United States         Office Of           21Z-1001
              Environmental Protection    The Administrator       December 1990
              Agency
v/EPA      The Green Thumb
              Of Capitalism

              The Environmental Benefits
              Of Sustainable Growth
EPA
21Z-

1001                                      Copyright 1990 by Policy Review
c'2                                      (Number 54), reprinted with
                                        permission.
                                            Printed on Recycled Paper

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                  THE  GREEN  THUMB OF CAPITALISM
                         The Environmental Benefits of Sustainable Growth
                                             WILLIAM K. REILLY
CD
CD
           Lurmurs of agreement rippled through the business
       world  last year when  the new chairman of Du Pont,
       Edgar S. Woolard, declared himself to be the company's
       "chief environmental officer." "Our continued existence
       as a leading manufacturer," he said, "requires that we
       excel in environmental performance."
         Ed Woolard has plenty of company these days. The
       sight of CEOs wrapped in green, embracing concepts
       such as "pollution prevention" and "waste minimization,"
       is becoming almost commonplace. Businessmen increas-
       ingly are acknowledging the value, to their profit margins
       and to the economy  as a whole, of environmentally
       sound business practices—reducing emissions, prevent-
       ing waste, conserving energy and resources. Government
       is trying to help  by  creating market incentives to curb
       pollution, by encouraging energy efficiency and waste
       reduction,  and  by  developing  flexible, cost-effective
       regulatory programs. The recognition by business
       leaders and government that a healthy environment and
       a healthy economy go  together—that in fact, they rein-
       force  each  other—reflects a  growing  awareness
       throughout society of  this profound reality of modern
       life.
         Less has been said or written, however, about the
       other side of the  coin—the environmental benefits of a
       prosperous, growing economy. Many environmentalists
       remain ambivalent—and some openly suspicious—about
       many forms of economic growth and development. En-
       tire  industries are viewed as unnecessary or downright
       illegitimate by a shifting subset of activist, although not
       mainstream,  environmentalist opinion: offshore oil
       development, animal husbandry, plastics, nuclear ener-
       gy, surface mining, agribusiness. These skeptics equate
       growth with pollution,  the cavalier depletion of natural
       resources, the destruction of natural systems, and—more
       abstractly—the estrangement of humanity from its roots
       in nature. Studs Terkel's trenchant comment about cor-
       porate  polluters—"They infect our environment  and
       then make a good buck on the sale of disinfectants"—
       remains a common  attitude among certain activists. At
       the grass-roots level, conflicts over industrial pollution,
       waste disposal, and new development tend to erupt with
       particular intensity and passion. One activist recently put
it to me directly: In relation to waste incinerators, he
said, "People think we're NIMBYs (Not-In-My-Backyard).
But we're not. We're NOPEs (Not-On-Planet-Earth)."
  The skepticism of some environmentalists  toward
growth is grounded in painful experience. Historically,
economic expansion has led  to  the  exploitation of
natural resources  with little or no concern  for their
renewal. At some  levels of population  and economic
activity the damage from such practices was not readily
apparent. But growing populations, demands for higher
living standards, and widespread access to the necessities
of modern life in economically advanced societies—and
even in developing countries that provide raw materials
to richer consumers—have created steadily increasing
pressures on the environment.  These include air and
water pollution, urban congestion, the careless disposal
of hazardous wastes, the destruction of wildlife, and the
degradation of valuable ecosystems. Up to half of the
wetlands in the lower 48 states that were here when the
first European settlers arrived are gone; and the United
States continues to lose 300,000 to 500,000 acres of this
ecologically—and economically—productive resource to
development every year. Furthermore, the byproducts of
rapid industrialization have become so pervasive that
they are altering  the chemical composition  of the
planet's atmosphere, depleting  stratospheric ozone and
adding to atmospheric carbon dioxide.
  Economic  development based on  unsustainable
resource use cannot continue  indefinitely without en-
dangering the carrying capacity  of  the planet. Old
growth patterns must change—and quickly—if we are to
ensure the long-term integrity of the natural systems that
sustain life on Earth.

               Great Expectations
  To achieve sustainable growth—growth consistent with
the needs and constraints of nature—we need to secure
the link between environmental and economic policies
at all levels of government and in all  sectors of the
economy. Harmonizing  economic expansion with en-
WlLLIAM K. REILLY is administrator of the U.S. Environmental
Protection Agency.
                                             HEADQUARTERS LIBRARY
                                             ENVIRONMENTAL PROTECTION AGENCY
                                             WASHINGTON, n C ?ni60

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       Manila, Philippines. The world's worst pollution problems are in poorer rather than richer countries.
vironmental protection requires a recognition that there
are environmental benefits to growth, just as there are
economic benefits flowing from healthy natural systems.
Most environmentalists realize this, and a growing num-
ber are working creatively toward new policies that serve
the long-term interests of both the environment and the
economy.
   How does economic growth benefit the environment?
   First, growth raises expectations and creates demands
for environmental improvement. As income levels and
standards of living rise and people  satisfy  their basic
needs for food, shelter, and clothing, they can afford to
pay attention to the quality of their lives and the condi-
tion of their habitat. Once the present seems relatively
secure, people can focus on the future.
   Within our own country, demands for better environ-
mental protection (for example, tighter controls on land
development  and the creation of new  parks)  tend to.
come  from property owners,  often  affluent  ones.
Homeowners want to guarantee the quality  of their
surroundings. On the other hand, environmental issues
have never  ranked high on the agenda of the economi-
cally disadvantaged. Even though the urban poor typi-
cally  experience environmental  degradation most
directly, the debate proceeds for the most part without
their active participation.
   The correlation between rising income and  environ-
mental concern holds as true among nations as it does
among social groups. The industrialized countries with
strong economies and high average standards  of living
tend to spend more time and resources on environmen-
tal issues, and thus to be better off environmentally.
Between  1973 and 1984, when Japan emerged as a global
economic power, it also took significant steps  to clean
up its historic legacy of pollution; and the energy and
raw materials used per  unit of Japanese production
decreased by an impressive 40 percent. In contrast, the
developing nations, mired in poverty and struggling to
stay one step ahead of mass starvation, have had little
time and even less money to devote to environmental
protection. Some of the world's worst and most intrac-
table pollution problems are in  the developing world
and Eastern Europe.
  Recent United  Nations data analyzed by the World
Resources Institute (WRI) show that the rivers with the
highest levels  of  bacterial  contamination, including
urban sewage, are  in Colombia, India, and Mexico. The
WRI also reports  consistently higher levels of sulfur
dioxide and particulate air pollution in cities in Eastern
As income levels rise,  people
can  afford to pay attention to
the quality of their lives and
the condition of their habitat.
Europe and the Third World than in most (although not
all) of the cities in the developed world. And it is in Third
World  countries  like Brazil, Indonesia, and Colombia
that tropical rain forests are being lost at such alarming
rates; while  in Africa, India,  and China, deserts are
growing amid ever-worsening water shortages.

