Assessing Costs and Defining Our Environmental Future

Written by Jennifer Helgeson on . Posted in Capital Commentary

L’dor vador — from generation to generation. This is a central tenet of so much of Judaism: passing on knowledge, the sense of community, and the world to the next generation. I do not have children of my own at this point in life, but I struggle to recognize that those who do can possibly condone rolling back provisions that are proven to make the environment healthier and safer for humans.

 

There is a sort of symbolism in the Presidential Executive Order (EO) on “Promoting Energy Independence and Economic Growth” that asks the federal government to repeal or re-evaluate several key climate change-related policies. As an environmental economist, I see this EO as a blatant announcement that only the bottom line, short-run financial gain is important when assessing environmental and climate-related regulation, especially where it meets human health.

Among other things, this EO specifically asks the federal government to roll back the Clean Power Act that requires substantial reductions in power plant emissions by 2030. The EO also calls for reconsidering the “social cost of carbon” (SCC) used to estimate the value of climate-related regulations and lifting the current ban on federal coal leasing. The EO is defended by President Trump by claims of “eliminating federal overreach” and an “era of production and job creation.”

But there are always co-costs and externalities associated with scaling back mitigation and adaptation measures; they need to be measured and considered in full. Just because some costs are secondary or don’t immediately arise, it doesn’t mean that they don’t exist. Most of my colleagues agree that there will not be profound effects in the short-term, but there are longer-term signaling issues to the rest of the world; collectively there is a lot to lose if our path dependency goes back towards heavily polluting fuels. After living for many years in the EU and doing some work with Asia, I think that it is likely the rest of the world will not follow the U.S. back to fossil fuels, and one day in the future we will be shocked at how far behind we fell.

It makes sense that young people have been invested in acts like the March for Science and filed a landmark lawsuit, Juliana v. United States, set to go to trial in 2017. This lawsuit has been brought against the Trump federal government by a group of 21 kids, teens and young adults, who are suing for their right to a stable climate. It is today’s young people who will shoulder the bulk of future costs associated with the Trump administration’s rollback of climate control policies (not to mention any cuts to research on topics ranging from cancer treatment to infectious diseases to ecosystem preservation).

I don’t see this as a partisan issue, but a moral issue. After all, it was under (Republican) President Nixon’s tenure that the EPA was established in 1970, and landmark legislation like the Clean Air Act was passed in 1972.

My grandmother grew up in the small Jewish community within the small town of Donora, Pennsylvania. In October 1948, a toxic fog generated by the Donora Zinc Works of the American Steel and Wire Co. settled, directly responsible for the death of 20 people in the first week and 50 more people in the following months. Donora in its current abandoned state is a tragic and clear example of how heavy industry can profit at the cost of the health of the nearby community. This is why environmental legislation should be stringent, and research and investment should continue to be made into cleaner production.

I have to fight the urge to send a copy of the UK’s “Stern Review on the Economics of Climate Change” (2006) to the White House on a regular basis. For more than a decade, I have dealt with assessing the value of environmental goods and services and the associated SCC. I have looked through the behavioral economics lens at individuals’ perception of these issues across space (different countries and socio-economic demographics) and time (generationally). A very small increase in prices today can translate to greater social equity (and health) and better outcomes for the grandchild of those surveyed in terms of the quality of natural amenities they face. The data supports that in most cases — I would go so far as to say almost always —individuals don’t mind this slight shift in order to positively impact environmental and health outcomes.

One thing that the EO overlooks is that many energy companies face state requirements to increase renewable power generation and are increasingly under pressure from shareholders and research endowments from universities to cleanup.  Cheaper U.S. natural gas has motivated many companies to abandon older coal plants in favor of gas-fired plants, which require fewer workers to operate. Economies of scale and technological advances mean solar and wind farms are becoming more cost-competitive with fossil-fuel generation; companies are taking associated tax credits and switching over to renewable power. In early April 2017, the Kentucky Coal Mining Museum in Benham, Kentucky, announced that they are modernizing and switching to solar power to save money.

The irony.

Within the SCC lays the subtler way, the Trump administration threatens to impose future costs on today’s young and disadvantaged. Many laws require administrative agencies to conduct a benefit-cost analysis (BCA) before deciding whether and how to create regulation. But in this EO, the SCC metric is slated for revision; presumably this will artificially minimize the costs imposed by carbon emissions and help justify further rollbacks in the arena of greenhouse gas regulations. Should the consideration of “co-benefits” (i.e. considering incidental benefits from regulation aimed at a different issue) be limited as well? BCAs will no longer consider items like lives saved per year from the particulate matter. Once those types of considerations are formally off the books, changes to the way we calculate the cost of pollution could exacerbate the problems regulation is meant to address.

I am not a huge fan of BCA, because it doesn’t always include enough of the non-market values that needs be considered, but such potential changes are just wrong. Not to mention they are subtle enough that they won’t grab headlines — I didn’t see a sign at the March for Science noting that government should keep its “hands off regulatory BCA.”

Those who work with BCA for environmental regulation and assessment need to speak out and help educate our friends and neighbors as to how changes may affect policy but also the potential long-term impacts. L’dor vador — to pass on a liveable world from generation to generation.

Please note that the public may comment on the EPA’s assessment of regulations that may be appropriate for repeal, replacement, or modification in accordance with E.O. 13777. Comments are being taken through May 15 at

https://www.regulations.gov/document?D=EPA-HQ-OA-2017-0190-0042.

By Jennifer Helgeson

 Dr. Jennifer F. Helgeson is an environmental economist leading work on the economics of community resilience planning. Views shared in this post are her own and do not reflect the opinion of the organization by which she is employed. She is the founder of Write-It-Forward, which seeks to create a database for writing and sharing letters to members of Congress and the public. Visit writeitforward.org for more information.