Economy versus Environment. The two have notoriously been pegged against each other throughout history. In fact, one of the most significant challenges with modern economics is having economic growth while still taking care of the environment. A recent study, first of its kind, has been able to prove that environmental cleanups can make economic sense and can end up paying for themselves or even become profitable, as was the case with the Boston Harbor.
The new study did a retrospective analysis focused on the Boston Harbor area, an area that was once renowned for being one of the dirtiest harbors in the United States. In the 1980s, this harbor was constantly filled with raw sewage and wastewater discharges, ruining the water quality for its marine inhabitants and for public recreation. The results of this analysis showed that although cleaning up the harbor cost $5 billion to accomplish, once the cleanup was through, there was a gain in revenue between $30 billion and $100 billion to the community. This substantial return on investment should easily make similar projects attractive to other areas of need in the future.
What exactly did the cleanup of the harbor do for the local economy? It led to increases in private investment as well as overall economic growth along the waterfront, so much growth that the amount outpaced the city’s rate of increase. Dr. Di Jin, lead author of the study from Woods Hole Oceanographic Institution, USA said, “This information shows we need to give more consideration to ecosystem service benefits when evaluating policy options.” Back in 1986, when a new treatment plant was put into place along with other cleanup projects for the harbor, no one expected these initiatives to be cost-effective. The efforts were viewed merely as necessary expenditures for an environmental situation that had gotten out of hand due to human impact.
The team involved in the retrospective study emphasized how this kind of view is entirely wrong and how that same view still occurs over 30 years later. Dr. Di Jin went on to explain how decision makers, when it comes to cost-benefit analyses for proposed future environmental projects, only consider the value of an area at the time of proposal. Meaning they look at the value of the area when it is at its most polluted state instead of looking into the value the area could have once the environment is restored. This kind of mindset and decision-making pushes cleanup initiatives to the bottom of the list of priorities while keeping things like industrial and residential developments in the forefront.
This current mindset is what fueled Dr. Di Jin and his researchers to conduct their study, which would ultimately prove how essential it is to consider the environmental value of an area post-cleanup versus pre-cleanup. The team specifically compared the cost-benefit analyses from the 1980s on the harbor, which was indeed based on the value of the harbor in its polluted state, to a newly developed economic evaluation model based on the value of services healthy ecosystems provide to society. They made this model by considering all the types of terrains in the area including the beaches, salt marshes, and oyster beds. From there, they estimated the overall value that each ecosystem could have, which is where the range of $30 billion to $100 billion came from, as an estimate for the current value post-cleanup.
Researchers were able to conclude that although $5 billion of the taxpayers’ money went into this cleanup, this only represents 5%-16% of the total capitalized value of the ecosystem. Dr. Di Jin emphasized how pollution control and cleanups are a common challenge facing urban harbors around the world. He further stated, “We hope that our study will provide useful information to decision makers and the public facing similar decisions on the viability of ecosystem restoration projects.” And we at IFCNR couldn’t agree more. Harmony between the economy and the environment can be achieved and it is necessary as society continues to progress.