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            Growth Lowers Birth Rates
   Economic growth can mitigate  these  resource and
environmental pressures in the developing nations in
two closely related ways: by reducing poverty, and by
helping to stabilize population growth. Many global en-
vironmental problems result less from  the activities of
those supposed villains, the profit-hungry multinational
corporations, than from the incremental,  cumulative
destruction  of nature  from  the actions of many  in-
dividuals—often  the poor trying desperately to eke out
a living. These actions range from the rural poor in Latin
America clearing land for title, for cattle, or for subsis-
tence farming; to gold miners, electroplaters, and small
factories releasing toxic substances into the air and water;
to farmers ruining fields and groundwater with excessive
applications of pesticides.
   In  the developing nations especially, the population
explosion of the  past few decades (developing countries
have more than doubled in population just since 1960)
has greatly intensified the accumulating pressures on the
environment. Even though the rate of increase is starting
to fall in most of the Third World, population growth in
countries such as Mexico, the Philippines, Kenya, Egypt,
Indonesia, and Brazil has contributed and will continue
to contribute to  global degradation, to loss  of natural
resources, to poverty, and to hunger. Continued rapid
population growth will cancel out environmental gains,
and offset environmental investments.
   One widely acceptable strategy that can make  an
important  contribution  to lowering fertility  rates is
education. The World Bank has drawn  attention to the
close correlation  between education of children—
specifically, bringing basic literacy to young girls—and
reduction in the  birth rate. Economic growth also offers
hope for some relief. As countries grow economically,
their  fertility rates tend  to decline; in most developed
nations the  birthrate has dropped below replacement
levels, although it is creeping back up in some countries.
Stable populations coupled with economic growth mean
rising per  capita standards  of living.  Education and
economic development are the surest paths to stabilizing
population growth.

            A Walk on the Supply Side
   The  benefits  of economic growth just described—
higher  expectations for environmental quality in the
industrialized countries, and reduced resource demands
and  environmental pressures related  to poverty and
swelling populations in  the developing nations—show
up on the demand side of the prosperity/progress equa-
tion. But economic expansion contributes on the supply
side as well—by generating the financial resources that
make environmental improvements possible.
   In the United  States, for example,  economic
prosperity has contributed to substantial progress in
environmental quality. The gains this country has made
in reducing  air  and water  pollution  since 1970 are
measurable, they are  significant, and  they  are  indis-
putable. In most  major categories of air pollution, emis-
sions  on a  national basis have  either leveled off or
declined since 1970. And the improvements are  even
more impressive  when compared with where we would
be without the controls established in the early 1970s.
  Air emissions of particulates went down by 63 percent
between 1970 and 1988; the EPA estimates that without
controls  particulate emissions would  be  70  percent
higher than current levels. Sulfur dioxide emissions are
down 27 percent; without  controls,  they would  be  42
percent higher than they are now. Nitrogen oxide, which
is up about 7 percent  from 1970 levels, would have
increased by 28  percent without controls.  Volatile or-
ganic chemicals are down 26 percent; without controls,
they would be 42 percent higher  than today's  levels.
Carbon monoxide is down 40 percent; without controls,
it would be 57 percent higher than current levels. And
without controls  on lead, particularly  the  phase-in of
unleaded  gasoline, lead emissions  to the air would  be
fully 97 percent higher than they are today.  Instead,
atmospheric lead is down 96 percent  from 1970 levels.
  Similar, although more localized, gains can be cited
with respect to  water pollution. In  the Great Lakes,
thanks to municipal sewage treatment  programs, fecal
coliform  is down, nutrients are down, algae are  down,
biological oxygen demand is down.  Twenty years ago
pollution  in Lake Erie decimated commercial fishing;
now Lake Erie is the largest commercial fishery in the
Great Lakes. The Potomac River in Washington, B.C.,
was so polluted that people who came into contact with
it were advised to get an inoculation for tetanus. Now
on a warm day the Potomac belongs to the windsurfers.
  It cost the American taxpayers, consumers, and
businessmen a great deal of money to realize these gains.
The direct cost of compliance with federal environmen-
tal regulations is now estimated at more  than $90 billion
a year—about 1.7 percent of gross  national  product
(GNP), the highest level among western industrial na-
tions for which data are  available. Yet the United States
achieved its remarkable environmental progress during
a period when  GNP increased by more than 70 percent.
  We can learn two important lessons from the U.S.
experience of the past two  decades. First, our environ-
mental commitments were compatible with economic
advancement;  the United States is now growing in a
qualitatively better, healthier way because we made those
commitments. And second, it was not just good luck that
substantial environmental progress occurred during a
period of economic  prosperity. Our  healthy economy
paid for our environmental gains; economic expansion
created the capital to finance superior environmental
performance.

        Eco-Catastrophe in Eastern Europe
  The contrast between the U.S. experience and that of
the Soviet Union and Eastern Europe over the past two
decades is both stark and illuminating. While the United
States prospered and made  a start on cleaning up,
Poland, Hungary, Romania, East Germany,  Czecho-
slovakia,  and the Soviet Union were  undergoing  an
environmental catastrophe that will  take many years and
hundreds of billions of dollars to  correct. In  Eastern
Europe, whole cities are blackened by thick dust. Chemi-
cals  make up  a  substantial percentage  of  river  flows.
Nearly two-thirds of the  length of the Vistula, Poland's
largest river, is unfit even for industrial use. The Oder

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River, which forms most of Poland's border with East
Germany, is useless over 80 percent of its length. Parts
of Poland, East Germany, and  Romania are literally
uninhabitable; zones of ecological disaster cover more
than a quarter of Poland's land area. Millions of Soviets
live in cities with dangerously polluted air. Military gas
masks were issued in 1988 to thousands of Ukrainians to
protect them from toxic emissions from a meat-process-
ing plant.
   The Soviet Union and its former satellites are plagued
by premature deaths, high infant mortality rates, chronic
lung disorders and other disabling illnesses, and worker
absenteeism. The economic drain from these environ-
mental burdens, in terms of disability benefits, health
care, and lost productivity is enormous—15 percent or
more of GNP, according to one Eastern European min-
ister with whom I spoke.
   The lifting of the Iron Curtain has revealed to the
world that authoritarian, centrally planned societies pose
much greater threats to  the environment than capitalist
democracies. Many environmental principles were un-
defendable in the absence of private property: Both the
factory and the nearby farmland contaminated by its
pollution were the property of the state. And  the state,
without elections, was not subject to popular  restraints
or reform. Equally important, decisions to forgo environ-
mental controls altogether, in order  to foster all-out,
no-holds-barred economic development, now can  be
seen to have done nothing for the economy. The same
policies that ravaged the environment also wrecked the
economy. There is a  good reason that no economic
benefits  have  been identified from  all the  pollution
control  costs these nations avoided:  Healthy  natural
systems are a sine qua now for all human activity, including
economic activity.
   What has happened in the United States and Eastern
Europe is convincing  evidence that in the modern in-
dustrial world  prosperity is essential for environmental
progress. Sustainable economic growth can and must be
the engine of environmental improvement; it must pay
for the technologies of protection and cleanup.

               Cleaner Technologies
   The development of cleaner, more environmentally
benign technologies clearly makes up a central element
in the transition to sustainable patterns of growth. Tech--
nology, like growth, can be a mixed blessing. Technologi-
cal progress has given many of the Earth's people longer,
healthier lives, greater mobility, and higher living stand-
ards than .most would have thought possible just a cen-
tury ago. Technology has alerted us to environmental
concerns such as stratospheric  ozone depletion and the
buildup of "greenhouse" gases in the atmosphere.
   But the adverse consequences  to the environment
from  new technology, while neither intended nor an-
ticipated, have also been significant. Twentieth-century
industrial and transportation technologies, heavily de-
pendent on fossil  fuels for their energy and  on non-
renewable mineral and other resources for raw materials,
have contributed substantially to today's environmental
disruptions. So,  too, has the widespread use of certain
substances—asbestos,  chlorofluorocarbons  (CFCs),
    Factories in Czechoslovakia: Centrally planned
      economies pose much greater threats to the
       environment than capitalist democracies.

