Environmental science

Page 206 Chapter 11 Command-and-Control Strategies: The Case of Standards A command-and-control (CAC) approach to public policy is one where, in order to bring about behavior thought to be socially desirable, political authorities simply mandate the behavior in law, then use whatever enforcement machinery—courts, police, fines, and so on—that is necessary to get people to obey the law. In the case of environmental policy, the command-and-control approach consists of relying on standards of various types to bring about improvements in environmental quality. In general, a standard is simply a mandated level of performance that is enforced in law. A speed limit is a classic type of standard; it sets maximum rates that drivers may legally travel. An emission standard is a maximum rate of emissions that is legally allowed. The spirit of a standard is, if you want people not to do something, simply pass a law that makes it illegal, then send out the authorities to enforce the law. Figure 11.1 is our familiar graph showing marginal abatement costs and marginal damages related to the rate at which some production residual is emitted into the environment. Suppose that initially the actual level of effluent is at e1, a rate substantially above the efficient rate of e*. To achieve e* the authorities set an emission standard at that level; e* becomes a mandated upper limit for the emissions of this firm. The standard is then enforced by sending out whatever enforcement authorities are necessary to measure and detect any possible violations. If infractions are found, the source is fined or subject to some other penalty. If the firm reduces emissions in accordance with the standard, it will be incurring an amount equivalent to area a per year in total abatement costs. These total abatement costs are the compliance costs of meeting the standard. Standards are popular for a number of reasons. They appear to be simple and direct. They apparently set clearly specified targets. They appeal, therefore, to the sense that everybody has of wanting to come directly to grips with environmental pollution and get it reduced. Standards also appear to be congenial to our ethical sense that pollution is bad and ought to be declared illegal. The legal system is geared to operate by defining and stopping illegal behavior, and the standards approach conforms to this mind-set. Page 207 FIGURE 11.1 Emission Standards We will see, however, that the standards approach is a lot more complex than might first appear. Standards appear to offer a method to take away the freedom of sources to pollute, replacing it with mandated changes in behavior. In fact, a very practical reason for the popularity of standards is that they may permit far more flexibility in enforcement than might be apparent. What appears to be the directness and unambiguousness of standards becomes a lot more problematic when we look below the surface. Types of Standards There are three main types of environmental standards: ambient, emission, and technology. Ambient Standards Ambient environmental quality refers to the qualitative dimensions of the surrounding environment; it could be the ambient quality of the air over a particular city or the ambient quality of the water in a particular river. So an ambient standard is a never-exceed level for some pollutant in the ambient environment. For example, an ambient standard for dissolved oxygen in a particular river may be set at 3 parts per million (ppm), meaning that this is the lowest level of dissolved oxygen that is to be allowed in the river. Ambient standards cannot be enforced directly, of course. What can be enforced are the various emissions that lead to ambient quality levels. To ensure that dissolved oxygen Page 208never falls below 3 ppm in the river, we must know how the emissions of the various sources on the river contribute to changes in this measure, then introduce some means of controlling these sources. Ambient standards are normally expressed in terms of average concentration levels over some period of time. For example, the current national primary ambient air quality standard for sulfur dioxide (SO2) is 80 μg/m3 on the basis of an annual arithmetic mean and 365 μg/m3 on a 24-hour average basis.1 The standard, in other words, has two criteria: a maximum annual average of 80 μg/m3 and a maximum 24-hour average of 365 μg/m3. The reason for taking averages is to recognize that there are seasonal and daily variations in meteorological conditions, as well as in the emissions that produce variations in ambient quality. Averaging means that short-term ambient quality levels may be worse than the standard, so long as this does not persist for too long and it is balanced by periods when the air quality is better than the standard. Emission Standards Emission standards are never-exceed levels applied directly to the quantities of emissions coming from pollution sources. Emission (or effluent) standards are normally expressed in terms of quantity of material per some unit of time—for example, grams per minute or tons per week. Continuous emissions streams may be subject to standards on “instantaneous” rates of flow: for example, upper limits on the quantity of residuals flow per minute or on the average residuals flow over some time period. It is important to keep in mind the distinction between ambient standards and emission standards. Setting emission standards at a certain level does not necessarily entail meeting a set of ambient standards. Between emissions and ambient quality stands nature, in particular the meteorological and hydrological phenomena that link the two. Research to study the linkage between emission levels and ambient quality levels is an important part of environmental science. The environment usually transports the emissions from point of discharge to other locations, often diluting and dispersing them along the way. Chemical processes occur in all environmental media that often change the physical character of the pollutant. In some cases this may render the emitted substance more benign. Organic wastes put in rivers and streams will normally be subject to natural degradation processes, which will break them down into constituent elements. Thus, the ambient quality of the water at various points downstream depends on the quantity of emissions as well as the hydrology of the river: its rate of flow, temperature, natural re-aeration conditions, and so on. The link between emissions and ambient quality also can be vitally affected by human decisions. A classic case is automobiles. As part of the mobile-source air-pollution program, emission standards have been set for new cars in terms of emissions per mile of operation. But because there is no effective way of controlling either the number of cars on the roads or the total number of miles each Page 209is driven, the aggregate quantity of pollutants in the air, and thus, ambient air quality, is not directly controlled. Emission standards can be set on a wide variety of different