CLINTON'S appointments of two strong environmentalists to the posts of secretary of the interior and administrator of EPA have alarmed many business leaders. But the choices of Bruce Babbitt and Carol Browner for these key environmental positions accurately reflect the "greening of America." They reconfirm the practical necessity for business to act in environmentally sensitive ways.

Clinton and Gore's environmental moves signify a definitive break with the tradition of resource development. While there may be a more kind and gentle future for America's bears and bunnies, the businesses upon which our prosperity depends can expect more stringent environmental standards.

An important new mission for business is to demonstrate how this greening of America can coexist with increasing efficiency and productivity.

This challenge is especially critical to the Northwest. Here in America's "ecotopia" the conflicts between economy and ecology are pronounced. The economies of the Northwest developed when culture and institutions were oriented toward resource exploitation. Our history is largely a story of damming, logging, mining and ranching. Yet more than any other region, the Northwest is home of the environmentally conscious.

With our mix of resource-based industries, changing the environmental behavior of business is neither costless nor smooth. Environmentalists have a vital stake in a successful transition, for if our businesses are not able to adapt to the new standards, we will lose the standard of living upon which our willingness and ability to pay for environmental quality depends.

Economist Don Coursey has pointed out that in the United States and other developed nations, when the income of a state or community rises by 10 percent, its willingness to pay for environmental quality rises by 25 percent. And if a state's income falls 10 percent, this willingness to pay drops by 25 percent. On the basis of this comparative data, we can expect relatively prosperous regions to place greater emphasis on the health of the environment.

How can we preserve the environment while continuing the economic progress that fosters environmental quality? One important key lies in preparing tomorrow's business leaders to be environmental managers. Harry E. Teasley, president and CEO of Coca-Cola/Nestle International has noted "After 20 years of interviewing MBAs, I have concluded that most are well trained in the functional areas of finance, accounting and marketing. These same students, however, have only a superficial or topical understanding of the relationship of business with the environment, the market economy, and public policy."

The University of Washington addresses this problem with a new program to train future decision-makers attending the School of Business. The Environmental Management (EM) Program for MBA students, was established by people who anticipated that the environment would be a high priority on the national agenda and who understand the link between prosperity, environmental concern, and the ability to effectively address this concern.

Major universities scattered throughout the United States are developing environmental MBA programs. What makes the University of Washington's effort unique is its emphasis upon market incentives and entrepreneurial innovations.

As Dean Leventhal of the Business School notes, "The environmental courses in most business schools are often taught by people who identify with the corporate guilt/social responsibility/command-and-control schools of thought. While we fully consider regulatory approaches to environmental management, our EM Program stresses property rights and market incentives as keys to harmonizing business and the environment."

According to Professor Jonathan Karpoff, Director of the EM Program, the curriculum is built on three intellectual perspectives:

-- The "tragedy of the commons," made famous by ecologist Garrett Hardin, applies to many of today's environmental problems, such as atmospheric pollution;

-- The prosperity that comes from successful, productive businesses fosters the achievement of environmental goals;

-- Successful environmental policy must include not only regulation, but also market-oriented incentive-based approaches, such as the use of tradeable permits to curb pollution.

Sue Mecklenburg, associate director of the EM Program, explains that it "is designed to teach students how to use the current knowledge of environmental concerns to make better business decisions for both their company and the world. And this July, a week-long seminar at the University of Washington will give today's business executives an overview of environmental management principles.

Vice president-elect Gore's book, Earth in the Balance, previews the new political climate under which businesses must operate. Fortunately, some politicians are beginning to understand environmental economics; specifically that environmental concern and the ability to effectively address that concern are dependent upon prosperity.