PCBs, a number of synthetic organic chemicals—which
have proved to be hazardous to human  health or the
environment, or both.
   But if technological development has caused many of
the environmental ills of the past and present, it also has
a vital role to play in their cure. This "paradox of tech-
nology," as Massachusetts Institute of Technology Presi-
dent Paul Gray calls  it,  is increasingly accepted  by
environmentalists and  technocrats alike.  In  fact, some
environmentalists and  legislators are more inclined to
invest faith in technology even than are the captains of
industry. Gus Speth, a co-founder of the Natural Resour-
ces Defense Council and now president of World Resour-
ces Institute, has called for a "new Industrial Revolution"
in which "green" technologies are adopted that "facilitate
economic growth while sharply reducing the pressures
on the natural environment."
   I share this enthusiasm for the promise of technology,
especially after observing firsthand the truly encouraging
results of bioremediation in cleaning up Alaska's Prince
William Sound after the Exxon  Valdez oil spill. When I
first saw the full scale of that disaster, my initial thought
was: Where are the exotic new technologies, the products
of genetic engineering, that can help us  clean this up?
It was immediately clear  that  conventional oil spill
response technology was overwhelmed.
   Not long after the spill, EPA's research and develop-
ment staff brought together 30 or so scientists to develop
a program of bioremediation. This program does not
involve  any genetically engineered organisms—-just ap-
plications of nutrients to feed and accelerate the creation
of naturally occurring, oil-eating microbes.
   Having been to Alaska several times to check on the
progress of the cleanup, I've seen what bioremediation
can do  to minimize the  effects  of a massive crude  oil
spill—especially below the surface  of  the  shoreline.
Those areas of shoreline that were treated only by wash-
ing or scrubbing still have unacceptably  high levels of
subsurface oil contamination—much higher than the
areas treated with nutrients. The success of bioremedia-
tion is, in fact, virtually the only good news to result from
that tragic oil spill.
   Biotechnology also has great potential for many other
environmental applications: Last February, I urged
biotechnology companies to give a high priority to locat-

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William K. Reffly at Alaska's Prince William Sound: "My
    enthusiasm for technology was confirmed by the
    encouraging results of bioremediation after the
                Exxon Valdez spill."
ing and developing microorganisms that can safely and
inexpensively neutralize harmful chemicals at hazardous
waste sites, as well as other pollutants in the air and water.
   Other technologies, such as space satellites and sen-
sors, increasingly sophisticated environmental monitor-
ing  and  modeling  capabilities, will  give us the
information base we need to  respond appropriately to
global  atmospheric changes.  The recent international
agreement to phase-out  ozone-depleting CFCs before
the end of this century was greatly facilitated by scientific
studies of the Antarctic ozone  hole  and  the  rapid
development of safe substitutes for CFCs. And continued
advancements in medical technology and in our under-
standing of the role of environmental factors in human
health will continue to enhance human life expectancy
and freedom from disease.

             Commuting by Computer
   President Bush  recently called attention  to the en-
vironmental and social benefits of a technological ad-
vance known as "telecommuting": working from home
or a neighborhood center close to home, sending mes-
sages and papers back and forth via fax or computer. By
giving  Americans  an  attractive alternative to driving,
telecommuting helps reduce harmful  auto  emissions,
from smog precursors to carbon  dioxide. It also  saves
energy, relieves traffic congestion, and  according  to
some studies, can even increase productivity by 20 per-
cent or more.
   As a fan of face-to-face communication, who believes
also that  creativity is often stimulated by the chance
encounter, I must confess to  a bit of skepticism about
some of the virtues attributed to telecommuting. But
environmentally and economically, it has incontestable
appeal.  And  as  congestion  grows in many American
cities, the appeal of telecommuting will  also increase.
Recognizing this, the federal government and several
states have tried telecommuting in pilot projects; the EPA
is among the  federal agencies testing the concept at
selected locations.
  Many other environmentally beneficial technologies
are changing for the better the way humans interact with
the environment. Miniaturization, fiber optics, and new
materials are easing the demand for natural resources.
As older  plants and equipment wear out, they  are
replaced by more efficient, less polluting capital stock.
The  evolution of energy will continue with  clean coal
technologies  and with  the  commercialization  of
economically  competitive,  non-polluting,  renewable
energy technologies such as photovoltaic solar cells. New
self-enclosed industrial processes will  prevent toxic sub-
stances such as  lead and cadmium,  which are almost
impossible to dispose of safely, from entering the am-
bient environment. The wise .manufacturer is already
asking new questions about products—not just how will
the  product be used, but how will it be disposed, and
with  what effects?

      A Resource Saved Is a Resource Earned
  Corporations  such as Dow, 3M, Monsanto, Du Pont,
Hewlett-Packard, Pratt & Whitney, Union Carbide, and
others have curtailed emissions and saved resources
through a wide variety of successful pollution-prevention
techniques. Dow's Louisiana division,  for example,
recently designed and installed a vent recovery system to
recapture hydrocarbon vapors that were being released
as liquid hydrocarbons were loaded into barges. The new
system recovers 98 percent of the vaporized hydrocar-
bons, abating hydrocarbon emissions to the atmosphere
by more than 100,000 pounds a year.
  As environmentalists have been pointing out for years,
a pollutant is simply a resource out of place. By taking
advantage  of opportunities  for pollution prevention,
companies not only can protect the environment, they
can save  resources and thus enhance productivity and
U.S.  competitiveness in an increasingly demanding in-
ternational market.
  Accordingly, the EPA has made the encouragement
of pollution prevention one  of its leading priorities. At
the same time, the administration is pursuing an innova-
tive regulatory approach that builds on traditional com-
mand-and-control programs with economic incentives to
harness  the dynamics of the marketplace on behalf of
the  environment. By engaging the market in environ-
mental protection, we can send the kind of signals to the
economy that will encourage cleaner industrial processes
and  the  wise  stewardship of  natural resources. The
Department of Energy is involved as well; DOE is placing
heavy emphasis on increasing energy efficiency and the
commercialization of renewable energy technologies.
  These governmental efforts are badly needed because
the development of environmentally  and economically
beneficial new technology has been slowed by the high
cost  of capital  in  the United States—a  direct conse-
quence  of the  immense  federal budget deficit. The

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deficit drives  up interest rates,  slows  the  pace of
economic  expansion, and  discourages modernization
and other environmentally friendly investments. While
there are many reasons to bring the federal deficit under
control, the need to free capital for environmental in-
vestments is certainly an important one.
  Deficit  spending is, unfortunately,  not the only
government policy inhibiting environmental improve-
ment. A wide  range of regulatory requirements and
subsidies,  in  the United States and in many other
countries,  lead to  market  distortions that  encourage
inefficiencies while promoting the unsustainable use of
timber, water, cropland, and other resources. The Foun-
dation for Research on Economics and the Environment
(FREE), a free-market think tank based  in  Seattle,
Washington, and Bozeman, Montana, has done pioneer-
ing work in  the field of "New Resource Economics";
FREE argues that hundreds of millions of dollars could
be saved and much environmental damage avoided every
year by discontinuing subsidized clear-cutting in national
forests and by curtailing heavily subsidized water develop-
ment projects. For similar reasons,  the Reagan  ad-
ministration  opposed development on coastal barrier
islands, which required heavy subsidies for bridges, flood
insurance, and seawalls, and also exposed taxpayers to
the costs of disaster relief when the inevitable hurricanes
devastated the  fragile handiwork of human beings.

