Celebrate Earth Day: Work Hard, Get Paid
Each year, Earth Day provides environmentalists an opportunity to showcase their cause and steel the nation’s resolve to confront an environment in crisis. Tuesday, April 22, marked this year’s Earth Day, with the usual fanfare and litany of environmental disasters. The administration and the Republican Congress are, of course, the villains in this tale. From a war for oil, to the push to exploit the Arctic wilderness, to the failure to ratify the Kyoto Protocol on global warming, they are accused of abandoning the environment in favor of the economy. In reality, this is a false dichotomy; economic growth provides the resources critical for environmental improvement.
The first Earth Day was in 1970 and much of today’s environmental movement harks back to the thinking and strategies of that time. Unbridled capitalism was viewed as the problem, and the solution was government mandates to clean up the environment. Command-and-control regulations were imposed to address concerns over toxic wastes, air quality, water quality, and other environmental issues. The economy was viewed as plagued by “market failures” that threatened the nation’s environmental health. Markets could not take into account the full costs imposed on the environment, nor could they provide public goods, such as the protection of wilderness areas or species. Government regulation and oversight were required to correct these deficits. Since that time, however, much has been learned about the economy and the environment, as well as the limits of command-and-control regulation and the potential for “government failure.”
In fact, a strong link exists between a society’s wealth and environmental quality. Economists have found that as income levels rise, so does the demand for improved environmental quality. It is the developed world, with the wealth to address environmental concerns, that has made the greatest strides toward environmental improvement. Brendan Gillespie of the <a href="http://www.oecd.org/EN/document/0,,EN-document-0-nodirectorate-no-15-9217-0,00.html
“> Organization for Economic Cooperation and Development has found that those transition economies of Eastern Europe making the greatest strides toward market economies were also the transition economies most successful at addressing concerns over pollution.
Beyond a greater demand by consumers for an improved quality of life, technological advancement has allowed producers to reduce the amount of resources wasted in the production process. The pursuit of profit in an open economy forces producers to economize on scarce resources and produce in the most efficient manner possible. In 1990, for example, soft drink producers used 80 percent less metal to produce a can than they did in 1965, according to professors James Gwartney and Richard Stroup. Advances in plastics, metals, and other technologies have made cars cleaner and more efficient, saving both materials and fuel while improving air quality; emissions from today’s cars are 90 percent lower than cars on the road during the first Earth Day.
Moreover, there is good news on the environment front. While problems remain, the progress cannot be overlooked. Since the first Earth Day in 1970, pollution levels have dropped for every pollutant regulated under the Clean Air Act, despite an increasing population and much larger economy. Water quality is also improving, and forests cover more land in the United States today than they did at the turn of the last century.
The big government solutions demanded by many environmentalists may spark scorn and criticism from the free market community, but concern over environmental quality is something that most Americans share. In this spirit, a new approach has emerged to address environmental issues. Many in the free market tradition, such as Richard Stroup, Bruce Yandle, and Terry Anderson, are identifying ways that market forces and institutions can solve environmental problems. Property rights, the common law, and market forces can all contribute to a healthier environment.
At the same time, an examination of government policies can identify spending and subsidies that damage the environment. Policies must be reviewed to identify any unintended consequences that may pose environmental problems. Government regulation must also be evaluated in light of tools designed to improve the regulatory process. The proper use of cost-benefit analysis and risk assessment, for example, ensures that regulations provide real benefits and address real risks.
Ironically, previous environmental gains make the large, one-size-fits-all regulatory mandates of the past ill suited for today’s environmental challenges. With the largest threats already addressed, chasing smaller and smaller risks requires increased flexibility so that companies can find the least-cost method of compliance. Rather than shoehorn diverse companies and businesses into one solution, this approach harnesses market forces by allowing companies to find innovative ways to reduce pollution. In addition, a better scientific understanding of potential health and safety threats makes certain that scarce resources are allocated to those risks that pose real hazards.
Concerns over the environment should not be abandoned to the collectivist left; environmental quality is a deeply shared value for all Americans. This nation’s bountiful resources and majestic geography have been an allure for generations of Americans. Free market advocates have much to offer (and, indeed, much to take credit for) in the debate over the environment. Market institutions that generate efficiency and create the wealth that allows Americans to invest in the environment should not be overlooked, nor should the real limitations and economic consequences of big government solutions be ignored.
