On Green Jobs and Opportunity Costs

Jennifer Thacher, writing on the New Mexico Independent, makes the point about job creation in the green energy world:

What about the arguments that investment in green energy will create new jobs? It is important to make clear whether we are talking about net new jobs or just new jobs in a particular industry.

In other words, are jobs in the green sector completely new jobs or are they jobs that are lost in another industry? As the statement points out, engineers and accountants work in green industries, but they also work in traditional energy sectors. From a purely “jobs” perspective, does it matter if green energy replaces traditional energy, and the accountants and engineers move between sectors?

This may have implications for different regions of the United States and there may be reasons other than jobs that cause me to prefer the green energy sector, but it is misleading to talk new jobs as opposed to net job creation.

I’m actually highly sympathetic to many of the ideas discussed in this statement. Energy production has external costs are not reflected in market prices. Because prices are too low, we consume excessive (and thus inefficient) amounts of energy. We should devise and promote methods to correct for these external costs.

We should also be clear about the road ahead. Reducing energy use and investing in clean energy has enormous potential, but lets not act as if there are no opportunity costs to clean energy investments.

One Comment

  1. re: the quoted article
    Of course there are opportunity costs,but let me offer an analogy at the personal level:

    1) Years ago, a rich uncle left your family a large amount of money, but payable in yearly increments, looking a bit like a normal curve, i.e.,starting small, rising to a peak, then slowly falling off over the years. You spend most of this on current expenses, and you invest some in the next category. You have to spend some of the income on legal fees to obtain each year’s increment, and the fraction spent on lawyers is increasing.

    2) You also have some bonds that offer regular income, but at most 20% of your income.

    3) The schedule for the inheritance delivery is uncertain, but it seems pretty clear that the total income will peak within the next decade or at most two, and in your great-grandchildren’s time, say 2100, the net inheritance income will be a small fraction of that currently available (maybe 10-20%), and quite insufficient to support your current lifestyle.

    4) One might say: “We need to trim our lifestyle in any way possible, and invest time in money to understand the bond market, and carefully select bonds with the best returns”


    5) One might say there are oppurtunity costs to doing that….
    and of course, one must be careful … but this ends somewhat up sounding like a wish to keep business-as-usual and punt the problem

    If people don’t convert the one-time inheritance of energy capital into long-term energy income, i.e., if we break the energy piggy-bank and spend it all as fast as we can, the great-grandchildren will have neither capital nor income.

    I would especially think this is an issue for NM, since, like here in CA, you have water issues besides and will have more.

    I think the best rule of thumb is:

    consider 2100, when there will be little oil or gas left, and not much coal that people can afford to use. If people look back at the ways in which we’ve invested that energy over the next 90 years, will they be happy with those investments, or bitterly unhappy?

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