            Accounting for Pollution
  One  important  step toward achieving greater har-
mony between economic and  environmental  policies
would be for the government to consider seriously some
long-overdue changes in the way the nation's economic
health and prosperity are evaluated. As environmen-
talists and economists at think tanks like Resources for
the Future have been pointing out  for years, traditional
economic accounting systems such as GNP and NNP (net
national product) are poor measures of overall national
well-being. They ignore-or undervalue many nonmarket
factors that add immeasurably to our quality of life: clean
air and water, unspoiled natural landscapes, wilderness,
wildlife in its natural setting. President Bush's Clean Air
Act proposals  for curtailing  sulfur dioxide emissions,
which are precursors of acid  rain,  will significantly im-
prove visibility  in the northeastern United States. People
literally will be able to see farther.  But we have not yet
found a way to put a price tag on a scenic vista.
  At the same time, GNP and NNP fail to discount from
national income accounts  the  environmental  costs of
production and disposal, or  the depletion  of valuable
natural  capital such as lost cropland and degraded wet-
lands. The Exxon Valdez oil spill, a terrible environmen-
tal disaster, shows up as  a gain in GNP because of all the
goods and services expended  in the clean-up. Without a
realistic measure of national welfare, it  is  difficult to
pursue  policies that promote healthy, sustainable
growth—growth that draws on the  interest on stocks of
renewable natural capital—in place of policies that con-
tribute to  the depletion of the capital itself.
   The effort to develop a more comprehensive measure
of national welfare should be just one part of an overall
national strategy to achieve environmentally sound, sus-
tainable economic growth. Such  a  strategy should be
based on two fundamental premises:
  First, economic growth confers  many benefits, en-
vironmental and  otherwise.  Growth provides jobs,
economic stability, and the opportunity for environmen-
tal and social progress. Only through economic growth
can the people of the world, and especially the poor and
hungry, realize their legitimate aspirations for security
and economic betterment. And second, not all growth
is "good" growth.  What  the world needs  is  healthy,
sustainable,  "green" growth:  growth informed by the
insights of ecology and wise natural resource manage-
ment, growth guided by what President Bush refers to
as an ethic of "global stewardship."
  At  the recent White House conference  on global
climate  change, the president said,  "Strong economies
allow  nations to  fulfill  the obligations of stewardship.
And environmental stewardship is crucial to sustaining
strong economies....True global stewardship will be
achieved...through more informed,  more efficient, and
cleaner growth."

            A "Good Growth" Strategy
  Good growth means greater emphasis on conserva-
tion, greater efficiency in  resource use, and greater use
of renewables and recycling. Good growth unifies en-
vironmental, social, and economic concerns, and stresses
the responsibility of all individuals to sustain a healthy
relationship with nature.
  Good growth enhances  productivity and international
competitiveness and makes possible a rising standard of
living for everyone, without damaging the environment.
It encourages broader, more integrated, longer-term
policy-making. It anticipates environmental problems
rather than reacting to the crisis of the moment.
  Good growth  recognizes that  increased  production
and consumption are not ends in themselves, but means
Economic expansion provided
the resources  for America's
recent environmental
gains—such as the return  of
fish to Lake Erie.
 to an end—the end being healthier, more secure, more
 humane, and more fulfilling lives for all humanity. Good
 growth is about more than simply refraining from inflict-
 ing harm on  natural systems. It has an ethical,  even
 spiritual dimension. Having more, using more, does not
 in the final scheme of things equate to being more.
   Good growth can illuminate the path to a sustainable
 society—a society in which we fulfill our ethical obliga-
 tions to be good stewards of the planet and responsible
 trustees of our legacy to future generations.         I

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Letters from
Readers
and
Administrator
Reilly's
Response
--Winter 1990
  Public Choice on "Good"
           Growth

Dear Sir:
  It was not long ago that virtually
all environmental policy discussions
were cast in  terms of  economic
growth versus the environment.
Government was viewed as the sole
protector of ecology. This paradigm
was shared by Republicans and
Democrats alike.  Even the Reagan
administration, while  enacting dif-
ferent governmental  policies,  was
largely influenced by this view and
offered no consistent, fundamental-
ly different alternative. However,
limitations  of this traditional ap-
proach are increasingly obvious. It is
therefore essential that we  incor-
porate markets and property rights
into environmental policy. To that
extent, it was refreshing to read Wil-
liam K. Reilly's article The Green
Thumb of Capitalism" (Fall  1990)
with  its  reference to markets,
economic growth,  and ecological
harmony. As Environmental Protec-
tion Agency administrator, he is in
an important position to develop
and test new paradigms. However, I
hope this is  only the beginning and
that he will  push harder, refine his
model, and resolve certain am-
biguities and internal  inconsisten-
cies.
    What Are Markets Anyway?
  Mr.  Reilly's  article suffers from
ambiguity about just what markets
are and  how they work.  Implicit
throughout the article is the assump-
tion that properly "motivated"
markets will wisely exercise sufficient
knowledge to channel resources and
dollars to environmentally desirable
goals. This  of course rests on the
assumption  that adequate informa-
tion will be available to market
motivators to enable them to make
the right choices. However, informa-
tion is inherently costly and diffuse,
rendering it virtually impossible for
these  market motivators to  make
anything  close  to a consistently in-
formed decision, even if armed with
Mr. Reilly's "new realistic measure of
national welfare." Markets, on the
other  hand, deal with information
problems very directly through pric-
ing, and reflect  the countless
decisions consumers and producers
make throughout  an  interdepen-
dent economy. By their very nature,
markets  are not  static.  In  their
resilience lies the greatest hope for
the kind of technological adapta-
tions that Mr. Reilly applauds.
  Mr.  Reilly's failure to recognize
the information problem is exacer-
bated exponentially by the failure to
address the  public choice problems
that plague his approach.  Simply
put, who will decide what is  "good
growth" as he describes it? Who will
reconcile competing environmen-
tal, social, and economic concerns
while anticipating environmental
problems rather than reacting to the
crisis of the  moment7 Is it conceiv-
able that the bureaucratic regulatory
and enforcement apparatus neces-
sary for such ecologically directed
economic policy would be immune
from rent-seeking, budget-maximiz-
ing, inefficiency, and coercion? If so,
it would be a unique experience in
all of public choice scholarship. If
not, then it is incumbent upon Mr.
Reilly to recognize  and address is-
sues that could profoundly affect his
proposal.
  Forging  new environmental
policy that takes advantage of what
markets and property rights have to
offer is a difficult challenge.  Mem-
bers of the environmental and free-
market communities  must work
through each other's legitimate con-
cerns and recommendations. It will
take a great deal more debate and
discussion, which I hope Mr. Reilly's
article will foster.
            William H.Mellorm
                      President
         Pacific Research Institute
               San Francisco, CA

