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 / Summer 2008 / Issue 51(originally published by Booz & Company)


The Making of a Market-Minded Environmentalist

How I stopped looking at industry as the enemy and enlisted it as an ally in fighting climate change.

Illustration by Lars Leetaru

Until I was almost 30 years old, all indications were that I would spend my life as a conventional environmental lawyer, “suing the bastards.” I’d had the classic formative experiences for an environmental activist: watching the New Jersey meadow where I played as a child get bulldozed for development and finding the fish and frogs in our neighborhood lake belly-up, poisoned by a chemical spill. In high school, I was an earnest kid helping to run the first Earth Day; at Yale Univer­sity, I was an impassioned undergraduate baffled by public apathy as New Haven dumped raw sewage in the harbor.

I armed myself with a law degree so I could go back and right those kinds of wrongs. I interned at two of the top organizations litigating against chemical and pesticide makers: the Environmental Defense Fund (EDF) and the Natural Resources Defense Council (NRDC). I then founded the Connecticut Fund for the Environment, with the intention of hauling “bad guys” — which, at the time, meant just about all business leaders whose work affected the natural environment — into court.

But along the way, I changed my tack, if not my goal; I became the green community’s chief advocate for using economic incentives to solve environmental problems. The Wall Street Journal has cheered me on, crediting me with a “singular style that serves business and the environment well.” The New Republic is not so sure, labeling me “The Devil’s Advocate: He’ll work with the GOP, oil men, obdurate polluters, and any other stock environmental bête noire open to sitting down and negotiating. And, unlike most environmentalists, he shares their reverence for the marketplace.”

How did I come to believe that where legal remedies alone couldn’t generate the needed solutions, market incentives could? The first seeds were sown at Yale in the early 1970s by an engineering professor named Charlie Walker, who inspired me with his belief that people could solve environmental problems if they would just stop yelling at each other. I also took my first course on global climate change, and was stunned by the “Keeling curve,” named for the measurements conducted by Charles David Keeling at the atmospheric observatory on Hawaii’s Mauna Loa peak. The curve showed a rising staircase of carbon dioxide concentration, which has climbed from 310 parts per million in the early 1960s to more than 380 parts per million today.

At the University of Michigan Law School, I had the privilege of studying under Joe Sax, a professor of environmental law. He laid bare for us the economics of environmental problems and talked about the potential beneficiaries of the policies we wanted in place. If you preserve wetlands, he told us, you get more fish, so you can get fishermen on your side. That was when I really started thinking about how powerful it would be to get the economic drivers aligned with the environment’s needs.

Thinking Like an Economist
When an opportunity arose in 1984 to serve as executive director of the Environmental Defense Fund, I took it. A big part of the appeal was that people at EDF were beginning to put market mechanisms into play. The head of our California office, Tom Graff, who has degrees from Harvard Law and the London School of Economics, had hired Zach Willey, the first Ph.D. economist ever to work full-time at an environmental organization. They were developing a system to make water rights transferable. Instead of building new dams on California’s last wild rivers, irrigation districts could sell their excess water to Los Angeles and use the money to finance more efficient irrigation systems and increase agricultural yields. At the same time, EDF software engineer Dan Kirshner was developing a computer model that demonstrated that conservation was the cheapest way to meet California’s projected electricity needs. An EDF staff attorney, David Roe, took a case before the regulators, and ultimately Pacific Gas & Electric (PG&E) was persuaded to cancel plans for 10 new power plants, which lowered utility rates and in­creased shareholder returns even as it spared the atmosphere all that pollution.

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