Twenty-Five Years Of Environmental Regulation:
What Americans Have Learned
speech delivered at UrbanEco97, American-Russian Conference, "A Safe Environment
for Big Cities on the Threshold of the 21st Century," February 4-6, 1997, San
Good afternoon. My name is Alexander Vladimirovich Volokh of the Reason
Foundation, and I'm going to be talking to you about American environmental
regulation. I was born in Kiev, but my family emigrated from the Soviet Union
in 1975, so I have been living in Los Angeles for the last 21 years, actively
forgetting my Russian. But in the interests of cross-cultural understanding and
"friendship of peoples," I will try and deliver my talk in Russian. I hope that
you will understand me and that you will be able to understand your questions if
you ask them in Russian, but I also hope you will forgive me if I answer them in
I will be discussing the lessons that Americans have learned from 25 years of
environmental regulation -- lessons about the appropriate role of government
planning and the appropriate role of voluntary action, private property, and
market forces. Today is an especially fitting day for discussing these ideas,
because today is the 86th birthday of President Ronald Reagan. Reagan's
accomplishments are still highly debated and controversial, but the fact remains
that he may have done more than any other single person to bring us to the
consensus we have today in America on the role -- more precisely, the reduction
of the role -- of government.
Environmental regulation has existed since the foundation of the United States,
and even existed hundreds of years ago in England. If a landowner dumped sewage
into a river so that another landowner downstream could no longer fish in the
water, the downstream landowner could take the first landowner to court. If a
factory emitted noxious fumes that contaminated the pasture grounds of a
neighboring dairy farm, the dairy farm could sue the factory. Parishioners at a
church brought a successful lawsuit against a railroad company because of its
air and noise pollution.
This system of environmental regulation, which did not come from laws enacted by
parliaments, but emerged from the evolving tradition of Anglo-American
jurisprudence, was based on private property. Sometimes the court made the
polluter pay the victim for the damage to him or his property; sometimes the
court decided that the harm to the victim was a serious enough infringement of
his property rights to make the polluter decrease his polluting activities or
stop them altogether. Often, the courts balanced the competing demands of
industry and neighboring landowners, and decided that a particular level of
pollution was too low to regulate, or decided that the landowner had no claim
because he knew about the pollution when he bought his land. In any case, the
remedies for pollution were based on the traditional notions of "nuisance" and
Even in the absence of the legal system to settle disputes, the very existence
of private property was often an effective conservation device. For example (or
rather, for a counterexample), many of you may remember the fable by Ivan
Andreyevich Krylov about the pig beneath the oak, who ate its fill of acorns and
started to dig up the roots of oak. "But this will harm the tree, you know,"
from the oak's branches said the crow. "Without its roots, the tree may dry."
"Oh, let it!" was the pig's reply. "What do I care? The roots don't matter. I
just want acorns -- for they make me fatter." In America, we call this the
story of killing the goose that laid the golden eggs. Economists call this
problem "The Tragedy of the Commons" -- when a resource is collectively owned,
no one has an incentive to invest in the improvement of that resource. Instead,
they have an incentive to chop down the tree and take the acorns before they are
ripe, because if they don't, someone else will. This is why Americans have
dirty public parks. On the other hand, private ownership of the resource
encourages responsible stewardship. This is why Americans have clean private
lawns. If the pig had been a shrewd businessman who owned the oak and had
secure property rights, he would have waited until all the acorns were ripe, and
probably would have planted more trees and sold the excess acorns.
But in the late 1960s and early 1970s, the American government turned toward
more interventionist measures, and enacted laws and regulations to address
environmental problems. This happened not because private property-based
solutions had failed, but because where property rights are poorly defined, as
they are in large metropolitan air basins, the legal system, with its individual
disputes, is not always the best way to improve environmental quality. But the
move toward greater regulation was also the result of ideology; many academics
and politicians at the time had an innate distrust of private property and
market forces, and believed that all problems, including environmental problems,
were best solved by government at the federal level.
The American environmental movement started out intensely idealistic, imbued
with moral fervor, and convinced that its mission was to save the world. One
watershed of the movement was the publication in 1962 of the book Silent Spring,
in which the biologist Rachel Carson hyperbolically predicted that man-made
chemicals were so harmful and pervasive that one day, Spring would come and no
birds would sing. Another important moment was Earth Day on April 22, 1970,
which fell, not by accident, on the 100th anniversary of the birth of Lenin.
Environmental activists took advantage of the publicity surrounding Earth Day to
call for sweeping government-led initiatives to improve air quality, water
quality, hazardous waste disposal, and so on. Within the next decade, Congress
- the Clean Air Act;
- the Clean Water Act;
- the Endangered Species Act;
- the Resource Conservation and Recovery Act, which regulates the
transportation and disposal of hazardous wastes; and
- the Comprehensive Environmental Response, Compensation, and Liability Act,
also called "Superfund," which regulates the cleanup of hazardous waste
The idea behind American environmental regulation was very simple; as anyone
knows who has read Krylov, "Don't spit inside a well; just think, you might want
to drink." But the regulations themselves were anything but simple. Over the
last 25 years, we have discovered many fundamental problems with our regulatory
structure. I will give you just a few examples.
Air quality, water quality, and hazardous waste regulations did not merely
regulate pollution. The regulations controlled the intimate details of the
operation of every company, down to what machinery every company had to use.
Instead of regulating pollution, the output of the industrial process, the law
regulated technology, the input.
The trouble was that governments can be good at establishing fair rules of
conduct between people, but they are usually bad at making management decisions
for individual companies. They do not have as much information as each company
manager has, and because of their bureaucratic nature, they work much more
slowly than technological innovation. A company that wanted to adopt a new
technology had to ask the government for a permit, but the time and expense
involved often meant that it made more sense for the company to stick with the
older, dirtier methods. The emphasis on technology and inputs slowed
environmental improvement by preventing firms from investing in whatever
technology was most efficient for their needs.
