Environmental Protection and States: "Race to the Bottom" or "Race to the Bottom"? (2023)

When Congress laid the groundwork for current environmental regulation in the early 1970s, the idea that states would necessarily reduce the cost of pollution control and environmental protection to attract business was a powerful argument for national action. When industrial debris caught fire in Cleveland's Cuyahoga River and oil from an offshore explosion devastated the beaches of Santa Barbara in 1969, the incidents became national symbols of a "race to the bottom" in state politics and local.

Recently, this vision has received renewed support. Not long ago, the press gave graphic reports of pig manure flowing down Virginia's Pagan River into the Chesapeake Bay from a factory owned by Smithfield Foods, Inc., the East Coast's largest producer of pork products. Lax enforcement of national water pollution laws "could create 'pollution havens'" and "lead to a shift in manufacturing and jobs that would penalize conscientious states," the New York Times wrote.

But the notion of background is too simplistic to describe the forces that shaped government environmental policies in the 1990s, and it is outdated for three reasons. First, the evidence is now overwhelming that companies rarely decide where to locate or expand based on the strength or weakness of government environmental programs. Second, state policy has been changed so that pollution and conservation issues are more likely to get a fair hearing, regardless of federal action. Finally, and most importantly, the attitude of the public has changed. Today, states compete for prosperity in a rapidly changing economy. After nearly 30 years of government action and scientific advances, government officials, business owners, and voters are finding that some environmental action is helping the race. There is growing evidence that some countries are leaders in economic growth and environmental protection, while others lag behind in both.

Calling attention to these changes is not to deny that state and local governments face tough tradeoffs, that corporations often lobbied to weaken environmental regulations, or that some polluters are still trying to game the system. Hiring inspectors to enforce the law or buying land to protect a watershed is expensive and must compete for limited government funds to improve schools, build roads and pay for Medicaid and welfare. Environmental issues remain contentious because they often trade off jobs for cleaner air or greater environmental protection, and sometimes both offer economic benefits. When the stakes are high, businesses, workers, homeowners, and other groups will fight for their interests. And, of course, there will always be scammers.

Thirty years ago, the assumption that there was a race to the bottom among states when Congress debated the need for a national environmental protection framework was important. This problem is already solved. Both leading Democrats and Republicans agree that federal laws must continue to control air pollution, water pollution and other environmental problems that cross state lines. With most of our daily attention focused on bitter struggles on the fringes of governance, it is easy to forget that in the last three decades we have witnessed an extraordinary event: the successful introduction of a new issue into national politics.

Today, the question of whether governments downplay environmental protection to attract business is important for several reasons. First, we have reached a tipping point in national environmental policy where some rebalancing of federal and state roles is inevitable. Thanks in part to the remarkable success of national legislation in curbing major sources of pollution and promoting conservation in much of the state, public attention is now focused on more intractable problems in Washington. Next-generation environmental policies will address widespread sources of pollution and protection options affecting farms and human settlements, as well as forests and grasslands.

Second, both Democrats and Republicans are calling for new approaches to first-generation environmental problems to give states more flexibility. Frustration with the high cost and rigidity of command and control regulations has led to supplementing these rules with market incentives, negotiated settlements, industry standards, and other techniques that decentralize decision making.

Third, the scope of federal regulation may be too broad. For example, the National Academy of Public Management has suggested that controlling chemical contaminants in drinking water and deciding when, where, and how to dispose of hazardous waste may be a matter for state and local governments.

The current confusion about the capabilities of state governments is costly. Much-needed revisions to three of the legal pillars of national environmental policy — the Superfund, Clean Water, and Endangered Species Acts — will stall in Congress in part because of troubling questions about how the federal and state governments should share powers.

companies have changed

In the 1970s, new time-bound environmental protection requirements suddenly required large unplanned and extremely costly investments for some industries. Today, environmental costs rarely dictate business location, as they have become a relatively small and generally predictable element of business spending. Even in the chemical and oil industries, annual spending on pollution control represents less than 2% of sales. The capital cost of environmental protection varies widely between industries, from 2% of total capital cost for machinery and 3% for electronics to 13% for the chemical industry and 25% for oil and coal. . However, according to executive surveys, these costs, while significant, are typically overshadowed by labor, real estate, transportation, energy, and tax considerations when making relocation decisions. A word of caution though. Sudden changes in pollution regulations can sometimes close individual factories and eliminate jobs. Retrofitting old factories can be extremely expensive, and small or marginal businesses cannot always survive government demands for change.

