Archive

Posts Tagged ‘environmental regulation’

Pennsylvania is Fracking its Most Vulnerable Citizens

October 20th, 2014 No comments

By: Aaron Kostyk

Blog Category: Economics of Environmental Regulation

As of 2012, the Commonwealth of Pennsylvania has been charging companies an “impact fee” to extract natural gas from the Marcellus Shale deposits.[1]  Several States, which have had longer relationships with the natural gas industry, have what are known as severance taxes, which are essentially just set rate percentage taxes.[2]  Pennsylvania could potentially generate $1.2 billion annually by the year 2019-20 with a 4% severance tax, which is three times as much as the current revenue generated by the “impact fee.”[3]  This is hardly some radical, leftist environmental regulation, Texas and West Virginia have had severance taxes for years, and as production increases the revenue gap between these two models increases in favor of a set percentage severance tax.[4]  The obvious question is why does the Commonwealth continue to surrender revenue to private interests while bemoaning budgetary constraints?

As editorials and think tanks coalesce against leaving money on the table with the “impact fee”, Pennsylvania will have to reconsider its tax policy to conform to States that have been dealing with the natural gas industry for decades.  Given Governor Corbett’s very public spat with Philadelphia area activists and education interests, perhaps it is time for the Commonwealth to consider plucking the low hanging fruit of natural gas revenue to ensure that education funding and spending on social services continue to improve.  Obviously the Marcellus Shale deposits bring jobs and opportunity to many long suffering rust belt towns but it does not stand up to scrutiny that  these jobs will dry up if Pennsylvania has the same tax rate as Texas.

The opinions expressed herein are strictly those of the author and do not necessarily reflect the opinions of the Widener Journal of Law, Economics & Race. 

[1] Michael Wood, A Look at Other States Shows Marcellus Impact Fee Shortchanges Pennsylvanians, 2013 Pa. Budget & Pol’y Center, Aug. 08, 2013 at (2013), http://pennbpc.org/look-other-states-shows-marcellus-impact-fee-shortchanges-pennsylvanians (last visited Mar. 17, 2014).

[2] Id.

[3] Id.

[4] Id.

Fire and Ice

September 29th, 2014 No comments

By: Dr. Robert Gorkin

Blog Category: Economics of Environmental Regulation

Robert Frost, in his poem Fire and Ice, wrote:

Some say the world will end in fire,
Some say in ice.
From what I’ve tasted of desire
I hold with those who favor fire.

So too, do those who believe in catastrophic anthropogenic global warming (CAGW).  For some, there is no debate.  Those who think there is room for further scientific deliberation are derided as being fully equivalent to “holocaust deniers,” and some of the more passionate “true believers” would have that CAGW questioners suffer a similar fate.  Indeed, some have advocated that those who question CAGW dogma should be held legally responsible and have gone so far as to propose Nuremberg-style trials and even execution.

The Precautionary Principle implies that if the world as we know it is to end because of global warming, it becomes obligatory to do everything possible to prevent the impending catastrophe.  An obvious rational corollary needs to be that any danger, no matter how great, ought to be realistically measured against its likelihood of occurring.  For example, the iconic modern day “prophet” with his sandwich board proclaiming “Repent! The World Will End Tomorrow!” asserts a danger that no one is going to take seriously.

Supporters of CAGW contend that mankind’s increasing use of fossil fuels since the Industrial Revolution (particularly since the late 1900s), and the consequent injection of carbon dioxide—a greenhouse gas—into the atmosphere, will cause the runaway destruction of the environment.  Their proposed solution is to dramatically restrict the use of traditional energy sources (e.g., by international treaty, regulation, and “carbon” taxes) and to subsidize the development of alternative energy sources.

Opponents of CAGW, in addition to martialling conflicting evidence, claim that even if global warming were true, the proposed remedial economic disruption and its ramifications are unwarranted. Opponents claim it would be far better to take a wait-and-see approach tempered by adapting to any climate change as it occurs.  They argue that even if there were any thermal abatement, it would amount to mere fractions of a degree achieved at an enormous cost. Among the dangers, they cite the cold weather deaths of the poor and elderly already seen in England due to unaffordable heating costs.  Costs attributable to the skyrocketing price of electricity caused, in part, by the regulatory imposition of costly wind-generated power.  Other concerns include increasing food costs associated with “green” economics favoring using food grains to make biofuels (gasohol), and the diversion of treasure and resources from currently pressing medical and other humanitarian needs.  Furthermore, there may actually be overall benefits, since many plants show increased productivity with higher levels of ambient carbon dioxide, and many people would prefer to live in a temperate climate.

Climate always changes, and has done so over the eons since earth first acquired its modern atmosphere starting about 2.8 billion years ago. Trying to prevent climate change may well be a Sisyphean task as effective as trying to prevent the continental drift that will surely obliterate the world’s geography, as we know it today.

No matter what side of the debate one falls on, one thing can be assured: Time will tell. We are today faced with a choice; a choice we shall recount to our grandchildren. And in the telling of our tale, perhaps we will have the much the same sentiments that Robert Frost poignantly captured in this well-known stanza from The Road Not Taken:

I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference.

