Environmental safeguards have clearly proven their value over the past few decades, bringing returns on investment as high as 40 to 1. Yet in its recent coverage of U.S. regulations, The Economist chooses to ignore this track record, and instead trot out a host of tired, unsubstantiated industry arguments against regulation. (NRDC chief economist Laurie Johnson has a detailed response to the article's surprising errors in her blog.)
I know "regulation" has become a dirty word in certain circles, and it's disappointing to see The Economist jump on the bandwagon and ignore the full story. History shows us that environmental safeguards can spur innovation that saves thousands of lives, and improves the health of millions of Americans, without any of the dire consequences, and at a fraction of the cost, predicted by industry.
History shows--and The Economist overlooks this fact--that industry typically exaggerates the cost of regulation. We see the pattern time and again. Industry warns of catastrophic consequences (blackouts, high prices, financial ruin, etc.,) that never pan out. The acid rain program, for example, cost a quarter of what the EPA predicted, with allowances trading at about 7 percent of the price industry projected--and without a blip in electric reliability. Refiners claimed it would cost a dollar a gallon to remove lead from gasoline. It ended up costing about a penny. Refrigeration industry representatives testified that refrigerated aisles in supermarkets would shut down if CFCs were removed. Nothing of the sort happened.
This trend continues right up to the present. Industry laggards that had avoided upgrading some of the nation's dirtiest power plants fought the EPA's new mercury and air toxics rule--which is expected to save 11,000 lives and prevent 130,000 asthma attacks and 4,700 heart attacks each year--tooth and nail, citing all the usual arguments. But once the rule was on the books, they suddenly reduced their estimates for compliance.
At the same time, the benefits of regulation are almost always undercounted because they are diffuse, long-term, and involve hard-to-calculate issues such as reduced sickness, increased productivity, and healthier ecosystems that provide clean air, clean water, healthy soil and other benefits.
The most recent report from the Office of Management and Budget (OMB), typically a tough critic of EPA rules, estimated the annual benefits major federal clean air and clean water regulations, from 2000 to 2010, at $82 to $533 billion, with costs of $26 to $29 billion. Any budget-minded congressman should be very happy with those figures.
In my experience working as a lawyer for the State of New York, I've seen my fair share of complex regulations. They're not always perfect. But they are an absolute necessity when it comes to defending our right to clean air and clean water, and protecting the public health.
Without these safeguards, our health is at the mercy of corporate and industrial interests. Disregarding the many benefits of environmental regulation, economic and otherwise, is inaccurate and misleading.