Antidote to Our Doom Affliction

In the past year the environment has returned to prime time. International concerns about potential global warming, accelerating destruction of tropical rain forests and a gaping hole in the stratosphere above Antarctica gripped people and nations around the world. The networks and newspapers have been full of stories of gloom and doom--medical wastes closing East Coast beaches, tanker spills, and pesticides and poison scares causing consumer and regulatory panic. The impression persists of a planet reeling out of control, with potentially terrifying consequences just over the horizon.

We need antidotes to this affliction. No doubt fear and anger are great mobilizers of public passion and an aroused public will be necessary to marshal the resources, financial and political, required to address the problems we face. But such mobilization of public passion is not enough. We also need public policies and social compacts that will attain environmental objectives with relatively little conflict and at lower cost.

It is here that a recent report issued by two U.S. senators, Timothy Wirth (D-Colo.) and John Heinz (R-Pa.), may turn out to have a greater positive impact on our planet’s future than all the scare stories that have dominated the news. Titled “Project 88: Harnessing Market Forces To Protect Our Environment,” the 130-page study addresses subjects such as global and domestic air pollution, energy, water resources and solid and hazardous wastes.

It does not, however, purport to be all-conclusive. Instead it applies a unifying theme to seven sets of major environmental problems: the use of economic criteria or market forces as a means of accomplishing desired environmental goals at the least cost.

A group of more than 50 environmentally concerned Americans, including environmentalists, industrialists, bureaucrats and academics, led by Prof. Robert Stavins of Harvard University, worked under the senators’ direction. What they produced was a bipartisan, wide-spectrum consensus supporting economic incentives as a preferred means of accomplishing environmental goals.

The report acknowledges that both public and private spending for pollution cleanup and resource preservation will be constrained in a time of severe budget deficits and increasing international competitiveness. But it counters that economic or market-based incentives will provide more pollution reduction and more efficient and environmentally sensitive resource allocation than government-imposed controls, at any level of public or private expenditure.

Of course, using economics to foster environmental improvement is not a new idea. Less than a decade ago, spurred on by environmentalists and regulators, California’s leading public utilities, Southern California Edison and Pacific Gas and Electric, surprised their industry when they abandoned the construction of large coal and nuclear power plants in favor of economically and environmentally superior alternative measures. Now their approach is common wisdom around the country, if not the world.

Similarly, earlier this year, two of California’s leading water utilities, the Metropolitan Water District of Southern California and the Imperial Irrigation District, announced a swap of conservation investment for water. This water-marketing arrangement signals that the highest levels of the Western “water industry” have also come to appreciate that sound economics should be a key determinant of the future of water development in the American West.

Such success stories need not be limited to domestic energy and water issues. A market approach limiting the total production and use of chlorofluorocarbons holds great promise as the most efficient means of reducing the threat these ozone-depleting chemicals pose to the Earth’s stratosphere.

Economic incentives to plant trees may go a long way to offset the carbon dioxide emissions that contribute to the greenhouse effect. “Debt for conservation” swaps are a promising means to protect tropical rain forests. And allowing polluters to trade strictly limited amounts of emission rights for a range of widely dispersed air pollutants is a worthwhile strategy to address regional air-pollution problems. It is also a possible avenue to breaking the political stalemate that has blocked legislation to control acid rain.

On the other hand, one should be careful not to claim too much for the economic approach. Politics, influenced by science and the clash of public values, will still decide how much pollution is acceptable. Spending for environmental protection will likely have to be increased. Existing regulatory programs should be built upon and supplemented by market incentives, not scrapped.

No doubt the political parties and interest groups represented in the Project 88 effort will continue to do battle on a wide spectrum of environmental issues. We will always fight over how serious particular environmental problems are, how much environmental preservation we want and what we as a society are willing to pay for that preservation. But the key lesson of this report is that all of us have a common interest in finding methods for dealing with environmental problems that are cost-effective, bipartisan and relatively uncontentious to implement.

If we learn that lesson well, perhaps we can make enough progress on the major environmental problems we confront that within a few years, the environment will again be relegated to the back pages and to Saturday morning television shows. If so, all of us, environmentalists especially, will have reason to applaud.