The opinions expressed herein are strictly those of the author and do not necessarily reflect the opinions of the Widener Journal of Law, Economics & Race.

Source:

See generally, e.g., Watts Up With That?, available at http://wattsupwiththat.com (last visited Mar. 31, 2014).

Will Increased Crude Oil Rail Transportation Affect Rail Safety?

September 1st, 2014 No comments

By: Caitlin Conk

Blog Category: Economics of Environmental Regulation

The safety of rail transportation of crude oil is a hot topic in California, as it will soon see a surge in the number of trains carrying crude oil into the state from North Dakota and Canada. The California Senate Environmental Quality Committee and Natural Resources Committee has raised significant questions regarding the best way to regulate oil by rail in California, how to foster inter-agency cooperation and ensure adequate emergency response in cases of accidents.

In just two years, California has seen a 4 million barrels of oil by rail increase, with a projection of up to 150 million barrels by 2016, according to Energy Commission data. While the increase is economically favoring, it comes with serious concerns of regulations with regards to railroad operations and safety. Although California’s Public Utilities Commission is responsible for regulating railroad safety, the Federal Railroad Safety Act preempts state law raising questions as to whether the existing federal regulations are stringent enough and what states can do to protect public health and the environment.

Source:

Jayni Foley Hein, As oil by rail gains momentum, is California on track to protect human health and the environment?, The Berkeley Blog, http://blogs.berkeley.edu/2014/03/31/as-oil-by-rail-gains-momentum-is-california-on-track-to-protect-human-health-and-the-environment.

Environmental Regulations Impact on the Bottom Line

August 4th, 2014 No comments

By: Jaclyn Crittenden

Blog Category: Economics of Environmental Regulation
 
Environmental regulations, through compliance costs, cause businesses to raise prices in order to make up for the decrease in their bottom lines. Regulations, such as those promulgated by the EPA, have cost as much as $45 billion over the past 10 years. However, these regulations also contributed to the economy as much as $640 billion. A complete cost-benefit analysis includes more than mere monetary considerations; it also focuses on social policies. While many economic and societal benefits outweigh the costs associated with environmental regulation compliance, this blog only briefly discusses two.

Former Senator Arlen Specter once noted that “[t]here’s nothing more important than our good health – that’s our principal capital asset.” There is no denying that a person’s well-being improves when they are not as heavily exposed to ozone and particle pollutants, such as those that environmental regulations seek to reduce. Such pollutants include gasoline vapors, chemical solvents, and combustion products caused by various fuels. These are often byproducts of large industrial facility processes, gas stations, vehicle exhaust, electric utilities, and small businesses such as dry cleaners, just to name a few. Billions in healthcare costs are spent every year on treatment of pollutant-related illnesses, such as respiratory and cardiovascular diseases, reproductive and developmental ailments, cancer, strokes, diabetes, and many other illnesses that cause premature deaths.  Additionally, a healthier population is a more productive population – a more productive population can earn more money that they can then spend on consumer products in the marketplace rather than medical bills.

Moreover, the economy is stimulated when new environmental compliance jobs are created due to new regulations. One result of environmental regulation is that companies must employ more people to clean up pollution, manage prevention and abatement efforts, and devise new, more environmentally friendly, production processes. While many businesses dislike eco-friendly regulations because they take away from their bottom lines, companies’ failure to respond to regulations by creating these new jobs risk a negative impact on their profit. This is because unemployment benefits are funded heavily through taxes assessed on businesses. So, when the unemployment rate is high, companies pay higher taxes, which then reduces their net-earnings.

The opinions expressed herein are strictly those of the author and do not necessarily reflect the opinions of the Widener Journal of Law, Economics & Race.  

Sources:

Am. Lung Ass’n, Particle Pollution, available at  http://www.stateoftheair.org/2013/health-risks/health-risks-particle.html#whatis (last visited March 13, 2014).

Jeff Spross, New Study: The Economic Benefits of EPA Regulations Massively Outweigh the Costs (May 3, 2013, 11:00 AM), available at http://thinkprogress.org/climate/2013/05/03/1955891/new-omb-study-the-economic-benefits-of-epa-regulations-massively-outweigh-the-costs.

Stephen D. Simpson, The Cost of Unemployment to the Economy (Aug. 9, 2011), available at http://www.investopedia.com/financial-edge/0811/the-cost-of-unemployment-to-the-economy.aspx.

Costs of Environmental Regulation Worth the Reward?

July 14th, 2014 No comments

By: Joe Winning

Blog Category: Economics of Environmental Regulation

There’s a feeling among many Americans that the benefits of environmental regulation in this country are not worth the cost. These opinions reflect the prevailing view that broad environmental regulations impose substantial costs, such as (1) excessively high prices, (2) greater unemployment, (3) more poverty, and (4) increased difficulty for American companies & workers attempting to compete in increasingly international market. While this blogger tends to agree with this perspective and would argue incentives are a better approach, Dr. Frank S. Arnold offers a compelling alternative argument that the costs of regulation are indeed worth the reward.

