How Government Regulations Work
Since federal and state governments began actively protecting the environment in the 1970s, they have acted primarily by creating rules—called regulations—that say how Americans can affect the environment around them. In order to get people and organizations to comply with these regulations, the government fines, imprisons, or otherwise punishes those who violate them.
Most federal regulations are aimed at controlling the environmental practices of businesses and industries, as their behavior is much easier to monitor and control than that of individual citizens. For example, to reduce air pollution the government might regulate the lawn mower industry by not allowing it to make lawn mowers that release more than a certain amount of pollutants. This is much easier for the government than the alternative: checking how much pollution is released when an individual mows his or her lawn, and punishing that person if it is too much.
Attitudes of Business toward Environmental Regulation
All environmental regulations interfere with the way businesses would otherwise operate. They force businesses to design their products differently, install special machinery in their factories, or even stop certain activities entirely. In the most extreme cases, entire industries might be shut down, such as when the government determined that the chemical DDT, once widely used as a pesticide, was too hazardous to human health to be used at all.
The changes required to comply with environmental regulations almost always result in smaller profits for those companies affected by such restrictions. This is especially true for industries that extract natural resources, such as mining and logging; industries that produce a great deal of pollution, such as electrical power generation; and industries whose products are potentially hazardous, such as the chemical industry. Compliance with governmental regulations is a very significant cost item for some industries. In November 2002 the U.S. Department of Commerce published the results from its latest survey of manufacturing companies on their expenses for environmental compliance. In Pollution Abatement Costs and Expenditures: 1999 the agency reported that in 1999 manufacturing industries spent $5.8 billion on pollution abatement capital expenditures (such as equipment) and $11.9 billion on pollution abatement operating costs.
It is not surprising that business and industry leaders object to these increased costs. Some claim that environmental regulations will make their businesses unprofitable by driving up prices and production costs, which will in turn force them to close plants and lay off workers, if not shut down entirely. As early as the 1970s these sentiments were finding support among politicians and the general population, and an antiregulatory movement developed.
DOES ENVIRONMENTAL PROTECTION DESTROY JOBS?
By the end of the twentieth century, the large-scale layoffs that some business-people predicted had not come to pass. Michael Renner, in State of the World 2000 (New York: Worldwatch Institute and W. W. Norton Company, 2000), states that job loss as a result of environmental regulation has been relatively limited. According to Renner, at least as many people have gained jobs due to the restrictions as have lost them. He points out that environmental regulations have led to the creation of an entirely new industry that earns its profits by assisting other businesses with compliance, mostly by helping them to minimize pollution.
Even for those who accept this positive view of the overall effects of environmental regulation on business, it is unquestionable that some industries and their workers are badly hurt by environmental regulations. Renner contends that policy changes intended to protect the environment must have a clear and predetermined schedule. This way workers will know in advance what is expected of them, what jobs will be in demand, and what training is needed to get them into those positions. As long as environmental regulation results in shrinking profits and loss of jobs, however, attempts to expand such regulation will certainly be met with opposition from those whose livelihood would be affected.
The Business of Environmental Protection
In order for the United States and other nations to meet their environmental goals, an environmental protection industry has emerged. Its major activities include pollution control, waste management, cleanup of contaminated sites, pollution prevention, and recycling.
Environmental Business International, Inc. (EBI) is a private organization that offers business and market information to the environmental industry. According to EBI the U.S. environmental market was largely driven by major legislation during the 1970s and 1980s. (See Figure 1.3.) During the 1990s overall economic growth and adaptation of ISO standards were important factors driving the market. ISO standards are voluntary standards developed by the International Organization for Standardization (ISO). They were adopted by many industries during the 1990s as a means of showing compliance with certain levels of environmental conduct. The environmental industry is in a transition phase. In the past this industry focused on remedial cleanup; in the future it will be focused more on prevention.
As shown in Figure 1.3 the environmental industry market underwent tremendous growth between 1970 and 2000. The U.S. market for pollution-control technologies and other environmental services topped $200 billion in 2000. Growth is expected to slow a little between 2000 and 2010. Table 1.1 details projected growth rates by sectors within the environmental industry. Wastewater treatment works and solid waste management are the only service sectors expected to increase their market shares. Remediation, hazardous waste management, and related consulting services are expected to continue to decline.
According to EBI, developed nations represent about 90 percent of the global pollution-control industry; the United States alone accounts for approximately 40 percent of the industry. Pollution-control markets are, however, growing rapidly in other countries. Expansion in Asian markets will greatly depend on the region's economic status. If the economy worsens, it may lead governments to give the environment less priority. Also, some governments,
FIGURE 1.3
U.S. environmental industry market, 1970–2010
including many in Eastern Europe and Russia, have a legacy of abusive environmental practices that increases their environmental needs but a lack of funding that limits an otherwise huge market for cleanup and new technology.
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