Economists Urge Science-Based Environmental Regulations to Mitigate Climate Risks and Boost Economic Growth

When Economics Meets Ecology: The Case Against Deregulation in the Age of Climate Risk

A rare alignment of economic insight and environmental urgency is reshaping the narrative around regulation in America. In a move that has reverberated through both policy circles and boardrooms, economists Charles Kling, Stephen Polasky, and Kathleen Segerson have issued a pointed critique of the Trump administration’s environmental rollbacks. Their intervention is more than academic—it is a call to recalibrate the relationship between market efficiency and societal well-being, especially as the world grapples with the existential challenge of climate change.

Market Efficiency and the True Cost of Deregulation

At the heart of the economists’ argument lies a deceptively simple question: what does it mean for a market to be efficient? The classical view—still prevalent in some quarters—suggests that less regulation naturally begets more growth. Kling, Polasky, and Segerson challenge this orthodoxy by highlighting the concept of externalities: the hidden costs that spill beyond corporate ledgers and into the public domain.

Consider the administration’s withdrawal from the Paris climate agreement and its relentless push to expand fossil fuel production. These actions, the economists argue, sidestep the market’s “natural correction” mechanism. When industries are not held accountable for pollution or resource depletion, the costs are shifted onto society—manifesting as health crises, environmental degradation, and lost productivity. Public investments in clean water, for instance, not only safeguard health but also enhance economic output by reducing medical expenses and absenteeism. Deregulation, when it ignores these broader impacts, is not efficiency—it is short-termism masquerading as progress.

Global Ripples and the Erosion of Trust

The consequences of environmental deregulation extend far beyond US borders. The decision to exit the Paris accord did not occur in a vacuum; it sent a shockwave through international markets and diplomatic channels. For multinational investors, trust in regulatory institutions is a key determinant of risk. When the world’s largest economy appears to sideline science in favor of expediency, it invites uncertainty and undermines its own competitive standing.

Editorial voices in Europe and the UK have amplified the economists’ warnings, urging other nations to double down on science-based governance. The United States’ retreat from environmental leadership risks ceding ground to regions that embrace rigorous, future-focused policies—potentially disadvantaging American firms in the race for sustainable investment and innovation. In an era where ESG (Environmental, Social, Governance) metrics are becoming central to capital allocation, the costs of regulatory backsliding are no longer hidden—they are embedded in the calculus of global finance.

The Ethical Imperative: Science, Governance, and Public Trust

The debate over deregulation is not merely technical—it is profoundly ethical. When policymakers disregard scientific consensus and minimize the long-term risks of environmental harm, they erode the foundation of democratic governance. The economists’ critique is thus not only about dollars and data; it is about the integrity of institutions and the social contract that underpins them.

If policy decisions are made in defiance of evidence, trust in public institutions falters. This erosion of trust can destabilize markets and societies alike, as citizens and investors grow wary of a system that prioritizes short-term profits over collective well-being. The economists’ stance is a reminder that robust regulation, grounded in science, is not an impediment to prosperity—it is a precondition for it.

Toward a Resilient, Inclusive Economic Future

What emerges from this debate is a vision for a more balanced approach to policymaking—one that recognizes the interdependence of economic vitality and environmental stewardship. By advocating for mechanisms such as pollution taxes and sustained investment in public goods, Kling, Polasky, and Segerson offer a blueprint for harmonizing market incentives with the imperatives of sustainability.

Their message resonates in boardrooms, trading floors, and government chambers alike: the path to enduring growth lies not in the abandonment of safeguards, but in their thoughtful reinforcement. As the world navigates the uncertainties of climate risk and technological disruption, the fusion of economic rigor and environmental responsibility may well define the next era of American—and global—prosperity.