Public Policy, Global Sustainability, and Global Economics

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1. Take a position on public policy, global sustainability, and global economics. Be able to support your position with evidence.

PUBLIC POLICY
There are more and more environmental policies, which are affecting trade flows, both directly and indirectly. And there is an obvious risk of a clash of policies: while trade officials work to remove encumbrances to trade that might otherwise restrict economic growth environment officials are increasingly advocating the use of trade-policy instruments to buttress the objectives of environmental policy.

The indirect effects of environmental policies on trade have been the traditional area of concern. Environmental regulations and standards can form non-tariff barriers. Environmental charges and taxes can alter the competitiveness of firms. Environmental labelling schemes can turn into unfair trade practices, for example, if foreign producers are denied the national stamp of approval or face unjustifiable hurdles to obtain it.

In general, environmental policies should be framed in ways that least distort trade in the pursuit of their objectives--but it is often difficult to sort out ecological intent from potentially protectionist aspects. For example, environmental rules on contaminants allowed in food products, minimum sizes for fish species and recyclable containers for beverages have all led to trade disputes.

One way to temper undue trade effects is to increase international policy convergence. The work of the OECD chemicals programme in harmonising chemicals testing and registration procedures illustrates how both environmental and trade goals can be furthered through co-operative international action.

A broad range of regulatory and economic instruments is now used to implement environmental policies in OECD countries, reflecting differing national environmental conditions and preferences--and discussions in international fora must take care not to weaken standards or jeopardise the right of an individual country to enact regulations that are appropriate in its national context. Nonetheless, the increased international compatibility of policies is also a desirable ecological goal, particularly for such issues as global warming, ozone depletion and the like. A 'harmonisation agenda' is now being discussed in the OECD to identify the most urgent areas for action and the most practical means to help environmental and trade policies converge.

Probably the most vexing problem raised by the cost-benefit analysis of environmental regulation is how to deal with the fact that the loss of human life generally does not occur contemporaneously with the exposure to certain contaminants. In some cases, the environmental exposure produces a harm with a latency period whereas in others it produces harms to future generations. The article underscores the extent to which the cases of latent harms and harms to future generations are analytically distinct, even though they have generally been treated as two manifestations of the same problem. In the case of latent harms, one needs to make intra-personal, intertemporal comparisons of utility, whereas in the case of harms to future generations what is needed is a metric against which to compare the utilities of individuals living in different generations. Thus, the appropriateness of discounting would be resolved differently in the two contexts.

Since the first Earth Day almost 25 years ago, the American people have enjoyed dramatic improvements in public health, worker safety, and the natural environment. We have taken lead out of gasoline and paint. We have virtually eliminated direct discharge of raw sewage into the nation's water. We have banned DDT and other dangerous and persistent pesticides. Because of these and other actions, lead levels in the average American's bloodstream have dropped by 25 percent since 1976, millions of Americans can now fish and swim in formerly polluted waters, and the bald eagle -- once close to extinction -- has been removed from the list of endangered species. Improvements in the quality of our air, water, and land represent investments in the future that will pay dividends for generations to come. But, for all the progress we have made, serious environmental problems remain. Examples include:
· Forty percent of our rivers and lakes still do not fully meet water quality standards;
· 54 million Americans - one in five - still live in areas where the air does not meet public health standards; and
· We are witnessing increases of asthma, breast cancer and other illnesses that may be related to environmental pollution.

It is clear that we have not finished the job. We must build on the successes of the past to construct a framework for continued success in the future. Many of the successes achieved thus far have been based on "end-of-the-pipe," "command-and-control" approaches. Under this system, Federal and state governments have set standards, issued permits for pollutant discharges, and then inspected, monitored and enforced the standards set for each environmental statute. By regulating emission sources to the air, water, and land, we have addressed many of the obvious environmental problems.

But as we achieved these successes, we learned a great deal about the limitations of "command-and-control." Prescriptive regulations can be inflexible, resulting in costly actions that defy common sense by requiring greater costs for smaller returns. This approach can discourage technological innovation that can lower the costs of regulation or achieve environmental benefits beyond compliance. Prescriptive regulation is often less effective in addressing some of the more diffuse sources of pollution that we will face in the years ahead.

We have seen both the value and the limitations of "command-and-control" regulation and end-of-pipe strategies. They will remain possible policy options to be chosen if they are the most efficient, effective -- or only -- solutions to future environmental problems. But we also know that we must expand available policy tools to include new and innovative ways to achieve greater levels of environmental protection at a lower cost.

For example, we have learned that setting "performance standards" and allowing the regulated community to find the best way to meet them can get results cheaper and quicker -- and cleaner -- than mandating design standards or specific technologies. We can promote both lower-cost environmental protection and innovation in pollution control and prevention technology. Using performance standards along with economic incentives encourages innovation. The lowest-cost and most effective strategies earn a greater return in the marketplace. Accountability and responsibility must accompany this increased flexibility so our citizens have confidence that our environmental goals are, in fact, being met.

We have also learned that a healthy environment and a healthy economy go hand-in-hand. This growing awareness is ...