Empirical evidence confirms that the stringency of government environmental policies generally has little impact on the location of firms. Economists, who find the problem difficult to analyze due to the lack of data on company relocations and the complexity of environmental policies, generally do not find a strong link between the cost of environmental compliance and the location of companies. Studies conducted during the Reagan administration, when national oversight was relaxed, found no evidence that companies moved in search of pollution havens. Also, according to a recent report by the Organization for Economic Co-operation and Development, there is little evidence that international companies are seeking havens for pollution.

Sometimes companies choose to maintain a high environmental standard for reasons unrelated to government law. Investors who were affected by the Rust Belt stock price crash in the 1970s, when companies predicted devastating costs to comply with the first wave of environmental laws, now want to know that companies have new requirements planned. And companies with factories in many locations may find it profitable to adhere to a single set of environmental standards.

states have changed

The states of the 1990s bear little resemblance to the states of the 1960s, and their role in protecting the environment has fundamentally changed. As political entities, they have changed with the growth of professional staff, strong two-party systems, the use of referendums, and initiatives to establish policies and procedures that ensure greater public participation in regulatory decisions.

Many aspects of environmental protection have been integrated into state, local, and national policies. Political scientist Barry Rabe notes in Environmental Protection in the 1990s that about 70 percent of the major environmental laws made by states have little or nothing to do with current national policy, and only about 20 percent of the $ 10 billion for the states now spend annually on the environment and natural resources comes from Washington. State and local governments are responsible for nearly all enforcement of national environmental laws and continue to dominate decisions in areas such as land use and waste management. At times, states have worked together to share the cost of solving a complex problem or to focus pressure to act on the states involved. Lax enforcement still happens, of course, but it's more driven by political interests in the state.

Public attitudes have changed

After all, the idea that states routinely downplay environmental protection to attract business is outdated because we've learned a lot about the benefits and costs of environmental protection in the last 25 years. Even without a government stimulus, voters have shown that they are sometimes willing to pay for state or local cleanup or upkeep if they can reap the rewards. Green measures that contribute to critical infrastructure, attract skilled workers, or meet the needs of specific businesses are rightly considered to have economic value. Governors and legislators support environmental proposals that promote safe drinking water or provide adequate sanitation, not because Washington requires it, but because public health is a prerequisite for prosperity. Voters decide on measures that improve the attractiveness of a district as a place to live and work, also because taking into account the preferences of skilled workers can boost economic growth. And tourism (which accounted for nearly 10% of US jobs in 1995) isn't the only business with a direct interest in pollution control or environmental protection. For example, businesses that require large volumes of pure water—computer chip manufacturers, food processors, and breweries, to name a few—have economic incentives to keep streams, rivers, and groundwater free of contaminants.

On the other hand, state legislators are likely to view spending money to clean up pollution that can spread, flow, seep, or be transported to other states as a bad prospect. And giving up the best development land to protect endangered species is generally seen as having little economic or political advantage. Environmental scientists must consider the impact of development on future generations. State politicians generally cannot do this. When weak investment by states is a nation's priority, strict federal oversight is required.

A race for the bottom line

However, in general, the promotion of environmental protection is the result, not the cause, of prosperity. At least in the extreme, states with strong economies tend to support relatively strong environmental protection programs, while states with weak economies generally support weaker programs.

In the 1990s, the real competition between states is not a race to minimize environmental protection, but a race to improve property values ​​and increase tax revenue. States compete for prosperity in an economy where businesses are consolidating, capital is increasingly mobile, and skilled workers are sometimes in short supply.

Since experience shows that prosperous economies devote more resources to environmental protection than economies in crisis, we should be concerned about the future of pollution and environmental protection in relatively poor countries.

Some research points to direct links between prosperity and environmental protection. A 1994 analysis by the Institute for Southern Studies found that 9 of the 12 most environmentally friendly states also had the fastest economic growth, while 12 of the 14 most environmentally weak states also had the fastest economic growth rates. lower. . Countries that depend on oil, timber, mining or other resource industries may face unique challenges when it comes to improving environmental protection and putting together the ingredients for sustained growth.