  The Incredible Expanding
             EPA

Dear Sir:
  William K, Reilly comes not to
praise capitalism, but to bury it In
his recent article "The Green
Thumb of Capitalism," EPA Ad-
ministrator Reilly demonstrates that
he is one of the smoothest political
operators in  the Republican Party.
He can implement the most ex-
treme  forms of centralized  com-
mand-and-control  regulations and
still coo  that he believes in free
markets. He can  argue  'that he

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believes in private property rights
even as he works behind the scenes
to weaken the Fifth Amendment's
prohibition against uncompensated
governmental takings of property.
He can state his support for a strong
economy even as he pushes for bil-
lions of dollars in unnecessary costs
for industry under the new Clean Air
Act amendments.
  The Environmental  Protection
Agency that Bill  Reilly heads is ag-
gressively  seeking to establish itself
as coordinator of a new  National
Industrial Policy. Reilly's attitude is
that of most  "moderate" Repub-
licans: central control of the
economy is acceptable so  long as I
am at  the center.
  The 20-year recipe for the EPA is
a stew  of occasional successes, heavi-
ly seasoned by major failures and the
excessive  costs of overregulation.
The trends toward  environmental
improvement—whether air, water,
or habitat quality—have not ac-
celerated since the EPA was created
and huge sums have been wasted.
Consider just a few examples. The
EPA asbestos program has increased
pletely ban asbestos anyway.
          Alar Hype
  EPA's methods for testing the
cancer-causing potential  of trace
chemicals in  the environment are
worse than useless. They actually
panic citizens into  unhealthy be-
havior. Consider EPA's capitulation
to the absurd propaganda from radi-
cal environmentalists about a cancer
risk  to  children from residual
amounts of Alar on apples. Despite
the evidence, EPA banned Alar.
  EPA's "devotion" to private
property rights is revealed by its ef-
forts to redefine "wetlands" so'as to
place millions of acres of (dry!)
farms and  ranches under its
bureaucratic thumb. Similarly, Reil-
ly personally  opposes passage of a
bill by Senator Steve Symms of Idaho
that is nothing more than a reitera-
tion  of every citizen's rights under
the Fifth Amendment to the Con-
stitution. Before he joined EPA, Reil-
ly called the Fifth Amendment's
protection of private property rights
an 18th-century anachronism.
  Reilly's   EPA  consistently
downplays the sunk costs of existing
     Who  will decide what is "good
growth" as  Reilly describes it? Who will
reconcile competing environmental,
social,  and  economic concerns while
anticipating environmental problems
rather  than reacting to the crisis of the
moment?
                           —William H.  Mellor III
the previously tiny risk to children
and teachers in  school buildings
with asbestos removal activities. The
asbestos program developed by EPA
would cost more than $150 billion
to implement—about the cost of the
savings and loan debacle. With such
astronomical costs threatening to
bankrupt most of the school systems
in America, Reilly announced that
the past several years of EPA asbes-
tos-bashing were misinterpreted by
an overreacting public. But despite
the  evidence, EPA plans  to corn-
equipment  and demands installa-
tion of the latest technology. He
would  mandate specific levels of
energy efficiency in every light bulb,
appliance, automobile, and  utility.
Reilly insists that the  savings are
universal, yet for some reason they
would not be  adopted without
federal coercion.
   The EPA has become more effec-
tive at expanding its  bureaucratic
turf than at protecting either the
environment or public health. Reilly
misses no opportunity to enlarge the

              8
federal estate at the expense of the
economy and the tax-paying  con-
sumer. In William Reilly's environ-
mentalism the only safe jobs are
those of the federal regulators. The
best thing that can be said about Bill
Reilly  is  that, like the president he
so closely resembles, he will be a
one-termer.
                   Kent Jeffreys
  Director of Environmental Studies
   Competitive Enterprise Institute
                Washington, DC

   EPA-Induced Asceticism

Dear Sir:
  William K. Reilly, in an attempt
to assuage conservatives' concerns
over his management  of environ-
mental policy,  has hailed biotech-
nology and quoted SL  Francis of
Assisi  to prove that he champions
capitalist solutions to pollution
problems and practices gentle
stewardship  over our earthly
dominion. The Bush adminis-
tration's actual handling of environ-
mental  issues, however, justifies
conservatives' anxiety.
  Ignoring the conclusions of the
$530-million, 10-year-long National
Acid  Precipitation Assessment
Project (NAPAP), the White House
and EPA have acceded to  liberal
Democrats' demands that scrubbers
be used on aging Midwest coal-fired
power plants. This antiquated tech-
nology reduces airborne particu-
lates, but produces tons of sludge for
disposal. Had Mr. Reilly and Mr.
Bush supported sensible, scientific
findings on acid rain,  they could
have championed giving utility com-
panies 10 additional years to comply
with stricter air standards, so  that
aging, dirty power plants could be
replaced with systems featuring
modern, clean-burn  technologies.
By caving in to demands for earlier
compliance, Mr. Reilly and Mr. Bush
will cost some 15,000 workers in the
Midwest their jobs  and force
Ohioans and others to pay substan-
tially  higher  rates to heat their
homes.
   In recent times, Mr. Reilly's EPA
has threatened  my community,
Colorado Springs, with heavy fines
because of the quality of our Foun-
tain Creek, a waterway whose level
of pollution  amounts to,  in the

-------
words of one local commentator, a
teaspoon of ammonia in a bathtub
full of water. The EPA also ordered
officials in Pocatello, Idaho to rip up
all of the city's sidewalks because the
concrete    emits   hazardous
materials—which may cause risk to
an individual pedestrian if he stands
in one place for 24 hours. Un-
suspecting  landowners  in Virginia
and Pennsylvania have been slapped
with lawsuits by the EPA for improv-
ing their property in areas that Mr.
Reilly's henchmen have declared to
be  wetlands, even though  the
regions contain no water, no reeds,
no waterfowl.
  The Resolution Trust Corpora-
tion,  thanks to   Mr. Reilly's
bureaucrats, must insure that each
property it tries to  sell is environ-
mentally   pristine.   Excessive
capitalization standards and falling
real  estate values,  it seems, are not
the  only  obstacles to  federal
recovery  from the savings and loan
crisis. Banks and insurance  com-
panies may now be held liable by the
EPA for any environmental hazards
that are  discovered  on  properties
that have come into their possession
only by default
   If Mr. Reilly's EPA continues its
current practices,  we all may  soon
seek comfort from St. Bernard and
Si. Francis to learn what happiness
may be attained by living a life of
poverty.
               Susan K Connelly
             Colorado Springs, CO

