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
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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
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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
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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-
12
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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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