5th Brainstorm Green–hard for me to believe, since I’ve been involved since the beginning–and we’ve again got a first-rate lineup of leaders from corporate America, the  environmental movement, the investment community and government, as well as a scattering of interesting writers, thinkers and doers about “green.”

Once again, the event will be held at the spectacular Ritz Carlton in Laguna Niguel, CA. Dates are April 16-18, 2012.

Alan Mulally

New faces for 2012 from the corporate world will include Alan Mulally, the president and CEO of Ford; Rob Walton, the chairman of Walmart; Andy Taylor, the chairman and CEO of Enteprise (they buy more cars than anyone in America); C. Larry Pope, the chairman and CEO of Smithfield Foods (they make more hot dogs than anyone in America, as I wrote in Smithfield Foods: Sustainable Pork?); Vance Bell, the chairman and CEO of Shaw Industries (the world’s largest carpet manufacturer, see my blogpost, This carpet has moral fiber); John Faraci, the chairman and CEO of International Paper; Gary Hirshberg, the CE-Yo of Stonyfield Farm; Russ Ford, the executive vice president of Shell; Bea Perez, the chief sustainability officer of Coca-Cola; and Trae Vassallo of Kleiner Perkins. [click to continue…]

Crowdsourcing green

We is smarter than me.

That’s the premise behind a partnership between the  Environmental Defense Fund and InnoCentive. You probably know EDF–they’re a (mostly) business friendly nonprofit that looks for solutions to environmental problems. InnoCentive is a company that has built an open Internet platform to connect other firms, governments and NGOs to creative people all over the world who can help them solve problems.

Last week, EDF and Innocentive declared a winner in their first challenge, which looked for a new approach to the old problem of agricultural nitrate pollution: He is Patrick Fuller, 23, who is studying for a PhD. in chemical and biological engineering at Northwestern. He’ll be awarded $5,000 for his idea, about which more below.

Beth Trask

To learn more about the partnership, I spoke with Beth Trask, who leads, along with David Witzel, leads what EDF calls its innovation exchange, an effort to spread new “green”  solutions among companies.

“Like many people,” Beth told me, “we’ve been looking with much interest at the open innovation space. Basically, the concept is that there are many more ideas and possible solutions out there in the world than any given company or organization can tap into on its own.”

This isn’t an entirely new approach. Prizes have been used an incentive to solve scientific problems for centuries [See my 2009 blogpost, The Strange Power of Prizes]. More recently, companies including Kraft Foods (“Do you have a new product or packaging idea?“) and GE, with its EcoMagination Challenge, have used the Internet to look outside their own walls for new ideas. Richard Branson’s Virgin Earth Challenge offered a $25 million prize for a commercially viable plan to reverse climate change by removing CO2 from the air, while the $10-million Progressive Insurance Automotive X PRIZE was set up to inspire new low-polluting cars. [click to continue…]

Walmart: The power–and limits–of efficiency

Arguably, Walmart has done more than any environmental group, politician, government regulator or Silicon Valley clean tech firm to nudge the U.S. economy towards sustainability in the last five years.  Walmart’s 2011 Global Responsibility Report, published last week, makes clear that despite the recession and some revently rough going for the company–lately its stock has lagged the S&P500Walmart is pushing ahead towards its big goals: To generate no waste, to be 100%-powered by renewable energy, and to sell lots more products that sustain people and the environment.

Yet a closer look at the report demonstrates that there are limits to what any company, even one as vast as Walmart, can do. Most of its environmental gains have come from doing what Walmart has always done very well–driving efficiency in its stores and supply chain. When sustainable initiatives cost more money, as they sometimes do, progress has been halting.

Still, Walmart deserves at least two cheers, maybe two-and-half for its efforts, particularly in the current, dispiriting political climate.

As Elizabeth Sturcken of the Environmental Defense Fund, which works closely with Walmar, told me:

Leadership on environmental issues is coming from Bentonville these days, not from Washington. Some people in Washington want to roll back basic environmental protection on clean air and clean water, saying it’s bad for business. Our work with Walmart proves that’s not true….Generally,  all the signs that I see are full speed ahead.