  A Wolf in Sheep's Clothing

Dear Sir:
   Administrator  Reilly, who  in  a
previous incarnation  attacked
"mainstream attitudes about private
property and freedom of action,"
finds no friends here in the West,
notwithstanding his new-found faith
in the free-market system. We who
are used to dealing with predators
can  see, beneath the sheep's cloth-
ing he creatively labels "sustainable
growth," his unchanged and w< 'ilish
lust  for federal government power.
For  us, Mr.  Reilly's actions and the
actions of his agency speak louder
than his words.
   This is the same  Mr.  Reilly who
within days of taking office heeded
demands of national environmental
groups and announced he would
veto a vital water project for north-
ern Colorado. The project to build
a dam and a reservoir was a coopera-
tive effort by 40 local governments—
no  federal or state money was  in-
volved—in which those govern-
ments  spent  $47 million  studying
the project. They agreed to $90 mil-
lion in "mitigation" measures—in-
cluding a three-fold increase in wet-
lands. Mr. Reilly said he would veto
the project, and then set about to
find a reason. Mr. Reilly determined
that northern Colorado—where
average annual rainfall is less than
15 inches—does not need the water
project The EPA solution: buy water
from farmers in northern Colorado,
essentially  dewatering the region
and yielding a dramatic loss in wet-
lands.
   Meanwhile, in  the  guise  of
protecting "wetlands," Mr.  Reilly
and his agency  have sought to
punish those who use their  land.
Here  in Colorado, Mr. Reilly sued
two elderly brothers who shored up
an  existing levee  that for 50  years
had kept the adjoining Roaring Fork
River  in  its historic channel. The
brothers' action was necessary be-
cause during spring runoff the Roar-
ing Fork had flooded 40 acres of
their ranch, washing away five feet
of precious top soil  over a two-acre
area. Mr. Reilly's EPA is seeking $35
million in fines against the brothers
for doing what the law permits them
to do—protect their land.
   Mr. Reilly's call for "sustainable
growth"  i- especially frightening.
Who determines what is "sustainable
growth"? The agenda beneath Mr.
Reilly's  free-market-sounding
rhetoric is for even more govern-
ment control. Anyone who has run
the gauntlet of the National En-
vironment  Policy  Act (NEPA), En-
dangered Species  Act, and Clear
Water Act (especially §404) must be
in a state of apoplexy  over  the
prospect of proving to the EPA that
the growth to result from a proposed
action is "sustainable."
   Mr. Reilly—who attacks constitu-
tionally protected  property rights
and consistently advocates more and
more government  regulation—has
not suddenly become an advocate of
the free-enterprise system and a
proponent of less government
regulation. He is merely cloaking his
call for ever-increasing government
regulation in rhetoric with which he
hopes to appeal to  us conservatives.
            William Perry Pendley
  President and Chief Legal Officer
 Mountain States Legal Foundation
                     Denver, CO

     Sustainable Decline

Dear Sir:
   Mr. Reilly shows acuity in his ob-
servation that centrally planned,
Soviet-style economies are devastat-
ing to  the environment,  but his
myopia is evident in his inability to
see the  same tendency to "central
control" within his own Environ-
mental Protection Agency.
   Although he correctly observes
the   lack  of  environmental
stewardship in controlled socialist
economies, he fails to explain why.
The  citizenry  of Eastern  Europe,
struggling with financial survival, is
not inclined  to consider environ-
mental cleanup a priority. Industries
seeking  to function under stifling
government control lack the profit
incentive and the capital  for re-
search and development of innova-
tive technologies that lead to greater
efficiency in the  use of natural
resources. Expenditures for environ-
mental improvement are found at
the bottom of budget listings in
governments  that  are functioning
near the ragged edge  of economic
collapse.
   Let this be  a lesson to us, and
particularly to Mr. Reilly.
   Total  expenditures for environ-
mental programs and regulations at
all levels of government  in  the
United States today stand at $141.2
billion, or 2.6 percent of our annual
GNP. Expenditures per American
household for  environmental

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cleanup  are now  estimated to be
$2,025 a year.
  With recent increases that come
in the face of an untouched deficit
and a slowing economy, the trick
lives and money? The cost of asbes-
tos removal, estimated at $150  to
$200 billion, rivals the savings and
loan bailout. This, though  Sir
Richard Doll of Oxford University,
    Had Mr. Reilly and Mr. Bush
supported sensible, scientific findings
on acid rain,  they could have given
utility  companies  10 additional years to
comply with stricter air standards.  By
caving in to demands  for earlier
compliance, Mr. Reilly and Mr.  Bush
will cost some 15,000  workers  in the
Midwest their jobs.
                               —Susan K. Connelly
becomes, how to keep the economy
growing so that there will continue
to be sufficient funds for environ-
mental  housekeeping.
   Somehow it is hard to be con-
vinced by Mr. Reilly's words of warn-
ing about the ill effects of central
control while he heads a massive
federal  agency comfortable in the
role of overall environmental
authority.
   Is this the same Mr. Reilly who
supports the president's plan for
government to plant a billion trees
in the next 10 years while it increas-
ingly ties the hands of the U.S. tim-
ber industry (which has  more real
interest in sound  forest manage-
ment than has  government)? The
Reilly who applauds the reallocation
of $250 million for the Land and
Water Conservation Fund as well as
delays in issuing offshore oil drilling
leases  in California and Florida,
even though this means a half a
billion dollars' loss in federal
revenues?
   Need for Science, Not Politics
   Is this the same Mr. Reilly who, in
a  speech  before  the  American
Enterprise Institute last August, ad-
mitted  that much  of his agency's
work with asbestos was, at best, rid-
dled with errors and had proved un-
necessarily expensive in terms of
the world's leading epidemiologist,
compared the risk from asbestos in
buildings to smoking one-half a
cigarette in a lifetime.
   Mr. Reilly frets that up to half the
wetlands  that  existed  when
European settlers landed here are
now  gone. Obviously, many were
filled to build homes and factories
on solid ground while others were
filled to reduce the devastation of
insect-borne disease such as en-
cephalitis and  malaria.  Does he
propose dial we revert back in time
and health?
   Sustainable growth has all  the
resounding ring of the "C" word,
"control." Like  sustainable agricul-
ture, which raises the price of food
and reduces the health effects of
good diet, sustainable growth means
no rise in the very GNP Mr. Reilly
claims he needs to get the environ-
mental job done.
            Barbara Keating-Edh
                     President
                 Consumer Alert
                   Modesto, CA

     More Than Advocacy

Dear Sir:
   I am sure your readers were im-
pressed by the sensible views of EPA
Administrator William K. Reilly in

            10
the Fall 1990 issue. Reilly persuasive-
ly  argued  that economic growth
leads to greater protection of the
environment
   Lest your readers think that the
EPA is actually sympathetic to busi-
ness, however,  they might like to
know about the talk that Reilly gave
before  the National P.ress Club at
about the time your issue reached
your readers. It tells a different story.
   Ostensibly, the purpose of the
speech was to introduce a new initia-
tive to base environmental priorities
more  on  science. However,
throughout most of the speech, Reil-
ly  emphasized the need for more
regulation, more enforcement, and
more pressure on business.
   For example, Reilly lauded the
Clean Air Act's acid rain provisions,
and even called them "cost effec-
tive." This differs from the assess-
ment  of many analysts, including
Brookings economist Robert Cran-
dall, who wrote recently in Journal of
Regulation and Social Costs that "Con-
gress is opting for a policy that costs
hundreds  of times more than a
simple solution which would have a
much more immediate effect on the
acidity of northeastern lakes and
streams." Reilly also praised the
toxic-air emission initiative of the
act, even though that has been
roundly criticized, too. Frederick H.
Rueter and Wilbur A. Steger say that
even if hazardous air pollutants were
totally  eliminated from major in-
dustrial sources (and that is not con-
sidered possible), the annual in-
cidence of cancer would be reduced
only  minimally, by between 0.035
percent and 0.055 percent
     Command and Control
   Reilly cited many regulatory ac-
tions during his watch: phasing out
asbestos use, reducing exposure to
benzene, proposing the cancellation
of most uses of the pesticide EBDC,
and  regulating the volatility of
gasoline, among others. Whatever
the merits of these activities, they are
part of the "command and control"
approach to  environmental  policy
that  stifles economic growth  and
directs entrepreneurship into fre-
quently non-productive areas. And
in case anyone thinks that regula-
tion will diminish, he noted that he
was seeking a 12 percent increase in
the EPA's operating fund, and has