Although written in 1999, Dr. Arnold’s research remains compelling, if for no other reason than providing calculable benchmarks to evaluate the value of this countries’ spending in the area of environmental regulation. In support of his argument, Arnold draws three major conclusions. First, national spending for environmental regulation is considerably less than the countries’ spending in areas such as health care and national defense. Next, regarding the nation’s “bang for its buck,” Dr. Arnold draws comparisons to other countries and their cost of regulation, concluding that the United States has attained a similar outcome for the amount spent. Finally, while critics insist the countries’ environmental regulation spending is destroying the nation’s job market, Dr. Arnold contends this is not the case. Arnold demonstrates the flaw in this argument by pointing to the lack of plant closures and job loss directly related to employer costs of environmental regulation. He also highlights the fact that there has not been a surge of companies fleeing the United States to go to countries with lower costs tied to environmental regulation. Although this article is somewhat dated and this blogger contends the best approach is economic incentives compared to regulations, the benchmarks outlined by Dr. Arnold remain compelling in evaluating the costs of environmental regulation in this country.

The opinions expressed herein are strictly those of the author and do not necessarily reflect the opinions of the Widener Journal of Law, Economics & Race.  

Source:

Frank S. Arnold, Environmental RegulationIs It Bad for the Economy?, Environmental Law Institute (July 9, 1999), available at http://ase.tufts.edu/gdae/es135/Environmental%20Protection%20and%20Economy.pdf.

Lack of Environmental Regulation Might Ruin Your Vacation : Examples of the Benefits of Regulation & Consequences without it

June 16th, 2014 No comments

By: Chris Pine

Blog Category: Economics of Environmental Regulation

Right leaning politics and business interests have long been unified by the mantra that regulation is bad for the economy.  Environmental regulation is no exception.  Republicans often characterize such regulation as an obstruction to job creation.[1]  For example, the electric utility industry projected over $7 billion in costs and tens of thousands in lost jobs as a consequence of Clean Air Act amendments regulating emissions.[2]  On the other hand, many facts and perspectives chip away at this sometimes hyperbolic characterization. One perspective regarding regulation looks at the economic benefits of regulation.

For instance, in regards to the Clean Air Act amendments mentioned above, an economist for Resources for the Future found costs to be closer to $1 billion.[3] In looking at effects, an MIT economist highlighted the reduction in infant mortality due to the clean air regulations.[4]  The economist cited gains in length of life, reduction in hospitalizations, and further health benefits that more than overcome the short-term costs of environmental regulation.[5]  A study by the Office of Management and Budget found that in general, the economic benefits of EPA regulations outweigh the short-term expenses.[6]  Like the benefits from clean air regulations, EPA regulations as a whole affect a range of health benefits across the populace.[7]  In another example, regulations on carbon emissions save on the destruction of food supplies that would result if such emissions were left unregulated.[8]

Alternatively, another perspective regarding environmental regulation looks to the economic consequences of poor environmental practices. revolves around incidents that occur for lack of regulation.  As summer creeps closer, many of us look forward to trips down the Jersey Shore. However, beaches lined with medical waste resulting from a lack of disposal regulation is not the picture we all have in mind.  The summer of 1988 saw hundreds of days on the beach lost when medical waste, including hypodermic needles, washed up on the Jersey Shore.[9]  Not only were vacations ruined, but the seasonally dependent economies of shore towns lost an estimate $1 billion that year.  Unfortunately, this medical flotsam is not just a distant memory.  In 2008, for example, Avalon, New Jersey temporarily closed several of its beaches after roughly 200 syringes washed ashore.[10]  Just last summer, beached needles caused New Jersey officials to reintroduce environmental protection legislation.[11]

The impact of environmental regulation on business is a valid concern.  But stopping there, without considering the potential economic gains from regulation, or consequences if we shirk responsibility, leaves us in continual economic jeopardy.

The opinions expressed herein are strictly those of the author and do not necessarily reflect the opinions of the Widener Journal of Law, Economics & Race. 


[1] Mikoto Rich and John Broder, A Debate Arises on Job Creation and Environment, N.Y. Times (Sept. 4, 2011), available at http://www.nytimes.com/2011/09/05/business/economy/a-debate-arises-on-job-creation-vs-environmental-regulation.html.

[2] Id.

[3] Id.

[4] Id.

[5] Id.

[6] Jeff Spross, New Study: The Economic Benefits of EPA Regulations Massively Outweigh the Costs, ThinkProgress (May 3, 2013), available at http://thinkprogress.org/climate/2013/05/03/1955891/new-omb-study-the-economic-benefits-of-epa-regulations-massively-outweigh-the-costs.

[7] Id.

[8] Id.

[9] Christopher Robbins, N.J. Congressman Introduces medical waste regulation after needles found on beach, NJ.com (August 15, 2013), available at http://www.nj.com/monmouth/index.ssf/2013/08/nj_congressman_introduces_medical_waste_regulation_after_needles_found_on_beach.html.

[10] Chris Newmaker, N.J. towns close beaches after medical waste washes ashore, USA Today (August 9, 2008), available at http://usatoday30.usatoday.com/travel/news/2008-08-29-nj-beaches-medical-waste_N.htm.

[11] Robbins, supra, note 9.