Andrea Thomas, who has led Walmart’s sustainability work for the past six months, made a similar point. The company set big, bold, broad goals back in 2005, without knowing how it would meet them. Since then, it has discovered unexpected business benefits.

Rather than being paralyzed by (the goals), they ignited  a lot of energy behind doing experiments, trying different things. Today, there’s a lot of interesting work going on, not just in the U.S., but all over the world. I’m very encouraged by the progress we’re making.

Here’s one success story from the report, a promising new initiative and an arena in which Walmart’s progress appears to have stalled:

Walmart recycling with "super sandwich bale"

Waste: WMT has turned its garbage into an asset, just by thinking about the stuff it throws away in a more disciplined fashion. Across California, more than 80% of waste has been diverted from landfills and made into something else, turning what was a cost center into a source of new revenue.

Said Thomas: “We would pay for people to haul our trash away. And we paid to put it in a landfill. Now people are paying us.”

Success hasn’t come as easily as it sounds, of course. To help find an outlet for food waste, Walmart’s foundation donated 100 refrigerated trucks to food banks. “ Now they have a means to pick up and deliver some of the food that we can’t use in the stores, but that’s still good food,” Thomas said.

Supporting small, local farms: Last fall, WMT announced an array of targets related to agriculture. In the U.S., the company promised to double sales of locally-sourced produce, so that it accounts for 9 percent of all produce sold by the end of 2015. Globally, WMT said it will sell $1 billion in food sourced from 1 million small- and medium-sized farmers in emerging markets by the end of 2015.

To achieve those goals, Thomas told me, WMT has to simplify its supply chain to deal directly with farmers and eliminate some middlemen. “The logistics aren’t as difficult as you might think,” she said. “The farmer can actually drop off produce at the distribution center or at the store.”

If all goes according to plan, WMT  should be able to sell fresher, local food at lower prices, and eliminate some of the greenhouse gases generated by a global supply chain for food. Like the waste initiative, the agriculture initiatives mostly dovetail nicely with the culture of efficiency at Walmart.

Clean energy: To achieve its goal of being powered by 100% renewable energy, WMT has made its fleet, stores and distribution centers more efficient. But its commitment to wind and solar power  has been limited because they cost more than electricity from fossil fuels. The report says:

During FY11, we successfully completed several renewable energy projects, including the installation of 35 solar projects in Arizona, California and Puerto Rico. Eight of the solar projects installed in FY11 utilized thin-film solar, which created manufacturing jobs and accelerated this new technology’s entry to market. We installed seven fuel cell projects in California this year and completed two microturbine wind projects on the parking lot light poles at the Walmart in Worcester, Mass., and at the Sam’s Club in Palmdale, Calif.

This is all to the good. By buying renewable energy in selected markets, WMT will help bring costs down. But because wind and solar power generally cost more than electricity from coal, nuclear or natural gas in most places, WMT can’t or won’t buy clean energy on a  scale that matters. (If the company says in its report how much of its energy now comes from renewable sources, I couldn’t find it. I’d guess it’s well under 10% of  WMT’s total energy spend, but I’m ready to be corrected.) Buying renewable energy would drive up its costs, with no tangible benefits to customers, and put the company at a competitive disadvantage, as the company says in the report:

In our efforts to ensure our operations are contributing to everyday low prices for our customers, it has sometimes been difficult to find and develop low-carbon technologies that meet our ROI requirements.

This, then, is where we run up against the limits of efficiency and, more broadly, what any company can reasonably be expected to do to become more sustainable.

More broadly, it’s a reminder that the rhetoric of green business — how green is gold, how green is green, how clean energy will generate jobs and growth — hasn’t always served the cause well. Sometimes, indeed often, “green” is more expensive than “brown,” or to be more precise, the full costs of “brown” (air and water pollution, GHG emissions) aren’t captured in its price. This is why policy matters. This is why we need to price carbon emissions into the energy economy.