-------
already added almost 2,000 staff. In
fact, EPA recently received a 9 per-
cent increase in funding.
   Superfund is perhaps the EPA's
most heavily criticized program,
even by environmentalists. Congress
has created this $10 billion fund
from an industry tax, yet the EPA
can't use it effectively to clean up
more than a few sites. Now Reilly has
announced an "enforcement first"
priority that is going to  use the
powers of the law to force companies
to take action.
   Enforcement of  the law is ap-
propriate, of course, but the flaws of
Superfund are egregious, and the
liability aspects of the law are among
its most unfair. As Reilly's chief en-
forcement officer, James Strock, has
written in  the pages of Policy Review
(Summer 1988), any single disposer
of hazardous substances may be held
responsible for  the  cleanup of an
entire  site, "irrespective of fault,
causal link to the  environmental
harm in question, or the number of
additional parties who also may have
contributed to the site in question,
or the fact that the disposal at issue
occurred prior to the passage of Su-
perfund (perhaps  even in com-
pliance with then-existing require-
ments)."  Is hounding  business
under these provisions the proper
foundation of EPA policy?
   Near the end of the speech, Reilly
advocated recycling 25 percent of all
solid waste by 1992. Completely con-
tradicting his earlier statement that
he  wants  "sound  science" to help
establish priorities, he latched on to
the popular notion  that waste
should be recycled  rather than in-
cinerated or placed  in landfills. Ex-
perts know that  the "solid waste
crisis" is largely  a myth,  and that
recycling, while it has a place, is not
inherently better or even  always
more environmentally benign than
other ways  of dealing with waste.
And when it's the EPA administrator
talking, "advocacy" means more
than  talk—he promised to push
recycling  through"proposed rules
on municipal waste combustors and
other initiatives," that is, more com-
mand and control.
                     Jane S. Shaw
                 Senior Associate
 Political Economy Research Center
                    Bozeman, MT
    Free Markets Know Best

Dear Sir:
  William K. Reilly is quite right to
point out that a healthy  environ-
ment and a healthy  economy go
hand in hand. But he misses the
mark when he premises his environ-
mental policy on sustainable growth,
that is, "growth consistent with the
needs and constraints of nature."
This goal entails securing "the link
between  environmental  and
economic policies at all levels of
government and in all sectors of the
economy."  Such governmental
securing, however, is likely to come
at  tremendous  costs  to  the
economy—costs that detract  from
the health of the environment
  U.S. environmental policy  is al-
ready based  on the  command-and-
control approach. We don't  need
more of it under the guise of sus-
tainable  growth.  The government
typically requires specific solutions
to environmental problems, giving
polluters little leeway or incentive to
find 'more appropriate ways. The
Clean Air Act, for example, requires
utilities  to install scrubbers  on
smokestacks to reduce sulfur emis-
sions, even though scrubbers are lar-
gely ineffective. By  requiring a
specific "fix,"  the  utilities had  no
incentive to  devise  more  ap-
propriate technology.  In fact, they
are hindered from doing so. Why
invest money in developing alterna-
tives when the law simply requires
scrubbers?
   Reilly puts great faith in the mar-
vels  of  technology largely  in
response to  the advances  in
bioremediation demonstrated in the
Exxon Valdez. cleanup. He says  he
has urged biotechnology companies
to give a high priority to developing
other environmental  applications.
Urging, however, will  likely go un-
heeded as long as existing regula-
tions stifle incentives for action.
Public relations comprise the prime
motivation for companies  to invest
in environmental technology so they
can advertise themselves as "green."
We need to  create incentives for
companies to invest  in pollution
mitigation technology as a routine
part of doing business and eliminate
incentives that hinder such invest-
ments. For example, under Super-
fund  regulations, anyone  who has
ever been remotely involved with a
toxic site can be required to pay the
entire cleanup costs. These  costs can
be assessed on the company's ability
to pay, rather than the volume or
toxicity of their waste contribution.
In contrast, if companies are re-
quired to be responsible for their
actual contribution, there would be
greater incentive  to  develop and
adopt the least-polluting approach.
          A Simple Fix
  Reilly also relies on technological
developments to provide an infor-
mation base to respond appropriate-
ly to environmental problems. Such
technology already exists and it is a
relatively simple  fix—the  market
We can foster markets if we allow
natural and environmental resour-
ces, such as wildlife, to be  privately
owned.  In  freely  functioning
markets, prices  reflect changing
resource scarcity. When resources
become more scarce, their prices go
up. Whey they become more abun-
dant, prices go down. These changes
occur gradually, giving people abun-
dant time to  respond appropriate-
ly—all without  sophisticated  tech-
nology. Unfortunately, technology is
often used when markets  could
achieve better results  at much less
cost.  For example, in water-short
California, local  officials are using
expensive mapping technologies to
pinpoint people who are using more
than their  share of water. Ap-
propriate water  pricing would be
more efficient If people had to pay
the value of water, we'd see fewer
water-loving crops, such as alfalfa,
and fewer fields flooded with stand-
ing water.
   Reilly has made an important
                                                  11

-------
contribution in pointing out that
economic growth can provide the
wealth for investing in environmen-
tal protection.  Instead of trying  to
harness and regulate that growth by
pursuing the vague concept of "sus-
tainable  growth," however,  he
should recognize and promote the
value of the free market for its ability
to fuel both strong economies and
healthy environmental stewardship.
                       Jo Kwong
          Director of Public Affairs
          Atlas Economic Research
                     Foundation
                      Fairfax, VA

  Environment for Everyone

Dear Sir:
   It  is  disheartening  to read
ideological cliche rather than ration-
ally consistent policy in a statement
by the nation's chief environmental
policymaker.
   Interestingly,  like many  writers
for Policy Review, Mr. Reilty shares
with the Marxists they revile empiri-
cally aberrant  economic  deter-
minism that prevents fruitful agency
initiative.  Their  sequence  of
ecologic  causation opposes  reality.
As Reilly notes in one inconsistent
moment of clarity,  good environ-
mental   policy  enables   good
economic policy, not vice versa.
   Reilly  sees a correlation between
rising income (via  his brand  of
economic determinism) and en-
vironmental concern.
          Union Support
   However, the World Resource In-
stitute points  to a poll taken  in
developing countries demonstrating
wide-spread concern  about the
quality of the  environment Large
majorities believe that their environ-
ments became worse in the past
decade  and that stronger action
should  be taken by government
EPA's own polls show the high con-
cerns found among American
workers, especially union workers.
And a study I  conducted (with Ido
deGroot) many years ago in Erie
County,  New York, found that the
perception of air pollution decreased
with rising socioeconomic status.
   The largest single voice for our
system of national parks was the CIO
 (Congress of  Industrial Organiza-
tions). The first national organiza-
tion  to call a national meeting in
defense  of  the air  we must all
breathe was the United Steehvorkers
of America.  The  countries whose
governments are most militant on
issues of the environment are the
socialist countries of Scandinavia.
   "Environment" is an issue for all
the people, and the wisdom of the
people is not a captive of ideology.
              Sheldon W. Samuels
      Industrial Union Department
                       AFL-CIO
                 Washington, DC

