Thursday, April 18, 2002
On Earth Day 2002, America is more powerfully committed to the environment than ever before. More than 150 million Americans are now recycling—a figure that is growing every year. Visits to national parks topped 280 million in the year 2000. And a whopping 91% of Americans say that the environment should be a priority for Congress in the 21st century.
In fact, tremendous progress has been made since the first Earth Day celebration in 1970. The facts bear witness to this progress, though they also show that we need new strategies to address remaining problems, and to avoid creating new ones.
Real Improvement, but Not Good Enough
Environmental improvement has been dramatic and widespread. Despite significant population growth and economic expansion in America, emissions of the six EPA “criteria” air pollutants have fallen by more than 31% since 1970. Dangerous emissions of lead have been spectacularly decreased by 98%. Los Angeles, once one of the nation’s most polluted cities, has not had a single “smog alert” day since 1998, after averaging 120 a year in the 1970’s and 80’s. The number of high-smog days in Houston has declined by 40% over the last 16 years.
The percentage of American lakes and waterways suitable for swimming and fishing has more than doubled since 1970. More than 98% of river and stream miles are cleaner or just as clean as they were a generation ago. Ocean dumping of sewage and industrial waste has entirely ceased. More of America is forested now than a century ago.
That these improvements have come while the U.S. population grew by 39% and the economy grew by more than 100% is no accident. The evidence establishes that prosperity and free markets promote a clean environment. This is so because environmental protection takes money—and prosperous societies can afford more of it. America’s environmental progress stands in stark contrast to the ravaged landscapes produced by the planned economies of the People’s Republic of China and the former Soviet Union.
In fact, centralized government “protection” of the environment is a global failure. To the extent they have followed the command-and-control model, governments have hampered efforts to improve the environment through conservation, competition, innovation, and local initiative.
Unfortunately, the failures of central government planning to achieve environmental progress are not limited to foreign countries. As the National Academy of Public Administrators concluded in their most recent report, “The regulatory programs in place in this country simply cannot address [many current environmental] problems at a price America can afford.” In some of the most important areas—such as air and water pollution—environmental progress is slowing. Meanwhile, the costs of regulation have continued to soar—doubling since 1986 to an estimated $148 billion annually, according to a recent report by the U.S. General Accounting Office.
The current regulatory structure stands in the way of innovation in environmental protection, and fails to adequately perform such important tasks as protecting endangered species. In many areas, resources are being poorly allocated, with minor concerns consuming resources that would better be directed towards more pressing problems. These shortcomings must be addressed if our environmental progress is to continue into the new century.
A Tale of Two Bays
A case study of an environmental problem exacerbated by ill-advised government regulation is that of our nation’s coastal fisheries, as exemplified by the collapse of the oyster population in the Chesapeake Bay. In the Chesapeake’s richest oyster hatching areas, there has been rampant over-fishing. The result has been a collapse of the oyster harvest, which has declined by over 95%. Since oysters serve to filter the bay water, this has had profound ecological consequences that extend to diminished water quality and impaired habitat for marine life. This horrific situation is in part due to misguided state attempts to curtail over-fishing. By placing production quotas on the allowable catch, government has encouraged commercial fishing operations to catch as much as they can, as fast as they can, before anyone can beat them to it. No one has any incentive to invest in protecting the oysters’ habitat or increasing their numbers.
This pattern is repeated countless times in our nation’s coastal waters—but there is a better alternative. In contrast to the experience of the Chesapeake, Willapa Bay in Washington State has cleaner water today than a generation ago. And while oyster catches around the country have been falling, the Willapa now accounts for over 1/6 of the entire nation’s harvest.
Instead of government quotas on the oyster catch from government-owned hatchery areas, Washington State has authorized the private ownership of most of its oyster-producing tidal bottomlands ever since statehood. Because they own the resources upon which they depend for their livelihoods, the Willapa’s oyster farmers have every reason to be good stewards of their waters and refrain from over-fishing.
At the same time, they also have the incentive—and ability—to protect these precious waters from outside polluters. When paper pulp mills began dumping sulfite pollution into the bay, which adversely affected the oyster harvest, the oyster farmers organized and compelled legal action to curtail the pollution. The oyster population quickly recovered.
Making the Polluter Pay
The lessons of Willapa Bay can be applied to other environmental challenges. Currently, the EPA prescribes specific technologies and techniques that companies must use to control pollution. In this era of rapid technological advance, this kind of prescriptive regulation is inefficient and costly. Such government policies are the very reason that the blistering pace of technological innovation in almost every other area of American life is missing from the field of pollution control. Under the current system, the people who manage a facility—who know how it works better than anyone else—have no incentive to find better ways to reduce pollution. Why not enlist their creative energies in the effort, and give them the incentive to do what is best?
To make progress in cleaning the air and water, everyone involved must have a stake in reducing pollution as much as possible, just as the oyster farmers of the Willapa Bay have a stake in protecting their ecosystem. EPA should replace the current technology-specific air and water quality control standards with mandated results. By making industry accountable for clean air and clean water, rather than for using a specific piece of equipment, we can ensure that technological innovation is our ally.
One way to do this is to sell tradable “emissions licenses” to facilities on a regional basis. These facilities can then reallocate the licenses among themselves by purchases and sales on the open market. In this way, the promise of the early environmental slogan “make polluters pay” will finally be realized, as polluters who have to pay more to license extra pollution will be placed at a competitive disadvantage.