Put another way, so long as environmental leadership is coming from Bentonville and not Washington, we’re in trouble.

 

 

 

 

 

 

Environmental Defense: living up to its name

Fred Krupp

What a different just a few years can make. Hard as it is to believe, there was a time not long ago when Congress appeared to be on the verge of a bipartisan agreement to regulate global warming pollution.

Republicans John McCain, John Warner, Newt Gingrich and Tim Pawlenty all supported efforts to put a cap on greenhouse gas emissions. Gingrich and Pawlenty went so far as to appear in commercials with the Environmental Defense Fund supporting climate regulation. And now?  “It was a mistake, it was stupid, it was wrong,” Pawlenty says.

The radical shift in the political climate means that big NGOs like the Environmental Defense Fund, the Natural Resources Defense Council and the Sierra Club now must fight merely to  preserve the status quo in Congress.

Environmental groups are playing defense rather than offense in Washington, said Fred Krupp, the president of the Environmental Defense Fund,  during a panel today on climate policy that opened FORTUNE’s Brainstorm Green conference.

He noted that House Republicans have voted to block funding not just for EPA’s efforts regulate carbon pollution (efforts that are required by a Supreme Court decision) but also for EPA efforts to control, on public health ground, mercury pollution from cement factories.

On climate issues, Fred said: “It’s hard to have a meaningful exchange of viewers, a serious conversation in Washington.”

That’s a big, big problem because, as he noted, every major piece of environmental legislation in the U.S has been enacted with bipartisan support. Fred himself was a leading advocate for the  late 1980s cap-and-trade system–to regulate sulfur dioxide pollution–that was put into place by President George Bush and his EPA chief, Bill Reilly. [click to continue…]

What a long, strange trip it’s been for McDonald’s Bob Langert

Bob Langert worked in logistics for McDonald’s in the late 1980s when he was asked to take on a “temporary” six-month assignment to get chlorofluorocarbons out of the company’s clamshell packages.

Twenty years later, Bob has worked with WWF and Conservation International on marine stewardship and sustainable beef, spent a decade with Temple Grandin dealing with animal welfare issues, visited chicken farms and slaughterhouses, picked tomatoes with migrant workers in Florida, lectured on sustainability in China and taken a nine-day raft trip down the Amazon River with his pals at Greenpeace.

“I never, ever imagined this,” Bob said. “To have the good fortune to do this work, and make a difference in the world is beyond my expectations.”

I interviewed Bob, who is vice president for corporate social responsibility, at McDonald’s, today at the State of Green Business Forum in Chicago. We talked about what he’d learned about working with NGOs, his accomplishments, frustrations and whether selling hamburgers can be “green.”

Here are a few highlights:

A pioneering partnership: Langert’s work with packaging led to a partnership with the Environmental Defense Fund, which ruffled feathers in the corporate world and the environmental community.

“Fred Krupp [EDF’s chief] was a visionary back then,” Bob said. “It was not politically correct to work with big companies.”

EDF’s crew did a shift working in a McDonald’s, and proceeded to help with dozens of initiatives—from trimming the size of straws to using recycled paper in napkins.

Recalled Bob: “We didn’t spend one penny more. We saved millions and millions of pounds of packaging and costs.”

The future of fish: McDonald’s joined with the WWF to develop guidelines for the companies that supply its fish. What’s the business case, I asked, for investing corporate time and money in sustainable fisheries?

“Assured supply,” Langert replied. “The guy in charge of buying fish for McDonald’s, he was really concerned with being able to buy fish 10 or 20 years from now….The No. 1 job of everyone in supply chain at McDonald’s is to make sure we have stuff on the menu tomorrow.”

This kind of long-term thinking—so rare in big public companies—is a key to sustainability.

