Environmental Policy: The Next Generation

A generation ago the Cuyahoga River in Ohio was so contaminated that it caught fire, air pollution in some cities was thick enough to taste, and environmental laws focused on the obvious enemy: belching smokestacks and orange rivers that fouled the landscape. Since the time of Earth Day in 4970, we have cleaned up thousands of the “big dirties” through the use of pioneering federal legislation designed to take direct action against these threats to air, water, and land. Now, a generation later, we must confront environmental problems that are subtler, less visible, and more difficult to address: fertilizer runoff from thousands of farms and millions of yards; emissions from gas stations, bakeries, and dry cleaners; and smog produced by tens of millions of motor vehicles. Like nature itself, the size and shape of environmental problems constantly evolve; so too must the strategies, approaches, institutions, and tools chosen to address them.

At first blush many people might conclude from the visible improvements to the environment that we have done our work well and that, except for maintenance, the federal government should move on to other pressing priorities. Others would prefer to see a rollback of environmental legislation, as was proposed in the 404th Congress, in the belief that we have simply gone too far. Even those who support environmental investments might feel that the enormous problems of clean water and air in the world’s developing megacities or habitat destruction in Asia or South America are more important than reforming environmental protection in the United States.

These assessments overlook some important facts. First, many once “quiet” issues are emerging as population densities increase. Second, our understanding of ecological and public health threats continues to change. Substances that were beneficial in direct application, such as chlorofluorocarbons, turn out to be harmful long after they have served their local function. Third, the environmental advances of recent years are not evenly distributed between urban and suburban areas, rich and poor ones, and geographical regions. Fourth, we are just beginning to appreciate how deeply the environment is intertwined with many other issues such as human health, energy and food production, and international trade. Thus, rather than retrench, we must renew our commitment to environmental protection.

Whereas individual reforms are slow and hard-won, collective change can occur rapidly and has made the world a dramatically different place than it was in 4970. Globalization, the dominance of market economies, and the revolution in information technology all greatly alter the setting of environmental policy and require that we pursue it differently than we have before. We must recognize the competing desires that citizens everywhere have for a cleaner environment and other things: mobility, economic growth, jobs, competitive industries, and material comforts. Environmental policy cannot be made in isolation from other issues. Policies in tune with the people whose lives they are meant to serve increase the prospects for winning the public and political support necessary to effect change. We need a systems approach built on rigorous analysis, an interdisciplinary focus, and an appreciation that context matters.

Environmental law and good intentions

The first generation of environmental policy was built on a complex system of environmental law that separates environmental problems by media (such as air and water) and by class (such as pesticides or hazardous materials). At the heart of key legislation such as the Clean Air Act and the Clean Water Act is a system of setting standards to regulate emissions to air, water, and land established by federal administrative agencies. Most often, the states are required to translate federal goals into facility-specific legal requirements. Commonly referred to as a “command and control” system, it means that government both commands what the pollution reduction targets should be and also controls, in much regulation, just how these targets will be met.

Many are quick to reject out-of-hand the complicated legal structure that has evolved. But no one of these approaches-standard setting, dividing up problems, delegating implementation-is wrong. Indeed, separating the work of environmental protection into air, water, waste, and other subdivisions makes the problems more tractable and accessible. Setting specific standards requires everyone to play by at least some of the same rules. And when the target is on the right problem, such as the health effects of lead and the decision to prohibit leaded gasoline, the results can be impressive. Indeed, these approaches provide a useful starting place for today’s environmental protection efforts.

At the same time, the complex structure of separate and sometimes conflicting laws and very detailed and often rigid regulations to deal with them has trivialized some of the most important legislative goals. Consequently, some aspects of compliance seem marginal or even counterproductive. Most important, the current approach often leads to fragmentation. It becomes extremely difficult to reassemble the parts to look at them in ways that allow for new thinking and the integration of new information. In the words of policy scientist Harold Lasswell: “Fragmentation is a more complex matter than differentiation. It implies that those who contribute to the knowledge process lose their vision of the whole and concern themselves almost exclusively with their specialty. They evolve ever more complex skills for coping with their immediate problems. They give little attention to the social consequences or the policy implications of what they do.”