Such differences between states are not surprising. State lines were drawn by accidental agreements and political compromises, not by a desire for justice. These random divisions have created variations in the political culture and history that we generally celebrate. They also led to changes in natural resources and taxable wealth. Naturally, government environmental protection, which stands at the intersection of economic forces, political will, and historical tradition, reflects these enduring differences.

One danger, however, is that states that are weak on both economic growth and environmental protection are particularly vulnerable to a funding squeeze that could become a major political dynamic over the next 10 years: the prospect of increased environmental demands that no one is willing or willing. able to pay it. Many of the less prosperous states rely heavily on federal funds to finance environmental protection at a time when such funds are dwindling. And their budgets are likely to be further strained by demands like welfare and Medicaid and less easily stretched by tax increases or credits.

None of this, however, is an argument in favor of economic determinism. Government economies are constantly changing as markets change, and experience shows that political will and fortuitous circumstances can overcome obstacles to growth. High-tech industries and booming tourism made the Rocky Mountain states, traditionally dependent on mining, lumber and agriculture, the fastest growing region in the country in the early 1990s. And the recent The opening of the $11 million Jack Nicklaus-designed Old Works golf course in Anaconda, Montana, built on Superfund land is not an isolated event.

To do?

Abandoning the simplistic issue of a race to the bottom between states to minimize environmental protection opens the way for consideration of more difficult issues. How much flexibility should states have in choosing environmental measures? What is the best way to promote national priorities that are not in the interest of a state? How should chronic inequalities between states be addressed? Several ongoing initiatives propose partial answers.

Variations on national themes.Setting clear national goals and allowing states maximum flexibility to implement them is the best way to mediate between national priorities and differences between states. Complementing regulations with broader use of market incentives, negotiated solutions, and corporate self-regulation can broaden local options while respecting national priorities. The federal government should focus supervision where states are weakest, as the National Academy of Public Administration has suggested. And as data improves, the state's progress should be measured by environmental conditions, not the number of inspections and permits. All of this is, of course, much easier said than done. After 30 years of effort and billions of dollars spent, the United States still lacks a reliable system for measuring trends in environmental conditions on which to base national goals and track progress toward them.

information as a rule.Mandating the public to receive detailed information about environmental impacts can create incentives for companies and governments to limit pollution, particularly when the impacts directly affect the recipients of the information and when the facts are accompanied by an objective interpretation. For example, with the EPA's newest Web site, Surf Your Watershed, anyone who enters a ZIP code can now get information about sources of pollution, water quality, and sources of clean water. And amendments to the Safe Drinking Water Act of 1996, passed by Congress 104 after two years of bitterness, require local water supply systems to notify customers once a year about bacteria and chemicals in tap water to encourage careful control. These reporting requirements follow the example of the Toxics Release Inventory, a provision introduced into federal law in 1986 and recently expanded to require businesses to report their releases of toxic substances. regional cooperation. Little attention is paid to the potential benefits of regional cooperation in a political system that emphasizes national and state authority. Many environmental problems are regional rather than national or local in nature. We need to better understand why some attempts at regional cooperation succeed and others fail.

Creative Financing.Voters who have effectively limited government revenue by opposing tax increases remain willing to pay additional fees for environmental services or projects deemed necessary investments, helping alleviate funding shortages, particularly for less prosperous states . According to a 1995 report from the General Accounting Office, three-quarters of state and local waste management programs are funded through benefits, a proportion that rose rapidly in the 1990s. Of course, special rates they also have disadvantages. Linking revenue collection to spending on specific activities may limit the flexibility of the policy system to respond to changing public needs.

the times they Are a changing

It would be a mistake to let the fears of the 1970s dominate what happened in the 2000s. The race to the bottom is a powerful idea that found an echo in the 1970s and 1990s, when environmental costs were a relatively small, with sudden changes in the environmental demands of corporate spending, state governments are more open to environmental considerations and public understanding. it has improved. After nearly 30 years, environmental protection has been integrated into the political system, where it will evolve into thousands of separate private, state, local, and national policies. The success of these actions depends in part on our ability to adapt our ideas about how government and business work to changing circumstances. In times of scarce national resources and persistent disparities between states that are successful at economic growth and environmental protection and those that are less successful at both, our attention must now shift from the race to the bottom to the race to the bottom. result.