As the Chesapeake Bay marches toward an EPA mandated cap on pollutants under the Federal Clean Water Act (known as a Bay TMDL); the idea that using pollution trading might be an avenue worth pursuing, is being touted as "inevitable". Mind you, it is not as though the notion of such trading has broad based support from the environmental community. On the contrary, many are just afraid to speak up for fear of censure from peers, or they don’t fully understand it, or still others fear that open opposition will impair their ability to raise funds from establishment funding sources who like the idea of turning the environment over to the "marketplace".
Ultimately, a relatively small cadre of monied (or money focused) environmental organizations have made the enormous leap of faith that market based pollution trading is better for them and better for the Bay than a simple command and control/compliance approach. There is no middle ground between these extremes. Either we are to have voluntary pollution reductions through trading or mandatory ones through enforcement of the Clean Water Act. A Bay TMDL with voluntary trading weakens the Clean Water Act.
But the more people talk to me about pollution trading and I raise good faith questions and concerns, the more I am told that the train has already left the station. That it is pointless to oppose what is increasingly obvious as deeply flawed pollution reduction policy motivated by money making and not-so-plausible and illusory claims for cleaner water. On the eve of pollution caps for the Bay, lo and behold, the environmental community has teamed up with the business community to provide an alternative to the caps! It's nothing short of incredible. A respondent to a BLOG I posted on this topic several weeks ago actually argued that I simply was not intelligent enough to grasp the intricacies of trading! Maybe he was right, because it seems to me, that instead of a bright environmental future for all and a clean environment, trading just increases the likelihood that most of us will be stuck with the very best environmental quality money can purchase.
Let me be clear up front. I believe that pollution trading is unjust, immoral and illegal.
Here is why:
• Pollution trading is unjust because it creates an opportunity for those communities with something worth trading to get money (by selling credits) in order to allow pollution to be allocated elsewhere. Usually there is little or no environmental benefit to be had for the communities that host such trades. The potential for injustice and creating disparities though is quite high.
• Trading is immoral because it allows financially motivated interests to treat public trust resources, as commodities and assets that can be bought sold and traded. It is the antithesis of environmental stewardship because it creates ownership and privatization of resources that belong to all.
• Trading is illegal because it trading provides an inelegant loophole to the strict caps on pollution that are mandated by the Clean Water Act and it potentially allows polluters to buy their way out of compliance by paying money instead. The Clean Water Act does not provide any legal authority for trading as an alternative to its compliance mandates. This loophole weakens citizen efforts to insist on strict compliance with environmental pollution caps.
You need only look at the particulars, to see there is much about it that mimics Wall Street investment pipe dreams. You know, of the sort where the stock prospectus is generally more optimistic than actual performance. Pollution trading involves buying, selling and trading something that is intangible and speculative (and so presumably hard to verify) in order to create business incentives for profiteers to eventually reduce their pollution voluntarily and profitably. Sounds crazy doesn't it? It is based on rather spurious logic and worthless assumptions.
Besides, if business interests are willing to voluntarily upgrade technology, reduce discharges to water and invest in water quality improvements then why haven't they done so already? What are they waiting for? Lord knows, the decline of the Bay is yesterday's news and has been for a long while. The proponents argue this will work, because the incentives were never there and this is a newer and better approach. But factually, compliance with the laws was never much of an incentive because so rarely have we shown the spine or inclination to enforce the laws! In Maryland for example, our fines for discharge violations are antiquated and Maryland Department of the Environment has an enormous backlog, is underfunded and not equal to the task. Maryland Waterkeepers filed a petition to the EPA to have the Federal government strip Maryland's delegated powers. So if the government can’t do the job, should we give it to the marketplace instead? That’s a helluva leap. Our regulatory establishment has failed and so we should turn the whole mess over to the regulated community instead? I may not be the smartest cookie but I am not the dumbest one either! It’s nothing short of insane.
If we pay or reward polluters to comply, or better still, get them to enter into private financial contracts with those with legal credits to sell, aren't we are in effect providing a public subsidy for pollution? By shifting business incentives away from legal compliance and recalibrating the system to serve private economic gain instead, we are of course creating fresh "marketplaces" for pollution. The better the marketplace (at least in theory) then the better for business. What about all the former robust marketplaces already ruined by bad environmental practices in the marketplace? I thought government was supposed to provide balance for the public and private sector interests? How does turning the environment over to marketeers accomplish the spirit or intent of our regulatory process or result in a cleaner Bay?
Duh, there I go showing off my ignorance again. Another of my colleagues recently explained that better minds than mine have already figured out all this stuff. I am not convinced they have. Do those better minds have an economic stake in trading perhaps?
