USC Price School of Public Policy

Climate Action Plan

Knowledge in Action:

Going Green Good for the Economy

Adam Rose

By Cristy Lytal

In Michigan, being green just got easier.

USC School of Policy, Planning, and Development research professor Adam Rose and postdoctoral research associate Dan Wei have found that the implementation of the Michigan Climate Action Plan could do more than battle global warming. It could also give a much-needed boost to the state’s economy — creating a projected net increase of 129,000 jobs, a $25 billion net gain in the Gross State Product and lower energy prices for average citizens by 2025.

Their report — co-authored by Steve Miller, assistant professor at Michigan State University, and with funding support from the Troy, Mich.-based Kresge Foundation through the Washington, D.C.-based Center for Climate Strategies — has the potential to have a powerful impact on climate policy in the state and has received media coverage by The New York Times and National Public Radio, among others.

“Adam Rose and Dan Wei do research that not only advances theory in the field of energy and the environment, but also has significant practical effects in terms of policymaking,” said Jack H. Knott, the C. Erwin and Ione L. Piper Dean and professor at SPPD. “The real-world relevance of their work perfectly exemplifies what we do best at SPPD.”

The researchers used REMI — popular economic modeling software — to conduct a macroeconomic analysis of the effects of the implementation of the Michigan plan’s 54 policy strategies. Recommendations focus on clean and renewable energy, energy efficiency, greener building codes, industrial process improvements, public transportation, forestry and agriculture conservation, urban tree plantings and waste management and recycling.

“Macroeconomics refer to how the individual actions of consumers, businesses and governments interact to give you a bottom-line, total effect on the number of jobs and the income in a state,” explained Rose, who also serves as the coordinator for economics at the USC Center for Risk and Economic Analysis of Terrorism Events. “Jobs are an important consideration in any case, but especially in a recession year. So that’s why it’s especially critical and sensitive now.”

While many people fear that greening the economy can weaken it, Rose and Wei’s research has demonstrated the opposite. “In terms of job creation in Michigan, the increase is equivalent to 2.7 percent of the baseline level in 2025,” Wei said. “In terms of Gross State Product in 2025, it’s a 2.3 percent increase.”

Rose and Wei’s research will help bridge the gap between Michigan’s green policy recommendations and reality.

Steven Chester, director of the Michigan Department of Environmental Quality and chair of the Climate Action Council, said: “These results really highlight the importance of staying on this path that we already are on in the state of Michigan, which is reducing our carbon footprint through aggressive energy efficiency measures and putting greater emphasis on renewable sources of energy.”

Rose and Wei, who previously conducted macroeconomic analyses of the projected effects of the climate action plans of Florida and Pennsylvania, also anticipate positive impacts for these states’ economies. Their next project will be a macroeconomic analysis for the state of New York.

To date, 33 states have put climate action plans into place. Michigan began developing their plan in November 2007, when Gov. Jennifer Granholm established the Michigan Climate Action Council, which included representatives from academia, the automotive industry, unions, chemical companies, environmental groups, tribal interests, government agencies and others. With facilitation from the nongovernmental organization the Center for Climate Strategies, the council created the Michigan Climate Action Plan.