POLICY RECOMMENDATIONS
1. Policies need to promote reasonable environmental stewardship and resource management.
2. There should be strong enforcement of the clean air and clean water legislation that already exists.
3. There needs to be a balance between environmental protection and economic development.
4. Cost-benefit analysis should be used to assess the appropriate level of public oversight that is required to ensure adequate environmental protections while minimizing the burden to economic development.
5. Effective public oversight will need to take various forms, but market-based solutions can often offer less costly and more effective strategies than regulatory standards.
6. Regulatory standards should be targeted towards outcomes rather than processes, and require periodic review and updating to incorporate the most current knowledge and technology so that environmental protection is achieved at the lowest possible cost.
BACKGROUND AND CONTEXT
Why is environmental policy so important?
The natural environment represents one of our nation’s greatest resources, and a healthy environment is a critical element of the well being of our citizens, our business organizations, and our entire society. A healthy environment is also a key foundation of the long-term economic vitality of our nation. To ensure that not only our grandchildren, but also all future generations, have the same or greater opportunities as the current generation, we have a moral obligation to exercise strong stewardship of the environment and the resources it provides.
Experience has shown that without such stewardship, our environment and natural resources can suffer significant harms, adversely affecting both our economic interests and the quality of life of our citizens. Some of the key areas of concern include the following:
· Air quality: Air contaminants (including particulates, sulphur dioxide, nitrogen oxides, ammonia, VOCs, and ground-level ozone) impact the cardiovascular and respiratory health of all individuals, but especially those with pre-existing respiratory and heart conditions, diabetes, and our children and seniors. Poor air quality is linked to increased mortality and decreased reproductive health. Air contaminants also adversely impact other parts of the environment, and can reduce economic output. Agricultural crops and other vegetation are damaged by ground level ozone through reduced growth rates. Nitrogen oxides, sulphur dioxide, and ammonia all cause the acidification of soils and waters, reducing the utility of these resources.
· Water quality: Water contaminants (including sediments, chemical nutrients, plastics, petroleum products, pesticides, pharmaceuticals, minerals, heavy metals, and pathogens) come from a wide variety of sources. Poor water quality threatens ecosystems and biodiversity, and results in both high water treatment costs and negative health impacts to our citizens. It also results in reduced economic output in many ways beyond the direct cost of water treatment. Sedimentation limits reservoirs and navigable waterways and requires ongoing mitigation. Chemical nutrients cause algae blooms damaging to commercial fishing and shellfish operations. Contaminated water systems reduce tourism, recreational businesses, and real estate values. High salt and metal contents reduce crop yields.
· Waste disposal: The management and disposal of waste includes garbage (which is easily biodegradable), solid waste, hazardous waste (i.e. those which are ignitable, reactive, corrosive, or toxic), medical waste, and runoff and sewage. Improper waste disposal presents both health and environmental damage through water contamination, reductions in air quality (through landfill off-gassing and pollution from incineration), habitat degradation, soil contamination, and the potential for pathogens to infect our communities.
· Biodiversity and wildlife: The beauty of our country, and the majesty of our native flora and fauna, provide not just enjoyment and pride for our citizens, but also serve as a significant source of national economic value in tourism, recreational business, and natural resources. Environmental degradation adversely impacts both quality of life and economic vitality.
· Ecosystem and agrosystem health: Inadequate protections for ecosystems result in painful economic costs, as can be seen when flood-protecting wetlands are degraded or eliminated. Productive timber and fishery resources require healthy natural ecosystems. Agrosystem health essentially relies upon high quality water and soil resources.
· Renewable energy: Of necessity, fossil fuels will continue to play a significant role in our economy for many years. However, the scientific consensus is clear that our historic and ongoing use of carbon-based fuels has contributed large amounts of carbon dioxide to our atmosphere. By most reasonable estimates, our environment is at significant risk unless both governments and private citizens accept responsibility for the need to modify their behavior, and make a substantial and rapid commitment to addressing this critical challenge. Our government needs to pursue policies that, within a very short timeframe, will decrease our reliance on fossil fuels, and incentivize the development and use of renewable energies.
Ensuring the health of our environment in these, and other, areas requires that our utilization of natural resources is sustainable, and that our economic activity is pursued in a way that leaves both the environment and our nation’s citizens in good health. Achieving appropriate environmental protections is not a pipe dream. Strong, bi-partisan leadership in the past was a reflection of an appreciation for the sanctity of our environment and the resources it provides. That leadership resulted in significant environmental protections, including the development of a National Park system under President Theodore Roosevelt and also the environmental legislation of The Clean Air Act and The Clean Water Act under President Nixon. Similarly bi-partisan efforts have resulted in solving other key environmental issues that our country has faced in the past, e.g. the threat of extinction to the bald eagle and removing lead from gasoline. Washington State (PEG’s home) is particularly proud of the bipartisan efforts led by former Governor Dan Evans. A fiscally conservative Republican, Governor Evans recognized the economic and social importance of a healthy environment, and in 1970 he worked with a special session of the state legislature to create the Washington State Department of Ecology. This was the first of its kind in the country, and it served as a blueprint for both other state environmental departments and the federal Environmental Protection Agency (EPA).
