Is It Possible That California is Thriving Because of More Regulations?

You might be surprised to know that California brought in $2.7 trillion in gross state product.  This was more than the entirety of the UK.  Making them the world’s 5^th largest economy.  But why?  Is it because of the farming regions throughout the state?  Or the moderate temperatures which allow produce to grow? Perhaps it’s the technology that’s coming out of Silicon Valley?  Regardless, California is booming when it comes to business.  But here’s the catch.  It’s actually the state’s strict adherence to environmental regulations, that are helping these numbers.

As you’re probably well aware, California has been on the leading edge of environmental regulation for quite some time.  Before I go into a big song and dance about how they’re achieving this, I just want to take some time to point out the fact that they do have these strict environmental regulations… and yet, they’re still able to 5^th in the world.  The world!  We’re not talking within the United States.  These are world rankings.

The state created its first Air Pollution District way back in 1947, a decade and a half before the passage of the US Clean Air Act, in response to public outcry over the air quality in Los Angeles. And the benefits of these environmental regulations are well-documented.  For the past 25 years, the state’s GDP and population have steadily increased while per capita carbon dioxide emissions rates have remained static.  Since 2006, when the state passed its California Global Warming Solutions Act, per capita GDP has increased by $5,000 (nearly double the national average) and job growth has outpaced the rest of the nation by 27 percent while its per capita CO2 emissions dropped 12 percent.  These stats are according to the annual California Green Innovation Index, from Next10.

When we think of the environment, we think about breathing in clean air.  But even the structures that we live and work in, have benefitted from the environmental regulation.  It’s only recently that the state has proposed new homes to be built with solar panels.  But California has been creating environmentally friendly building codes for decades.  Back in the late 70s, California implemented a series of changes, which many deem radical to ensure stricter rules over time.  The goal was to reduce the electricity and gas being used in new buildings by 80% for new buildings after 1990.  As a result of this requirement, homes built under these guidelines use 75% less power.

That’s incredible, isn’t it?  California was being pushed to gut their regulations during the 2008 recession.  But instead, they established the states greenhouse gas emission cap-and-trade program.  Which, in 2016 cleared $2.5 billion in revenue from emission permits.  I think the take away from this one is the fact that you can be environmentally conscious, and still bring in money.  Which kind of flies in the face of the current administration’s views on, not only the environment but also on regulations.  The current administration would prefer to have fewer regulations, but this is a prime example of how and why that doesn’t work.  While I’m sure that this won’t change the minds of anyone, I am hopeful that we can look at it as an example.