Economic development through the lens of an environmental economist

From the NY Times, a natural gas company in New Jersey that proposed constructing a pipeline through the protected Pinelands, has had its proposal rejected.

The decision dealt a defeat to Gov.Chris Christie, whose administration vigorously lobbied for the pipeline, saying it was an important economic development tool for southern New Jersey. The Pinelands sit atop a shallow, trillions-of-gallons-large aquifer that serves millions of residents. There are 17 species of plants that are found there but nowhere else, said Jeff Tittel, director of the New Jersey Sierra Club, an environmental group.

Dan Lockwood, a spokesman for the gas company, told The A.P. on Friday that it was studying its options.

“We’re disappointed, particularly for our customers in Cape May County,” Mr. Lockwood said.

The gas company said that, in addition to providing a cleaner fuel source to the power plant, the new pipeline would provide a second transmission vehicle for natural gas to thousands of customers in Atlantic and Cape May Counties.

The article doesn’t mention whether any environmental economists provided input for either party.  Here, the benefits of the pipeline are presumably the increased producer and consumer surplus in the natural gas market. The costs of the pipeline include the disruption to the Pinelands, which are valued for their role in aquifer regeneration and rare plant species (among other benefits not mentioned in the article).

In environmental economics, we would carefully compare the benefits of the proposed pipeline to the costs of the proposed pipeline to determine whether it is a good idea (from an economic point of view).  Environmental economists specialize in estimating benefits of those hard-to-value environmental services (like aquifer regeneration and rare species support) we get from Pinelands and other natural habits.

People not trained to think like an (environmental) economist might consider the surplus generated in the natural gas market but might fail to consider the costs of the environmental disruption when deciding whether to support the pipeline.