A healthy environment and a strong economy both contribute greatly to the overall quality of life of our citizens and the success of our society. Accordingly, we should strive to maximize both of these goods. There is an apparent conflict, however, between environmental protection and economic development; the mindless pursuit of either good will generally result in some harm to the other.
Is there conflict between a healthy environment and a strong economy?
Our market-based economy is responsible for the enormous wealth that our country is able to generate, and is a thing to be greatly appreciated and nurtured. But of course, some of the outcomes of economic activity and growth can negatively impact the environment. Both history and economic theory clearly show that market forces alone will not, in a satisfactory time frame, eliminate all practices that might create significant environmental harm. While it is conceivably true that markets will in the long run eliminate organizations and practices that create harm to the environment and the health of our citizens, history has shown that such economic disincentive is often extremely slow to arrive, and is not therefore a reliable mechanism for adequate environmental and societal protections. Furthermore, it is undoubtedly true that in the short term organizations sometimes have a strong financial incentive to pursue actions that can create significant environmental harms that have lasting effects.
When the environmental harms of an organization fall on individuals who are not consumers of that organization’s products or services, there is generally no immediately compelling reason for it to change its practices. Because a healthy environment is in general a public good, an organization can benefit even when others pay to maintain that good; for example, there may be little incentive for an organization to pay for enhanced equipment to improve the quality of discharge waste water, because even without doing so they still enjoy the benefit of the clean water produced at the expense of municipal treatment. Similarly, short-term market forces can incentivize the overconsumption of shared resources. When multiple organizations participate in the utilization of a shared resource (e.g. water usage, fisheries, grazing), there can be inadequate market incentive to limit that utilization to a sustainable level.
For all of these reasons, it would be unwise to leave the health of our environment and society solely to the realm of private market forces. Some degree of public oversight is clearly and critically required. Traditionally, public oversight of environmental protection and public health comes in the form of regulatory standards (e.g. emissions limits), market-based incentives (e.g. pollution reduction credits), and compulsory remediation of environmental harms (e.g. cleaning up oil spills). But while public oversight undoubtedly begins with the best of intentions, it is certainly possible for it to become unduly burdensome.
Environmental protections generally impose some costs on society. As business costs increase due to governmental requirements, consumers pay higher prices for the products and services they purchase. Environmental legislation and enforcement also increase the size and cost of government. In particular, regulatory standards that are overly prescriptive and/or poorly targeted can be expensive, result in significant economic inefficiencies, and hamper technological innovation as they lock organizations into outdated, but mandated, pollution control equipment and/or processes. Therefore, the challenge is to develop policy and legislation that adequately protects the environment and society, while imposing minimal costs on economic development.
Market-based policies, if well designed, can avoid some of the economic pitfalls of regulatory standards. They start from the assumption that the most effective way to ensure environmental protection is to engage the financial self-interest of individuals and organizations. The creation of targeted financial incentives, based on hard science and data about significant environmental harms, can result in helpful changes in both individual and organizational behavior related to consumption, production, and waste management. Additionally, market-based policies can reduce the cost of business (relative to regulatory compliance), incentivize technological innovation, and create more transparency about the costs of environmental protections and the balance between such protections and economic development.
Market-based incentives cannot fully replace regulatory standards, but they can certainly allow us to simplify the regulatory framework and ease the regulatory burden on organizations. The regulatory standards that remain need, whenever possible, to be targeted toward achieving desired environmental outcomes, rather toward prescribing specific industrial processes. Additionally, they require periodic review and update to reflect changes in technology and our growing understanding of environmental impacts. All such laws and regulations need to be grounded in the best possible data, and they need to be designed to ensure they are effective in achieving the desired environmental objectives without creating unnecessary adverse economic or social impact.
What does a reasonable balance between environmental protections and economic development look like?
Effective governing requires us to balance the cost of oversight with the cost of environmental harm in order to establish the appropriate degree of environmental protection. Too much protection, and the cost to business (and the corresponding constraint on economic development) is too great. Too little protection, and the cost to the environment and societal health is too great. Public oversight needs to accurately assess the cost to business, and the benefits to the environment and society. Where the environmental risk is critical, the oversight needs to be strong and have a substantial effect. But where the environmental risk is less than critical, the benefits of environmental protections need to be carefully weighed against the economic costs. Wherever possible, the costs and benefits of environmental policies should be expressed in monetary terms, to facilitate the cost-benefit analysis, and thereby bring clarity to the appropriate degree of public oversight; one that creates the least burden to economic growth while achieving the desired environmental protections.
Environmental policy must be relevant to those affected by the policies, achieve the desired environmental goals, be cost effective, and demonstrate accountability to the public. Moreover, environmental and economic policies should be coordinated and mutually coherent. Key economic policies, e.g. regarding transport, industry, energy, and agriculture, should not cause significant environmental harm. And key environmental policies, to the greatest extent possible, should not place undue burdens on economic development and growth.
Policy adoption date: 2/7/2018