Laws that tried to protect sensitive ecological areas or endangered wildlife
also suffered from serious problems. The Endangered Species Act tried to
protect species in the most direct way. It told landowners, "If you find an
endangered species on your property, you cannot develop your land near where
that animal lives." It seemed like the most direct way to prevent the
extinction of endangered species, but many now believe that it may have had the
opposite effect. The law made the interests of endangered species opposite to
those of landowners. Landowners with an endangered species could find the value
of their land drop to zero, but they were almost never compensated for this
loss. Many farmers or owners of private forests are afraid of finding an
endangered species on their property, and actively manage their property to
prevent endangered species from wanting to live there. The law has also
encouraged a mentality among some landowners that is picturesquely called,
"Shoot, shovel, and shut up."
I could tell similar stories about many other environmental programs. Laws that
tried to improve the environment regardless of cost became highly burdensome to
businesses, landowners, and ordinary citizens; as the environment became cleaner
and cleaner, additional improvements became more and more expensive, even as
they became less and less ecologically valuable. Laws that tried to control
every company decision in detail necessarily became highly complex, highly
technical, and confusing. The complete text of some regulatory programs often
takes up thousands of pages. One judge jokingly remarked that the people who
wrote hazardous waste law "ought to be shot." Two-thirds of corporate
environmental lawyers said in a 1993 survey that their companies had violated
some environmental law during the previous year because of uncertainty and
complexity. Seventy percent believed that full compliance with all federal and
state environmental laws was impossible.
More agencies and committees and bureaucratic layers were created to solve more
complicated problems, but the problem was the complexity itself. Shuffling the
responsibilities around proved to be counterproductive when the agencies
themselves had ineffective tools. As Krylov commented on the quartet that tried
to play better music by switching seats: "And you, no matter what position, will
never make a fine musician."
It did not help that most environmental laws were passed on the federal level,
so that the same standard was mandated for different regions, regardless of
different regions' values and tolerance for environmental risk. Nor did it help
that environmental enforcers often adopted a deliberately confrontational
attitude with respect to industry. The success of enforcement programs was
measured by how many inspections were done, how much money was collected in
penalties, how many violators were convicted of environmental crimes in court.
Again, the focus was on measuring inputs -- that is, enforcement activity -- not
outputs -- that is, environmental quality, which is the ultimate goal of any
environmental program. Instead of being encouraged to seek out violations that
caused the most environmental harm, or violations committed intentionally or
recklessly, environmental agencies were simply encouraged to bring more cases.
In practice, this meant choosing the easiest cases instead of the worst ones.
In the beginning, when environmental problems were large, this approach may have
worked, but as problem after problem was solved or greatly reduced, the
inadequacies of this approach became painfully clear.
All of this speaks to a common problem. Once upon a time, American
environmental problems were like a haystack, and could be fixed even with
inefficient tools. Today, they are like a needle in a haystack, and ordinary
pitchforks are no longer enough. Moreover, inefficient laws worked in the
United States because in the 1970s, the United States already had a high
standard of living and a great deal of resources. A little waste could go
unnoticed and, indeed, did go unnoticed for many years. But not everyone can
afford to repeat our mistakes. Russian federal, regional, and municipal
authorities are not in a position to waste massive public and private resources,
even in the pursuit of a worthy goal like environmental quality. The Russian
economy is still going through a precarious transition period. Governments do
not have a lot of money. Underpayment of taxes is a serious problem.
Inflexible policies that mandate environmental improvements at too high a cost
can have serious unintended side effects and decrease people's overall well-
being. If Russians are serious about environmental improvements, they must
start out on the right path. This means that they must take note of the lessons
that we have learned since 1970:
- First, if you are interested in controlling pollution, regulate pollution.
For instance, set an objective standard of pollution, and allow companies to
meet that standard in any way they like. Be flexible. Allow companies to
pollute more, as long as they can get get some other companies to pollute less.
American environmental agencies do this by setting up systems of tradeable
- Second, if you are interested in measuring environmental compliance, do not
measure the activity of your environmental enforcement agencies. Instead,
measure improvements in environmental quality.
- Third, make your regulations easy to understand, easy to comply with, and
based on actual environmental measurements, like environmental risk.
- Fourth, do not mandate the same standard for everyone. If problems are
localized, let local governments set their own standards. If problems are
regional, let regional governments solve them. It makes sense that residents of
Moscow will have different tolerances for risk than residents of Chukotka.
- Fifth, Americans are fond of saying that "there ain't no such thing as a
free lunch." Or, as my father says, "If life is priceless, how come it's so
expensive?" Everything comes at a cost. So do environmental improvements.
Resources spent on environmental quality cannot be spent on health care, crime
prevention, or defense, and since resources are not unlimited, they must be
- Sixth, remember that any effective solution to environmental problems must
rely on private property and market forces. People will take care of what they
own, and they will act without the need for compulsion if they can be convinced
that environmental improvements can also be in their self-interest.
This is what Americans -- at least, some of them -- have learned from 25 years
of environmental regulation. I hope that you will be able to implement rational
environmental regulations without having to repeat our costly mistakes. Thank
you very much.
Alexander Volokh has written extensively on American environmental
regulation. His policy studies include "Environmental Enforcement: In Seach of
Both Effectiveness and Fairness," "Punitive Damages and Environmental Law:
Rethinking the Issues," and a policy series entitled "Recycling and
Deregulation: Opportunities for Market Development." His studies are available
from the Reason Foundation, 310-391-2245.
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