Picking tomatoes: When McDonald’s was urged to support efforts by migrant workers in Florida to win better wages, Langert worked side by side with the pickers. “ I couldn’t keep up with people half my size,” he remembered. “Females doing the work all day long in the sun and you see the living conditions which are not good at all.” Just last month,  the workers hashed out an agreement that should bring them higher pay.

Bears and the Amazon: When Greenpeace protesters dressed as chickens picketed a McDonald’s in London, accusing the company of destroying the Amazon, Langert’s first job was to calm down his colleagues.

He recalled saying: “Let’s not get all in a tizzy about their tactics. Greenpeace doesn’t have an advertising budget, so they had to use McDonald’s to get the word out. Let’s look at the issue.” The allegation was that tropical forest was being cut down to grow soy to feed chickens in Europe that became McNuggets.

When he asked trusted partners at Conservation International and WWF about the charge, he decided Greenpeace had a point. He approached the group and, before long, McDonald’s, Greenpeace and big suppliers like Cargill had agreed to stop buying soy from deforested land.

The raft trip came later. “We spent nine days—four of us from McDonald’s, four of us from Greenpeace, to get the lay of the land. I gave up a Chicago Bears Superbowl game to go so that tells you where my passion is. Anyone who knows me knows that besides my family and my faith, it’s the Chicago Bears.”

Langert’s to-do list: He’d like to find new ways to engage consumers in McDonald’s sustainability work. The company serves about 64 million people a day.

He also wants to do more to reduce the environmental impact of the company’s 33,000 stores, most of which are  owned and operated by others. “Energy’s a big issue for us,” he said. New initiatives are on the way, he hinted.

The problem with burgers: Because beef has such a big environmental footprint, I asked Bob how he could reconcile the company’s desire to grow—and sell more beef—with its environmental ethic. I told him that my rabbi, Fred Dobb, has said that one of the easiest things people can do to help the planet is to eat less beef, and asked if McDonald’s would try to wean its customers away from Big Macs.

“I’d like to talk with your rabbi,” Bob replied. He acknowledged the beef production has a big footprint, but said that “at the end of the day, we’re going to give people what they want. We’re going to do it in a good, responsible, clean, safe way. We’ve tried veggie burgers. They hardly sell at all. The day we can sell 500 a week in a restaurant, they’ll be on our menu forever and ever. I don’t have angst. You’ve got to face the realities of the world. And the reality of the world is that people eat protein from livestock and meat. Nothing wrong with that from my moral compass. I respect others that have a different moral compass. It’s our job as a company to make things better, though. We’re starting on that path–working with WWF on sustainable beef. That’s the  next step.”

Certainly McDonald’s offers choices to those who would prefer to avoid beef. Hey, the company even gave out pedometers and yoga CDs a few years ago to encourage people to be more active. But…given the climate crisis and the obesity crisis, maybe the next step ought to be to encourage those 64 million customers to make choices that are healthier for themselves and for the planet.

The green jobs debate (cont’d)

Nat Keohane

In a blogpost the other day (Cancun can’t: Ten reasons why the climate talks will fail), I devoted a paragraph (see below) to what could have been a longer critique of the way environmental groups tried to sell legislation to limit greenhouse gas emissions as a jobs program. I was reflecting my sense that green groups, in an effort to get cap-and-trade through the Senate during a recession, had latched onto a convenient but specious argument about “green jobs” that polled well, instead of trying to make what was a politically more-challenging argument: That we ought to adopt climate protection, despite its  modest short-term costs, because it’s important to protect the climate. Let me add that this question of political messaging isn’t an either-or; of course the green groups talked about climate along with jobs, and energy security, and any other semi-reasonable claim they could make on behalf of cap-and-trade.

But the debate, it seemed to me, was not as honest as it could or should have been. One word that rarely appears in any messaging from the green groups is “sacrifice”–even though doing the right thing about climate will require some short-term sacrifice. Another word you don’t hear much is “moral.”

