Criteria for Evaluating Environmental Policies

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Criteria for Evaluating Environmental Policies

• Field, chapter 9

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Policy Criteria

• In evaluating the effectiveness and
  appropriateness of a policy for addressing a
  given problem in environmental pollution control,
  it is important to have clearly in mind a set of
  policy evaluation criteria.

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List

• Their ability to achieve efficient and
  cost-effective reductions in pollution.
• Their fairness.
• The incentives they offer to people to search for
  better solutions.
• Their enforceability.
• The extent to which they agree with certain moral
  precepts.

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EFFICIENCY

• An efficient policy is where marginal abatement
  costs and marginal damages are equal.
• One way of thinking about environmental policies
  is along a continuum from centralized to
  decentralized.
• A centralized policy requires that some control
  administrative agency be responsible for
  determining what is to be done.

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Measurement

• To achieve efficiency in a centralized policy,
  the regulatory agency in charge must have
  knowledge of the relevant marginal abatement cost
  and marginal damage functions, then take steps to
  move the situation to the point where they are
  equal.
• It is often the case that environmental damages
  cannot be measured accurately.

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Cost Effectiveness

• Measurement issues makes it useful to employ
  cost-effectiveness as a primary policy criterion.
  
• A policy is cost-effective if it produces the
  maximum environmental improvement possible for
  the resources being expended or, equivalently, it
  achieves a given amount of environmental
  improvement at the least possible cost.
• For a policy to be efficient it must be
  cost-effective, but not necessarily vice versa.

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Less Abatement than Desired

• If programs are not cost-effective,
  administrators will tend to set less restrictive
  targets in terms of desired amounts of emission
  reductions.
• The real problem with having costs higher than
  they need to be is that society will be inclined
  to set its objectives too low in terms of the
  amount of emission reduction sought.

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FAIRNESS

• Equity is, first and foremost, a matter of
  morality and the concerns about how the benefits
  and costs of environmental improvements ought to
  be distributed among members of society.
• It has to be recognized that there is no
  agreement on how much weight should be put on the
  two objectives efficiency and distribution.

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Environmental Justice

• The concern is that racial minorities and
  low-income people are disproportionately exposed
  to environmental contaminants, both those outside
  the home such as air and water pollution and
  those within the home and workplace such as lead.
• Its possible that low-income households locate
  close to hazardous waste sites because property
  values are lower.

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INCENTIVES FOR LONG-RUN IMPROVEMENTS

• It is firms and consumers whose decisions
  actually determine the range and extent of
  environmental impacts.
• The incentives facing these private parties
  determine how and where these impacts will be
  reduced.
• Do environmental policies provide strong
  incentives for individuals and groups to find
  new, innovative ways of reducing their impacts on
  the environment?

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Incentives for RD

• Shifting downward the marginal abatement cost
  function makes it cheaper to secure reductions in
  emissions, because this will justify higher
  levels of environmental quality.

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ENFORCEABILITY

• There perhaps is a natural tendency among people
  to think that enacting a law automatically leads
  to the rectification of the problem to which it
  is addressed.
• Among the environmental community this tendency
  is depressingly strong.
• Enforcement requires energy and resources.
• There will always be people whose interests lie
  in not having environmental policies enforced.

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Compliance

• The GAO once surveyed a large number of major
  wastewater dischargers in the country.
• They found that a substantial fraction (more than
  one-third) of the sources were not in compliance.
• RFF surveyed state enforcement agencies to
  determine common practices and costs associated
  with enforcing pollution-control regulations.
• A widespread practice is for agencies to require
  self-reporting of emissions by firms.

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Enforcement

• There are two main steps in enforcement
• Monitoring refers to measuring the performance in
  comparison to whatever requirements are set out
  in the relevant law.
• Sanctioning refers to the task of bringing to
  justice those whom monitoring has shown to be in
  violation of the law.
• Authorities often seek to achieve voluntary
  compliance encouraging violators to remedy the
  situation w/o penalty.

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Paradox

• One might think that the greater the
  sanctionshigher fines, long jail terms for
  violators, and so onthe more the law would deter
  violators.
• But the higher the penalties, the more reluctant
  courts may be to apply them.
• The threat to close down violators, or even to
  levy stiff financial penalties, can in turn
  threaten the economic livelihoods of large
  numbers of people.

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 MORAL CONSIDERATIONS

• The innate feelings that people have about what
  is right and wrong affect the way they look at
  different environmental policies.
• Take, for example, the question of choosing
  between effluent taxes and effluent subsidies.
• Subsidies may be more effective.
• Some people regard polluting behavior as
  essentially immoral.
• Those who cause a problem ought to bear the major
  burden of alleviating it.

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GOVERNMENT FAILURE

• Government failure means that it cannot simply be
  assumed that each and every attempt at public
  environmental policy will make the situation
  better.
• Government failure refers to systematic
  tendencies and incentives within legislatures and
  regulating agencies that work against the
  attainment of efficient and equitable public
  policy.
• Outcomes in the political process may not
  resemble informed, rational public policy that
  advances the welfare of society.
• The process could make the situation worse in
  some circumstances. (See Anderson, Political
  Environmentalism)

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SUMMARY

• Efficiency and cost-effectiveness
• Equity
• Incentives for long-run innovations
• Enforceability
• Agreement with moral precepts
• Several traditional decentralized approaches, (ch
  10)
• The use of standards, a centralized approach that
  has been the most frequently used historically
  (ch 11)
• Incentive-based policies (chs 12-13)