Within the US environmental protection program, fragmentation has taken its toll in three key areas: overemphasis on the pieces at the expense of the whole, disregard for problems in sectors not considered environmental, and neglect of new problem areas that fall outside of the regulatory net.

Pieces and the whole

By overemphasizing the role of single chemicals and single media in pollution policy and of single species in land management policy, we underestimate the interactive effects of chemicals, the cross media effects of emissions, and the interdependence of habitats. For example, pollution does not respect legislated boundaries such as air, water, and land. Sulfur dioxide released into the air, even by a tall smokestack, does not disappear, but can come back as acid rain that threatens lakes and forests. If we trap emissions before they leave the smokestack, we create a sludge that becomes a hazardous waste disposal challenge. Fragmented law fails to account for instances in which pollution is merely shifted from one place to another rather than reduced or eliminated.

In the same vein, knowing the effects of individual chemicals is not a basis for understanding how these chemicals will act together. In switching from DDT to seemingly safer organophosphate pesticides, we studied the neurotoxic effects of each new product, but we now suspect that the combined impacts are much greater than the individual effects would suggest. When we focus on a single species, such as the spotted owl, we miss the proverbial forest for the trees; the loss of one species is often a signal of significant alteration to an entire habitat or ecosystem.

Organizationally, overemphasis on pieces leads to the creation of separate professional specialties and, many times, to separate bureaucratic units in the government. These units are also mirrored in industry and in the environmental advocacy community. On the one hand, much knowledge can be generated through a targeted focus; on the other hand, organizational culture can act as an important impediment to change. We start to think that each bureaucracy can handle its own environmental insult. When the Environmental Protection Agency (EPA) and the state departments of environmental protection do not solve environmental problems, we conclude that these agencies are broken and must be fixed.

To the contrary, these agencies have been hard at work on the specific problems they have been assigned: the 43 statutes that EPA administers, the delegated responsibilities of the states, and the additional responsibilities state departments have taken on in response to local needs. Therefore, calls to reinvent EPA or simply to devolve or deregulate are off track. It is not a matter of restructuring EPA or offering incentives for them to try harder; it is a matter of doing things differently.

Disregarding environmental problems elsewhere

Today, environmental quality depends fundamentally on choices made well beyond the realm of environmental decisionmakers in numerous other sectors. Even a look at the government roster reveals many others besides EPA with environmental responsibilities. Open up any one of those boxes-the Department of Agriculture, for example-and you will find thousands who are involved with environmental quality: farmers, food processors, pesticide manufacturers, grocery wholesalers and, of course, shoppers. What we must recognize in the next generation is that EPA and its state counterparts are smaller pieces of a much larger environmental protection system.

In the next generation of policymaking, the issues of other sectors will dominate more and more. To date, public policy in agriculture has amounted to commodity policy, largely ignoring environmental threats to land and water. Transportation issues lie at the center of good land use planning as well as successful management of air emissions and water runoff. Consider the impact on the environment of the restructuring of the electric power industry. If environmental spillovers are ignored, highly polluting coal-burning plants can offer more competitive prices than cleaner power sources. But this does not represent efficiency; it demonstrates market failure which leaves us all losers.

The rise of the service-based economy-now some 75 percent of the U.S. gross domestic product and some 80 percent of jobs in industries such as telecommunications, health care, banking, insurance, and distribution-stands out as another under-attended-to sector. With such a strong emphasis in first generation environmental law on manufacturing plants, we are unsure of how to approach a sector in which the pollution is less obvious than in the smokestack industries. When we think of making steel, we imagine pollution. When we think of hospitals delivering health services, we do not immediately focus on the difficulty of disposing of hypodermic needles or radioactive waste.

