We, like everybody else, have a lot of interest in the nature, size, and costs of developing a "green economy," and so are interested in understanding the existing scholarship. One of the most influential scholars on the subject recently has been an associate professor at King Juan Carlos University in Madrid, Gabriel Calzada Álvarez. Unfortunately for the quality of the debate, his much-touted findings fail to hold up under some fairly simple scrutiny and provide an extremely flimsy basis for policy-making.
In recent testimony he gave a rather bleak assessment of the Spanish government’s effort to spur green jobs through fiscal policy: “For every one green job financed by Spanish taxpayers, 2.2 jobs were lost as an opportunity cost....Since 2000, Spain has committed €571,138 ($753,778) per each ‘green job.’”
These dismal numbers are based on an unpublished working paper that he wrote with two co-authors in March of 2009. This work has been discussed widely in various advocacy and media outlets (including last week’s Washington Post) and even critiqued by the U.S. National Renewable Energy Laboratory. While some have pointed out that his jobs data understate those published by the UNEP (by almost a quarter) and Spanish government sources, he obtained his figures from a 2003 study from the European Commission’s Monitoring and Modelling Initiative on the Targets for Renewable Energy (MITRE), a reputable source. As it happens, many other issues have been raised, but I will focus on one that generally has not been discussed, his cost calculation.
Keep reading for the full breakdown of the assumptions and estimates, but the first thing to realize is that Calzada’s calculation that 2.2 jobs are “destroyed”--the opportunity cost--for every green job comes from this simple formula:
