Hamermesh on being green

Daniel Hamermesh, at the Freakonomics blog, considers the The Consequences of Being Green and he says there should be a rule:

before helping the environment in one market, we should be required to think through the impacts on other markets.

In economic terms this means thinking in general equilibrum - multi-market - terms rather than partial equlibrium - single market - terms. He makes the point that saving the environment in one market generates consequences in other markets, and a not always good ones. His example of what happens when you don't think in general equilibrium terms,

Perhaps the best illustration is the misguided effort to generate ethanol from corn by subsidizing farmers to switch to corn production. Fine for gasoline users, and fine in reducing environmental damage from gasoline; but corn uses lots of water (environmental depletion) and, moreover, the subsidies have helped fuel the spurt of inflation in food prices worldwide.