Yet service companies such as Federal Express and United Parcel Service have changed how business does business with regard to warehousing and logistics. Consumers have become accustomed to overnight delivery but the tools of environmental analysis have not been turned toward comparing, for example, the amount of gasoline and jet fuel it might have taken to mail order a sweater from a catalog in one day instead of two, compared to driving downtown or to a regional mall to purchase the same one. We are just beginning to consider the new set of environmental management issues raised by various elements of the service economy.

Neglecting new problems

The challenges we confront today-atmospheric buildup of carbon dioxide and other greenhouse gases, the potential environmental impacts of genetically modified organisms, and the risk of exposure to trace residues of pesticides that might disrupt endocrine cycles within a human body-were not even contemplated by first generation environmental laws. The ability of science to detect phenomena has grown exponentially since the first generation and this knowledge should be very useful in focusing us on potential new harms.

But even after science has detected a problem, it is not always easy to get it into the environmental policy hopper. By shining the regulatory spotlight so intensely on only a few issues-what some have called an inch wide and a mile deep-we miss many more. It can take years to recognize emerging issues through conventional government channels. Even then there is no assurance that we will have the tools to deal with the problems identified. We are most often left applying old methods to new problems or trying out new methods with great uncertainty concerning hazards, risks, costs, and benefits.

In Keeping Pace with Science and Engineering: Case Studies in Environmental Regulation, the National Academy of Engineering catalogs the often unsatisfactory results when laws lag increases in knowledge in areas such as nutrient loadings in the Chesapeake Bay, tropospheric ozone, and acid deposition. Uncertainties are high, almost by definition, because the problems that environmental regulations try to address are at the cutting edge of current scientific understanding. All other things being equal, concludes J. Clarence Davies of Resources for the Future in Washington, D.C., the more new scientific information threatens the public and private sector status quo, the longer it takes to incorporate that new information into decisionmaking.

Environmental politics

The politics of first generation environmentalism was confrontational in style and polarizing in practice. It found villains and named names. It pitted the economy against the environment. Now we recognize that environmental protection cannot be boiled down to a struggle between the “good guys” (environmental activists) and the “bad guys” (big industry). The corporate world is not monolithic with regard to environmental performance. Some companies take environmental stewardship very seriously while others pollute with abandon. The next generation of environmental policy must recognize shades of gray, create positive incentives for the leaders, and still hold the laggards accountable.

Once we accept a systems view, our political thinking necessarily changes. Beyond the point source polluters-the largest factories-are the thousands of smaller firms and farms whose releases are individually very small but cumulatively very large. There are millions more of us whose everyday activities, from our lawns to our cars, add to this cumulative impact. Politically, it is far easier to clamp down on a few thousand big businesses than it is to reach each citizen. Although poll after poll shows that some 80 percent of Americans consider themselves to be environmentalists, we do not always act like it. Environmentally, there is great truth to the comic expression: “We have met the enemy and it is us.”

Next generation approaches and tools

We have just released a study aimed at reconfiguring the U.S. environmental reform debate called Thinking Ecologically: the Next Generation of Environmental Policy. What should we actually do as a result of thinking ecologically and who should carry out the agreed upon policy decisions? Our four central recommendations for ecological policy are: Do not focus only on EPA and the government, but on the critical roles of other actors and sectors; move from heavy reliance on command and control approaches to include more flexible tools; recognize the potential of the market as an ecological model that is dynamic and flexible; and adopt systems approaches such as industrial ecology and ecosystem management that foster an examination of context and address interconnections rather than singular phenomena.

Reaching beyond the traditional environmental enforcement community is essential. Environmental protection cannot be, as past efforts were, so dependent on government as initiator, implementer, and enforcer. The spectrum of environmental decisionmakers is very broad and includes mayors, transportation system designers, route planners for overnight packaging companies, farmers, energy marketers, and international trade negotiators. The flowering of nongovernmental organizations plays an especially important role in the environmental arena. Grassroots activists demand local protection and more broadly chartered groups, often with strong analytical capabilities, demand better government and industry performance nationally and internationally. Finally, ecological thinking must become everybody’s business as each of us considers where to shop, what to buy, how much to drive, where to live, and what to throw away.