The promise of such “cap-and-trade” systems has been amply demonstrated by the successful Acid Rain program promoted by President Bush, and signed into law by him in the 1990 Clean Air Act amendments. The program has so far made 22% greater reductions in sulfur-dioxide emissions than required by law—at only one-fourth the projected costs.
In February, President George W. Bush announced a new “Clear Skies” initiative, modeled after the Acid Rain program. It will reduce sulfur dioxide emissions by 73%, nitrogen oxide emissions by 67%, and mercury emissions by 69%. Congress should support legislation to enact this proposal, which is expected to be introduced later this spring. Making the polluter pay works.
Endangering Endangered Species
The Endangered Species Act is another example of a well-intentioned environmental policy that is not achieving satisfactory results. It is debatable whether a single species has been recovered as a result of action taken under the Act. The reasons for its failure are built into the law itself: when an endangered species habitat is found on private property, the owners lose the right to use the property as they see fit. Therefore, property owners do not want to find any endangered species on their land. There is no incentive to report the presence of endangered species, and certainly no incentive to improve its habitat.
Instead of punishing people for owning land that is home to an endangered species, it is essential that they be rewarded. At the state level, Colorado and Wyoming both provide incentives for the preservation of elk and grizzlies, and their programs have been highly effective. These can serve as a model for federal policy. Ensuring that people are fairly compensated for any loss of property rights (as is required in any case by the Fifth Amendment) will result in far greater environmental benefits than the current confiscatory policy that is causing such grievous harm to endangered animals.
Spending Environmental Resources Wisely
Just as important as reforming regulation to achieve our desired environmental goals is making sure that our scarce environmental resources are spent wisely. The costs of wasting tax dollars earmarked for the environment are not just in the greater burden on individual Americans in taxes paid. The costs are also borne by the environment. As the example of the Acid Rain program shows, there are ways to pare away inefficiency while simultaneously achieving better environmental results. The resources thus saved will then be available for achieving even greater environmental protection. Every dollar of waste is a dollar that cannot be used to clean up waste.
The causes of inefficient regulation are two-fold. First, most environmental problems are local or regional, and the best solutions are highly dependent on local conditions. The current centralized system does not take into account the diversity of local situations. A Columbus, Ohio, health official sums up the resulting frustration: “The new rules coming out of Washington are taking money from decent programs and making me waste them on less important problems.” Congress should ask EPA to assess its functions and see which of them could be more profitably regulated at the state or regional level.
Second, lack of sound science and rigorous cost-benefit analysis causes EPA to spend resources unwisely. Faulty or insufficient science can lead to misguided regulations. For example, speed limits designed to prevent boats from colliding with manatees off the coast of Florida have actually led to a surge in the number of manatees killed or maimed by boat propellers. Research has only recently been conducted demonstrating that manatees are unable to hear the low frequencies generated by the propellers of boats that have slowed in compliance with the regulation, and thus are less able to avoid them.
Misallocation of resources has real effects, and tragic consequences. A Harvard University study found that federal health and safety regulations could save an additional 60,000 lives per year for no additional cost if resources were allocated more efficiently by the diligent application of cost-benefit principles. While the EPA is instructed by Executive Order 12866 to perform cost-benefit analyses on all major rules, statutory guidelines are insufficient or wholly lacking. On February 27, 2001, in American Trucking v. EPA, the Supreme Court ruled 9-0 that the Clean Air Act actually forbids the consideration of cost in the formulation of national air quality standards. The resulting misallocation of resources is an appalling waste that Congress cannot allow to continue.
Congress should set requirements that EPA rules be based on sound, peer-reviewed science, to ensure our efforts are directed towards real risks, rather than phantom fears, and result in new solutions, not new problems. Congress should also require the use of cost-benefit analyses in formulating standards and regulations, to ensure that the costs of rules issued by EPA are justified by the benefits.
A Cleaner Future for America
We have made important strides in reducing pollution and protecting the environment over the past three decades. Our air, water, and forests are all healthier than they have been for generations. However, we still face problems that our current system of environmental protection is unable to address. There are still unhealthy levels of air and water pollution in many parts of the country, which are undercutting human health and damaging the natural environment. Many of the unique species that form a valuable part of our nation’s landscape are still at risk. Too many resources are being misallocated, hampering our ability to address pressing environmental problems.
Congress is already moving in the right direction. In December of 2001, the House passed H.R. 2869, which reforms the Superfund program by removing barriers and providing incentives to clean up contaminated brownfield sites. To build on this important step, Congress should:
· Promote the protection of property rights, and extend them to our nation’s coastal waters, so as to promote responsible stewardship and prevent “tragedies of the commons.”
· Support the Administration’s “Clear Skies” initiative, and mandate the use of “cap-and-trade” programs to combat air and water pollution by “making the polluter pay.”
· Reform the Endangered Species Act to encourage conservation by rewarding, rather than punishing, landowners whose property contains endangered species habitat.
· Require EPA to assess which of its functions would be better performed at the state or regional levels, to ensure that real solutions are crafted for local problems.
· Require EPA to use sound, peer-reviewed science to identify risks, to ensure that they focus on solving real problems, rather than unfounded fears.
· Require EPA to conduct rigorous cost-benefit analyses on proposed rules, to ensure resources are dedicated to the most pressing and useful purposes.
We must reform a system that constitutes a massive burden on the economy and too often fails to achieve the desired results. By taking these measures, Congress will help to guarantee a clean and healthy future for our children—and the environment—and will ensure that the freest nation in the world is also the greenest.