Water is a public trust resource. How does one trade something not truly owned by them? Aren't the most likely traders those with a commercial and profit oriented interests in our natural resources? And when you confer a lawful and fungible monetary interest in clean water, aren't you in effect privatizing it? So, doesn't pollution trading create a private property interest in water? How is that good for the public interest or cleaner water? If you do the right thing for the wrong reasons then don't you incentivize the wrong things as well? All good questions. Not only are there no good answers forthcoming, but no real forum to ask such questions. The environmental community overall has been less than diligent in unraveling the details.
Along with my overall objections also comes the utter skepticism that a regulatory system that has already proven itself to be politically spineless, corruptible, non-transparent, over extended and utterly in the thrall of business and private interest is now able to change gears and instead administer a practical trading program with any real integrity. Most people listening to the agency briefings about this stuff can't understand easily how it works. By contrast, pollution caps are easy to understand. However, pollution trades, give most of us a migraine.
So, I am completely incredulous that this same wayward establishment, this busted bureaucracy, can administer, monitor and regulate a fair, sound, or well-run trading system likely to result in gains for the environment. Why would it do so, if it can raise private money through speculation instead of public money through fines? Indeed, why would it do so if most of the polluting industries would rather count money than nutrients?
Look, trading is not really complicated. It allocates wealth. Trades have beneficiaries through the sale of credits. and also those who bear the burden through trades of either increased discharges, or unabated pollution. The environmental community has some strange mojo on this. I thought we were supposed to be fighting to make a just system checks and safeguards that restores the environment? Not selling or trading it to the highest bidder!
So with all of these objections on the table, it is unclear to me why we need to trade pollution at all? What's wrong with strictly enforcing the Clean Water Act? This is good law; the backbone of citizen's advocacy rights for clean water and it's been on the books for 40 years. Lots of common law and statutory law has been created around this body of regulations. It is the strongest tool that Waterkeepers have to intervene in regulatory problems where the government is plainly not up to doing the job-- or at least not to the extent that we are actually protecting and restoring water quality. We have all known that these long overdue TMDL pollution caps would be implemented sooner or later? So, why at the ninth hour is there a full court press by environmentalists to provide a loophole for profiteers that will allow the worst pollution sources in our waterways an alternative to compliance with the Federal laws? Ask yourself, what kind of environmentalist thinks this is actually a good idea?
Not only does the current set of proposed trading schemes present unverifiable scenarios where the pollution reductions are all but smoke and mirrors, but as a matter of fact, water quality pollution trading has proven itself to be rather unworkable on the national stage where it has been attempted. And nobody has yet produced an example of where it has worked successfully for water quality improvements. Let's be clear that what is being proposed for the Bay as far as pollution trading is just bad environmental policy with expedient fundraising attached to it.
Carbon credits and rain forest credits, and other similar schemes that favor these "market approaches" all seem to have in common that at least some of the money generated finds its way into investment funds and other opportunities for environmental groups to generate money in order to fund their activities. There is a self-interest factor imbedded within the trading initiatives that is deeply disturbing and sadly, have blinded some to the flaws of pollution trading.
The glib rationale that the train has left the station simply fails to address the need for, or the lack of evidence of really thoughtful, good policy. All this talk of "trains" obscures that truly shocking reality that those of us not on the train are just considered to be out of luck, that we have missed the opportunity to get on board a train that only goes to only one preordained destination. Basically an even worse off Chesapeake Bay. Sadly, if you articulate, well framed, intelligent questions and concerns about trading that lean towards rejecting it out of hand, you are absolutely not welcome on that speeding train rushing toward trading zealotry.
The business of trading our natural resources is nothing short of an appropriation of wealth by a relatively small cadre environmental organizations and their allies who plainly believe that what is good for them darned well be better be good for the Bay. To complete the analogy, a train robbery if you will.
If you don't drink the Kool-Aid, then the trading zealots argue that you are unreasonable and intractable or worse that you are entirely negative and have no positive alternatives solutions to offer. So in order to make it clear to all reading this, I am positively and unequivocally for upholding and enforcing the laws that protect the environment. I support transparency and empowered citizenry, I am also completely for advancing good policy and good stewardship for the environment without resorting to imprecise, impossible to verify, untested schemes that are very ripe for abuse.
Check out this recent example of abuse of a very similar trading initiative: http://finance.yahoo.com/...
When it comes to the choice to trade or not to trade, there are ideological differences at stake for which no practical reconciliation is possible. Either you think you live in a watershed or you live in a marketplace. It may even be possible for you to live in both, but if so, then the end result assures that only those with credits to sell will ever have the very best environmental quality that money can buy. The rest of us will be left waiting on the platform at that darned train station!