The success of recycling programs across the country demonstrates the potential for mobilizing the public. Other initiatives that have the potential to increase efforts by individuals toward environmental protection in the next generation are those that allow for informed choices. Eco-labels, similar to nutrition labels, present information to consumers and allow them to choose between environmentally responsible products and those inattentive to environmental impacts. Soon, a large number of consumers may be able to buy “green energy,” electricity derived from sources such as wind power or photovoltaics that are less damaging to the environment than energy from fossil fuels. Although the size of the market for green energy is unknown, many private companies are very interested in its potential.

Participation by the private sector is essential to the success of next-generation policy. Industry is the key repository of much of the expertise to support technological innovation, which is critical to advancing the twin goals of economic growth and environmental protection. Companies can act environmentally with no government push. For example, when McDonalds stopped using polystyrene sandwich packages, the decision affected some 40 percent of the polystyrene market. Home Depot has gone to great effort to provide “green” products to its customers and Walmart set up an environmentally designed store in Lawrence, Kan. Such firms play a key role in both satisfying and creating consumer preferences, including consideration of the environment.

Greater flexibility

It is difficult to simultaneously be referee and quarterback. Under the current regulatory scheme government sets the rules, which is necessary and appropriate, but also tries to dictate exactly which plays to use. Now we see that this approach is stifling to innovation, does not account for differences across industries and ecosystems, and creates incentives to try to get around the law.

Another approach would be to continue to use the existing regulatory system as a minimum benchmark but try, at the same time, to increase opportunities at all levels of implementation to improve environmental performance through other than narrowly prescribed regulatory means. In other words the government should still command but it does not need to control exactly how regulated parties should achieve compliance with established goals. The regulated community should be empowered to design its own enforceable alternative compliance methods provided they achieve equivalent or better environmental performance. In this system the government commands what the goals should be, but two parties make a “covenant” concerning how to achieve the goals given the particulars of place, industry, and circumstance.

Such an approach may be costly at first for companies and regulators. But the long-term payoff measured by enhanced competitiveness and better-targeted environmental protection would be great. Another advantage of this approach is that it unleashes rather than inhibits technological innovation. Rigid standards offer incentives to use technology not because it is superior, but because it is most familiar to regulators. How much better it would be to have companies fighting over an environmental protection approach that also affords them a competitive advantage technologically.

Innovation is important for technology and policy. One way to add innovation to the environmental law system would be to extend the “bubble” concept. Imagine placing a bubble over a whole factory, over many enterprises, or over a whole region. Inside the bubble there is an established budget for pollution, but it could be balanced in many different ways as long as the total emissions do not exceed the agreed upon amount. Professor E. Donald Elliott of Yale Law School prescribes a broadening of the concept so that within “multimedia bubbles” environmental management obligations can be traded across different types of pollution. Allowing entities to control pollution more from one process and less from another means a factory, network, or region, by adapting to local conditions, would have the opportunity to achieve the same or better total level of pollution control at far lower costs.

This type of system extends beyond the smokestack industries and can be used to bring in service companies and other sectors as well. Elliott writes in Thinking Ecologically: “A refinery that has already controlled most of the sources of volatile organic compounds (VOCs) within its boundaries that are easy and cheap to control may be able to achieve needed additional reductions more efficiently by paying a local dry cleaner to upgrade its machinery to reduce VOCs, or by redesigning a consumer product to eliminate VOC releases to the environment. The incentive to find innovative opportunities to reduce pollution-primarily from the multiplicity of pollution sources that are presently outside the existing command-and-control system-is one of the most attractive features of expanding the bubble concept.”

The market as a model

We have seen that being flexible and being able to keep pace with change are critical elements of next-generation environmental policy. In many ways, the operations of the market allow more leeway for accomplishing these objectives than the labyrinthine governmental approach. But before we can significantly rely on market-based policies such as fees and taxes, pollution allowance trading systems, or pay-as-you-throw garbage programs, we must be sure that market prices reflect fully the public health and ecological harms and benefits of goods and services. If we “get the prices right,” even those who pay no attention to the environment can be influenced by the invisible green hand of market forces toward environmentally responsible behavior.