bases. For example: Emission rate (e.g., pounds per hour). Emission concentration (e.g., parts per million of biochemical oxygen demand, or BOD, in wastewater). Total quantity of residuals (rate of discharge times concentration times duration). Residuals produced per unit of output (e.g., SO2 emissions per kilowatt-hour of electricity produced). Residuals content per unit of input (e.g., SO2 emissions per ton of coal burned in power generation). Percentage removal of pollutant (e.g., 60 percent removal of waste material before discharge). In the language of regulation, emission standards are a type of performance standard because they refer to end results that are meant to be achieved by the polluters that are regulated. There are many other types of performance standards: for example, workplace standards set in terms of maximum numbers of accidents or levels of risk to which workers are exposed. A requirement that farmers reduce their use of a particular pesticide below some level is also a performance standard, as is a highway speed limit. Technology Standards There are numerous standards that don’t actually specify some end result, but rather the technologies, techniques, or practices that potential polluters must adopt. We lump these together under the heading of technology standards. The requirement that cars be equipped with catalytic converters or seat belts is a technology standard. If all electric utilities were required to install stackgas scrubbers to reduce SO2 emissions,2 these would be, in effect, technology standards because a particular type of technology is being specified by central authorities. This type of standard also includes what are often called design standards or engineering standards. There are also a variety of product standards specifying characteristics that goods must have and input standards that require potential polluters to use inputs meeting specific conditions. At the edges the difference between a performance standard and a technology standard may become blurred. The basic point of differentiation is that a performance standard, such as an emission standard, sets a constraint on some performance criterion and then allows people to choose the best means of achieving it. A technology standard actually dictates certain decisions and techniques to be used, such as particular equipment or operating practices to be used by polluters. For illustrative purposes, Exhibit 11.1 shows some typical standards, applicable in this case to snowmobiles. The carbon monoxide, hydrocarbon, and noise limits are emission standards; the limit on snowmobiles entering Yellowstone National Park can be thought of as a technology standard, as it restricts the use of certain machines in this setting. Page 210 Standards Applicable to Snowmobiles EXHIBIT 11.1 Snowmobiling has become a major wintertime activity in the United States. Historically, snowmobiles were built with two-stroke engines, the same kind of engine that has been used to power lawn mowers and outboard motors. In a two-stroke engine, fuel enters the combustion chamber at the same time that exhaust gases are expelled from it. As a result, as much as one-third of the fuel passes through the engine without being combusted. This causes poor fuel economy and high levels of emissions, particularly hydrocarbons and carbon monoxide. In one hour, a typical snowmobile emits as much hydrocarbon as a 2001 model automobile emits in 24,300 miles of driving. Snowmobiles also emit as much carbon monoxide in an hour as a 2001 model auto does in 1,520 miles of driving. They are also very noisy. In the last decade there has been a political struggle over emission standards applicable to snowmobiles. Another aspect of the fight has been over efforts to control the entrance of snowmobiles into national parks, especially Yellowstone National Park. The tabulation shows standards recently proposed by the EPA. As of now they are tied up in court battles, as the snowmobile industry regards them as too restrictive, and environmental groups regard them as not restrictive enough. Sources: James E. McCarthy, Snowmobiles: Environmental Standards and Access to National Parks, Congressional Research Service, December 3, 2007; U.S. National Park Service, The Future of Winter Use in Yellowstone National Park, October 11, 2011. Page 211 Standards Used in Combination In most actual pollution-control programs, different types of standards are used in combination. National air-pollution-control policy contains all three, as we shall see in Chapter 15. In the Total Maximum Daily Load program for water-pollution control, authorities establish ambient standards for water quality, emission standards to reduce incoming pollution loads, and technology standards in the form of best management practices. We will encounter this program in Chapter 14. The Economics of Standards It would seem to be a simple and straightforward thing to achieve better environmental quality by applying standards of various types. Standards appear to give regulators a degree of positive control to get pollution reduced, but standards turn out to be more complicated than they first appear. The discussion in the rest of this chapter will focus on the efficiency and cost-effectiveness of standards, as well as the problem of enforcement. Setting the Level of the Standard Perhaps the first perplexing problem is where to set the standard. We saw in the case of the decentralized approaches to pollution control—liability laws and property rights regimes—that there was, at least, the theoretical possibility that the interactions of people involved would lead to efficient outcomes. But with standards we obviously can’t presume this; standards are established through some sort of authoritative political/administrative process that may be affected by all kinds of considerations. The most fundamental question is whether, in setting standards, authorities should take into account only damages or both damages and abatement costs. Look again at Figure 11.1, particularly at the marginal damage function. One approach in standard setting has been to try to set ambient or emission standards by reference only to the damage function. Thus, one looks at the damage function to find significant points that might suggest themselves. A principle used in some environmental laws has been to set the standard at a “zero-risk” level: that is, at the level that would protect everyone, no matter how sensitive, from damage. This would imply setting emission standards at the threshold level, labeled et in Figure 11.1. This concept is fine as long as there is a threshold. Recent work by toxicologists and other scientists, however, seems to indicate that there may be no threshold for many environmental pollutants, that in fact marginal damage functions are positive right from the origin. In fact, if we followed a zero-risk approach, we would have to set all standards at zero. This may be appropriate for some substances, certain highly Page

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