For the week of December 4 - 10, 2002

Relaxing environmental regulations is short sighted

Commentary by ADAM TANOUS

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The latest in herd thinking by the media, political analysts and just about anyone with a forum is that when it comes to politics, the ideological edge presently goes to the Republicans. Talking heads on the left lament the void of ideas or platforms coming from the Democrats; those on the right affirm their party’s wealth of ideas.

Frankly, I don’t think you’ll find political mavericks on either side of the aisle, or even dead center in the aisle, for that matter. But brilliant ideology is not necessarily the linchpin of effective governing. Having a sense of what a government can and cannot do well may be as, if not more, important.

If President Bush is consistently making one misjudgment, it is in the realm of regulation. The president and his advisors’ absolute belief in the self-regulating nature of free markets, in all situations—threatens to be his Achilles heel. The complete failure of regulatory agencies overseeing business and finance concerns is obvious enough and has been discussed to death. What has received less attention is the administration’s approach to environmental regulation.

It seems the administration does not understand or does not believe in the economic concept of externalities. Externalities are economic costs that cannot be easily assigned to any one element of an economic system. These are costs that typically don’t figure into free market supply and demand curves. And for this reason they present one of the more compelling reasons for the existence of governments and government regulations.

Clean air and water and a healthy environment, in general, are externalities. The consequences of not having them are profound. Consider not only the worldwide costs absorbed by health care systems from the millions of cases of pollution-induced respiratory diseases and water-borne illnesses, but also something as basic as maintaining fertile land so that we can grow enough food to feed ourselves.

Regulation is one way externalities can be dealt with. Government regulation seeks to eliminate externalities by assigning the associated costs to those who incur them.

Perhaps one of the least glamorous but most important functions of a government is to find the magic point where free market economics meets the public interests of regulation. I think the gut reaction of the president and his advisors is that regulation of any sort is by definition anti-capitalism, and introduces inefficiencies into the system.

Two recent decisions by the administration, relaxing logging rules in national forests and loosening industrial air pollution rules, show an indifference to environmental protection that is not only incumbent on the government but which has negative economic effects.

With the logging case, the administration has decided to give the 155 national forest managers new flexibility to approve logging and commercial activities with less oversight when it comes to environmental damage these activities may cause. The new rules reverse regulations put in place in 2000, prior to Bush taking office. The previous regulations set up standards for maintaining and monitoring wildlife populations. They also required ecological sustainability and reliance on scientific data. The administration was widely quoted as saying this last requirement "would be difficult, if not impossible, to accomplish." They also said the 2000 regulations required a "level of involvement by scientists that may or may not be needed."

The position seems to be that such forest decisions should be political ones fought out by the forest managers, timber industry and regional environmental groups, rather than scientific ones.

Forests are complex systems. Any perturbations to them—major logging, fires, erosion, fluctuations in wildlife populations—have effects that ripple through them. The administration is claiming that relying on facts and the insight of scientists is burdensome. I can think of no better situation in which to engage scientists. They, in general, are impartial and have more allegiance to their scientific integrity than to financial or political ends. Leaving federal land use decisions up to local forest managers is to invite more hardball politics into an already too-politicized climate. The pressure the timber industry will put on those individuals will be enormous. It is hard to see how unbiased and wise decisions will come out of such a situation.

Another recent decision by the administration was to undo tough air pollution requirements put in place called the New Source Review program. These were rules applying to oil refineries and manufacturing plants.

The New Source Review program requires industrial facilities to invest in modern pollution controls whenever they make a "major modification" and increase pollution. The program forces companies to face the economic costs of polluting. It is aimed at many of the old, coal-powered plants, all of which were exempted from the 1977 Clean Air Act provided they didn’t modify their plants. In other words, before the New Source Review program, a plant that kept polluting at the same horrendous rate, as before, didn’t have to abide by the clean air laws that everyone else does.

The New Source Review program eliminated this perverse result. In loosening the rules of the program, President Bush has removed any kind of economic incentive—plant expansion—that a company might have for reducing emissions.

What both these cases suggest is that environmental regulation, in general, is in the president’s crosshairs. The reason is obvious: Huge short-term economic interests are at stake. And these interests have a way of finding their way into the political process—generally in the form of contributions, without which no politician gets beyond his or her local school board election.

I believe Bush is underestimating the long-term, positive economic benefits of pro-environmental policies. Having clean water, air and healthy forests are more than nice to have around or to look at. They are real elements in the modern economy.

Given the country’s resources, anyone can make short-term profits. The true test of a businessman, like Bush, or for that matter a nation, is whether he or it can sustain a profit over the long term. This country has a bright and long future before it. Why doesn’t the president plan for that?

 

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