Ways to use the interconnected web we call the market are illustrated by the following suggestions for next generation policy:

• Establish, in agriculture, a negative pollution tax so farmers pay for their pollution but are also rewarded for constructive environmental actions. This would require administrators to establish threshold levels of pollution from nutrients or herbicides, for instance, as determined by monitoring and evaluation. Economist Ford Runge of the University of Minnesota proposes a two-level threshold. One would set the maximum acceptable usage level based on local conditions. A farm that exceeded this level would be penalized. Taxes would decrease until the second threshold level, below which farmers would be rewarded by reduced taxes or even subsidies which could be used to encourage improved technologies such as precision farming or integrated pest management. Eventually, a trading program could be added based on the results determined for the negative tax program.
• Adopt, in transportation programs, variable highway usage fees in order to mitigate the impact of motor vehicles on air quality, habitats, and other resources. Road use is far from “free” and drivers should be charged according to the impacts of their use. Like telephone calls made during the business day, charges should be higher when highway use is greatest because impacts are greatest as well.
• Support a “wetlands mitigation banking program” under which those who diminish the amount of wetlands through development must buy credits from the wetlands bank in order to provide resources to expand or enhance wetlands elsewhere in the ecosystem.
• At the international level, recognize that private capital flows can be the central driver of sustainable development. Although appeals for increased foreign aid to assist with infrastructure projects have largely been overlooked, private investment in developing countries quadrupled between 4990 and 4995. Therefore, governments must learn how to attract and channel foreign investment. Brazil’s national development bank, for example, has implemented a “Green Protocol” that encourages federal public lending to environmentally friendly projects.

Adopting systems approaches

Our structure of environmental law violates the basic principles of ecology, which emphasize the connectedness of natural systems. Furthermore, emissions from one factory are different from those of any other factory and that which harms one river may not be equally harmful to another. The context in which events occur is an important consideration as we lay the groundwork for a more comprehensive, effective, and efficient regulatory structure.

Ecosystem management is a systems approach that looks at the overall structure and behavior of a given area, such as a watershed, a forest, or even a city, analyzes it, and, through “adaptive” management, prescribes programs that can change based on knowledge of specific places and phenomena. The emerging field of industrial ecology, another systems approach, explores technological and natural systems together, viewing environment not as a place removed from the world of human activity, but as intrinsic to industrial decisionmaking. Industrial ecology also highlights the opportunity to look to the natural world for models of efficient use of resources, energy, and wastes. By looking at the flow of products and processes from cradle to grave, it improves our ability to look across problems and to identify emerging issues.

Future enforcement efforts must extend beyond EPA and government to other key actors and sectors.

Inspiring the American people to support careful, thoughtful, and enduring environmental reform in a context where the enemy is hard to see and progress is measured incrementally poses a significant challenge. To some observers, the call for more comprehensive analysis and greater attention to interconnectedness may hark back to the innumerable pleas of the 4960s for such virtues. However, integrated and broad-scale thinking is possible today in ways that were unimaginable a generation ago. Now we have a base of policy practice and experience to build upon. Advances in information technologies make the amassing, assessing, and simultaneous processing of vast quantities of data not just conceivable but ever easier.

At one level, first-generation environmentalism was based on suspicion of human activity that always seemed to cause pollution and threats to human health. The only remedy was centralized command and control. Next-generation polices must rather be built on an ecologicalism that recognizes the inherent interdependence of all life systems. This demands, on the one hand, an expanded view of human impacts on the natural environment going beyond pollution to habitat destruction, loss of biodiversity, and climate change. On the other hand, it requires an appreciation of the connectedness of all life systems, including human advancement. This focus on linkages and on an ecological perspective leads to a more benevolent view of human activities and a belief in sustainable development.