What are environmental economists made of?

For David Bael and Baishali Bakshi, economists with the Minnesota Pollution Control Agency, the recipe is easy: an aptitude for mathematics, a head for trends and analysis, and a personal connection with the environment.

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“Where I grew up in India, there was high population density and lots of environmental pollution. This was compounded by the fact that there were also deep social inequities,” Bakshi said. Her journey to environmental economics was the natural result of combining her number-crunching prowess with her care for the environment and people living on the outskirts of decision-making.

Bael, who hails from the East Coast, also answered the call to do right by the environment. “I’m really more of a generalist,” he chuckled. “I still don’t know what I want to be when I grow up! I sort of see myself as living in the intersection between the natural and social sciences.”

He considers sustainability to be one of his core values, and believes that charting a sustainable path requires the realization that economic, social and environmental systems are all interdependent and cannot be seen as separate from one another.

For the MPCA, the economists analyze the economics of regulations and policies to protect water, air, land and renewable resources. They evaluate and quantify benefits, costs, incentives and impacts of alternative options using economic principles and statistical techniques. Their work informs agency rulemakings, federal and state regulations, permit development, legislative initiatives and regulations, and agency fee changes.

Bael, who came to the MPCA five years ago, was the principal researcher for the landmark Life and Breath study, which looked at how air pollution affects human health in the metro. His study also exposed the high price people in marginalized communities pay for pollution created by everyone.

“When it comes down to it, environmental economics is about two things: efficiency and equity. We want to know how we can use environmental resources for the overall good. But we’re also asking, ‘Are decisions fair? Are policies just?’ ” he said.

Bael and Bakshi’s focus on equity is a key component in their work. Placing a hard value on life may seem stark, but the economists say it is essential.

“How do you put a dollar value on life? It’s priceless! But if we don’t, we run the risk of undervaluing it and there’s a much higher cost of losing out,” Bakshi said.

Minnesota has been at the forefront of progressive environmental policy for years; however, both economists sense a deepening divide between policy and science that should not exist.

Balancing the scales

Environmental economics as a concept emerged in the midst of a massive environmental movement that swept through the country in the 1960s.

“We began realizing that the things we were doing to the environment were contributing to negative health impacts … people were getting sick,” Bael said.

This newfound environmental consciousness eventually led to national events like Earth Day and the creation of the MPCA in 1967. A few years later, the Environmental Protection Agency (EPA) was created at the federal level.

Today, the question is less about whether people should protect the environment, and more on how they can reduce pollution while also enjoying the benefits of economic growth.

As the economy grows, environmental quality tends to decrease. But once economic growth reaches a certain level, people tend to become more concerned with environmental quality and especially the impact on human health, explained Bakshi, adding that this relationship has been documented by researchers.

Finding the optimum level for industry and environmental quality isn’t an exact science, but Bakshi and Bael are getting close.

Bakshi, who came to the MPCA in February 2017, is reviewing the benefits of clean water and regulating it in Minnesota.

“As humans, we can see the benefits of protecting the resources we need to survive and thrive, and translate it to regulations that benefit us … the harder question is how to help people understand that taking care of other forms of life is beneficial to humans since we’re all connected through ecosystems,” she said.

In the long run, Bakshi says smarter regulation is helpful, controlling pollutants in a way that has the most impact.

Looking ahead

Bakshi and Bael are surprisingly calm as they list the handful of other big projects on their plate. An expanded Life and Breath study and some climate change work, to name two. “The environment provides us with a lot of benefits, and there are costs to harming it,” Bakshi said. She and Bael are on a mission to find out just how high those costs will be for Minnesotans.