In any event, I singled out Environmental Defense as a proponent of the green jobs argument. I did so because I remembered TV commercials like this one from EDF which says “Carbon Caps = Hard Hats,” and leaves viewers with the impression that cap-and-trade is a jobs creation program. I could have just as easily cited the Natural Resources Defense Council, Sierra Club or the Apollo Alliance (“working to catalyze a clean energy revolution that will put millions of Americans to work in a new generation of high-quality, green-collar jobs”).

Today, two economists who work at EDF — Nat Keohane and Gernot Wagner — posted a very useful response to my blog at EDF’s excellent Market Forces blog. I’ve posted it below–note in particular the Peterson Institute study which shows that carbon caps would create some (green) jobs and eliminate other (brown) jobs.  In a phone conversation, Nat told me that he was disappointed in my comment because EDF has been extremely careful not to oversell the green jobs argument–certainly more careful than opponents of climate regulation who made wildly  overstated claims that carbon caps would kill millions of  jobs. He’s got a point, although EDF’s political messaging around cap-and-trade was, inevitably, not as nuanced as the writings of its PhD. economists. I’m hoping to have a conversation with Nat and Gernot about “lessons learned” and  “where-do-we-go-from-here” before long.

Marc Gunther lists ten reasons why “Cancun can’t.” We won’t go into his other nine points here, but number three on the list hit home:

Environmentalists have been disingenuous about the climate issue. They’ve argued that regulation of carbon dioxide will create green jobs and grow the economy. Typical is this graphic from Environmental Defense. (“Get a step-by-step picture of how a carbon cap will spark new jobs, lift the economy and clean the air.”) Uh, no. Most economists agree that dealing with global warming will entail short term costs. (See Eric Pooley’s excellent analysis at Slate.)

Talking about jobs is one of the most difficult things to do well in the arena of climate policy. The jobs issue is highly politically charged—and for good reason, given the state of the economy. But it struck us as unfair for Marc to use EDF as his bête noire.

To begin with, the graphic that Marc links to doesn’t make the claim he ascribes to it. We weren’t saying that climate policy was a free lunch. What we were pointing out was that doing something about climate can also create good jobs in some unexpected places. More on that in a minute.

Gernot Wagner

We have bent over backwards to be as balanced and rigorous as possible in our assessment of the economics of climate change.

This turns out to be perfectly illustrated by Eric Pooley’s analysis—the same one Marc links to.

Eric’s indeed excellent analysis makes two points:

First, there is a broad consensus that the cost of climate inaction would greatly exceed the cost of climate action.

That’s the main, often-forgotten point because it seems so obvious: “it’s cheaper to act than not to act.”

We should really stop here and reflect on that for a second. Many—if not most—economists do, in fact, agree on that statement and have for a while.

But that’s not our point here, either.

Small but positive

Eric’s second point concerns the cost side of the ledger. The irony here is that Eric cites our analysis as highlighting that the costs of reducing emissions will be real, but small:

The second area of consensus concerns the short-term cost of climate action—the question of how expensive it will be to preserve a climate that is hospitable to humans. The Environmental Defense Fund pointed to this consensus last year when it published a study [PDF] of five nonpartisan academic and governmental economic forecasts and concluded that “the median projected impact of climate policy on U.S. GDP is less than one-half of one percent for the period 2010-2030, and under three-quarters of one percent through the middle of the century.”

That’s a mouthful.

In short, yes, the best economic studies show that there will be a cost to climate action. The costs are so small that they often fall within the general noise of model predictions, but they are there. There’s no denying that, and we never have. And yes, it was a much-cited EDF study [PDF] that makes this point, as well as a more recent update [PDF].

Just to be clear: Marc points to us as proponents of the “free lunch” theory, and then points to Eric as the best source on the costs—while Eric actually cites us as fairly and accurately surveying the available evidence on costs.

So did we contradict ourselves? Uh, no.

There is no contradiction between the following two assertions:

  1. There will be modest short-term economic costs associated with reducing emissions (although those will be much smaller than the economic costs of not reducing emissions!); and
  2. Policies to reduce emissions, like a cap-and-trade program, will lead to job creation. [click to continue…]