William K. Reilly replies:
   In my September 26 speech to the
National Press Club, to which two of
your writers refer, I called for  a
"robust national dialogue" on the
nation's environmental agenda. It's
encouraging to see  this kind of
dialogue taking place in the pages
of Policy Review.
   It seems to me that most of the
commentary on my article, while dis-
cussing a wide range of specific is-
sues ranging from asbestos to Super-
fund to wetlands protection,  sug-
gests a need for more objective, ra-
tional standards against which the
nation's pursuit of its environmental
goals can be measured.
   The American  people, through
their support of environmental legis-
lation at all levels of government
over the past 20 years, have made  it
clear that  they expect—indeed,
demand—a substantial government
role  in the protection of public
health and safety and the restoration
of environmental quality. Thus the
EPA's establishment and expansion
is less an exercise in bureaucratic
empire-building than  a reflection of
the growth of those public expecta-
tions over the last two decades.
        Sound Governance
   Government clearly has a respon-
sibility to carry out the public's en-
vironmental commitments—but
sound governance also imposes an
obligation to do so  in a way that
minimizes intrusions into the private
sector, assures cost-effectiveness  of
environmental expenditures, and
reduces any negative  impact on the
nation's  economic health. As Wil-
liam Mellor points out, 50771* trade-
offs  among environmental, social,
and  economic goals  are inevitable.
In making these trade-offs, govern-
ment must strive to strike the right
chord—protecting human  health
and the environment on one hand,
and  ensuring sound,  sustainable
economic growth on the other. That
is the kind of balance the Bush ad-
ministration insisted upon in  its
negotiations with Congress on the
Clean Air Act, and it will continue
to be the guiding principle for our
environmental proposals.
  The EPA fully  recognizes  the
need to  reconcile environmental
protection and economic growth.
Far from  plotting  to "control the
economy" or to devise a centralized
National Industrial Policy (an amus-
ing notion,..even if we wanted  to,
such a scheme is far beyond any-
thing we're capable of pulling off),
the agency has been devoting much
of its creative energy in recent years
to developing flexible, cost-effective
new  programs to  address the  in-
creasingly complex environmental
problems of the 1990s.  These
problems, whose sources are often
smaller in scale, more  widespread
and  diffuse than the industrial or
municipal facilities targeted in the
first round of environmental legisla-
tion, include acid rain, urban smog
and  other ambient air pollution;
municipal and hazardous wastes;
toxic substances in the air and water;
pollution of streams,  lakes,  and
groundwater from agricultural and
urban  runoff;  drinking water  con-
tamination; ecological concerns
such as  habitat alteration  and
destruction, species extinction, and
loss of genetic diversity; and global
atmospheric  disruptions:  ozone
depletion and  climate change.
  To  come  to  grips  with these
vexing problems, the  nation's en-
vironmental policies are evolving in
three fundamental ways:
      Harnessing the Market
   1) From a traditional reliance on
prescriptive, command-and-control
regulations to  a much stronger em-
phasis  on the  use of economic  in-
centives  and market  forces  to
achieve environmental  gains  (the
emissions-trading provision of the
new Clean Air Act is an example).
The command-and-control  ap-
proach has accomplished a great
deal in cleaning up the most obvious
and  dangerous sources of pollution;
and regulatory  controls will con-
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tinue to play an important role in
environmental protection, correct-
ing for the inability of unregulated
markets to account for the environ-
mental costs of energy extraction
and use and the disposal of in-
dustrial products. But we now recog-
nize that by themselves, technology-
based regulations are no longer suf-
ficient to get the job done. They are
of limited value in dealing with pol-
lution from  small, widely scattered
sources. And in some cases,  as Jo
Kwong rightly notes, they can be
counterproductive—inhibiting in-
novation or discouraging regulated
industries from going beyond mini-
mum legal requirements. Tradition-
al regulation and enforcement must
be  supplemented  with  flexible
programs that can harness  the
power of the marketplace on behalf
of the environment.
   Nipping Pollution in the Bud
   2)  From  ex post facto efforts to
control and  clean up waste  to a
strong thrust toward preventing pol-
lution before it becomes a problem.
Examples include the voluntary ef-
forts by nine major petrochemical
manufacturers, undertaken last year
at EPA's urging, to reduce toxic air
emissions substantially through
process changes and materials sub-
stitution; and a similar toxic reduc-
tion initiative now being pursued
with  emitters of  17 especially
troublesome chemicals nationwide.
     Appropriate Intervention
   3) From narrowly focused, single-
medium (air, water, land) pollution
control   toward  coordinated
programs that view all environmen-
tal media as a whole, seeking out the
most  appropriate points  and
methods of intervention to protect
natural systems and to reduce over-
all  exposures to  toxic substances
from  all sources and routes of ex-
posure. Two contaminants, dioxin
and lead,  along with serious pollu-
tion problems in the Great Lakes,
are being addressed through  this
multi-media "cluster" approach.
   The impetus for  these new ap-
proaches is  a firm  belief that en-
vironmental policy should, with the
resources available, achieve  the
greatest possible reductions in
risk—risk both to human health and
to the integrity of productive natural
systems. As I said in my speech to
the National Press Club in Septem-
ber, risk is a common metric that
can help us distinguish'the environ-
mental  heart attacks and broken
bones from indigestion or bruises.
Comparative risk assessment is one
of the best indicators we have  of
where we should be directing our
resources.
   I say this knowing full well that
environmental risk  assessment
remains an inexact science at best,
one that must incorporate a great
deal of uncertainty. Rarely do we
have enough information, to make
unequivocal, unambiguous deci-
sions about risk. Most of our con-
clusions about human health risks,
for example, are based on debatable
assumptions and projections, which
may or may not accurately predict
human health effects. But while we
often do not have the kind of scien-
tific data we would like, we also do
not have the luxury of waiting for
this  data to arrive before we take
action. Based on what we do know,
the  EPA must, and will, take a
cautious, protective approach until
we are convinced of lesser risk as we
learn more about the effects of toxic
substances on human  cells and
ecosystems and the mechanisms  by
which harm is caused.
          Risk Science
   As scientific knowledge advances,
the EPA is constantly updating  its
risk assessments; we are insisting that
they be subjected to rigorous inter-
nal and external peer review; and we
are looking for ways to achieve
greater consistency in our use of risk
assessments across the range of EPA
decisionmaking. Furthermore,  as
the science of risk evolves, we also
have an obligation to share this new
information with  the  public.  The
public has the right to know which
risks are regarded as serious by the
government, and which are not, and
why.
   Greater reliance on science, then,
can help the EPA, the Congress, and
the public to establish priorities and
allocate resources based on risk. Ob-
viously other important  factors  go
into setting our priorities—public
values and perceptions,  economic
issues—but  rigorous  science
remains our most reliable compass
in a turbulent sea of environmental
policy.  Science can lend  much-
needed coherence, order, and in-
tegrity to the often costly and con-
troversial  decisions that must be
made.
   Economic prosperity and growth
are essential  to meet the  political
and social challenges of the 1990s;
and so is continued environmental
progress. As George C. Eads, chief
economist for General Motors,
wrote  in a recent paper on sus-
tainable development* To be suc-
cessful, (environmental) improve-
ments  must...keep  pace  with
...economic growth. The environ-
mental progress of one decade or
generation must provide a basis for
further  progress  in  the next"  I
couldn't agree more.

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