February 20, 2018 37 min to read
CREATING A CONSERVATIONIST ECONOMY
Publication : Articles
Essay from the book “Buying America Back“
By Jonathan Greenberg
When it comes to wastefulness, no country on earth can compete with the United States. According to the Organization of Economic Cooperation and Development, the average citizen of other industrialized nations creates about 750 pounds of garbage per year. Americans create two and a half times this amount – more than 1,900 pounds each.
The time has come to stop killing the planet in the name of economic growth. The time has come to reform capitalism – the very system at which America has excelled- to help heal the planet.
This could be achieved through the creation of an Environmental Impact Fee. This would be a federal value-added fee on all goods sold in this country based upon the environmental cost of creating, using, and disposing of a product and its packaging. For example, a new, heavy plastic half-gallon container of Tide® laundry detergent might have a thirty-cent Environmental Impact Fee, while a cardboard container made from re cycled paper would have a two-cent fee. If a retailer refilled a used container that a customer brought in, there would be no packaging fee charged at all. But if the detergent contained pollutants like phosphates, a few cents would be added to the cost as a polluting fee.
The fee levy, as well as the administration of this money and the channeling of revenues in an environmentally beneficial direction, would be calculated by a new government agency, which might be called the Environmental Impact Agency.
The Environmental Impact Agency (EIA) could collect and adminis ter the roughly $60 billion in annual revenues which such a system would create. It would be uniquely suited to form a job works program the likes of which have not been seen in the United States since the New Deal. Recycling is highly labor intensive. About two million unskilled and low skilled jobs could be created for welfare recipients, homeless people, former convicts, and soldiers laid off from the military. On the high tech end, the EIA could employ many of the thousands of scientists and engineers who no longer truly serve the nation’s economic interest by working for the Pentagon and defense industries. They could engage in a form of R & D to create environmentally friendly products and packaging which America could export well into the next century.
The idea that the free market, acting on its own, will accommodate the recycling of growing mountains of waste is as dubious as the “trickle down” theory of the Reagan eighties.
As long as it is cheaper to create new products and packaging and not be taxed for its disposal, there will be insufficient markets to recycle products. Because the market for recyclable materials has failed to keep pace with the materials being collected, the recycling efforts of municipali ties across the country are faltering. But with an EIA, federal tax credits could be allocated to those companies that facilitate recycling. More importantly, carefully directed Environmental Impact Fees on non-re cycled packages and products made from “virgin” material could allow recycled packages and products to compete more effectively.
Instead of promoting wastefulness, our economy could reward be havior which positively impacted the environment. We could reverse the unjustifiable trend of the past century in which the function of the economy has been to promote higher and higher levels of consumption, wrapped in increasingly wasteful new forms of packaging. By forcing people to pay for the true costs of products and packaging, consumers would have economic incentives to pollute less. Those who preferred bulky, difficult – to-recycle packages would pay the true costs for them, while those who purchased goods in an environmentally conscientious manner would pay less. Com panies would trip over themselves in their haste to offer packaging and products with lower Environmental Impact Fees-and therefore competi tively lower prices. While less benign forms of products and packaging would continue to be sold to those willing to pay for the convenience that something like a single-servingTV dinner offers, an array of new products and packaging would compete to be the least expensive-and the most environmentally beneficial.
A WELFARE SYSTEM FOR POLLUTERS
Economists call the factoring of costs not intrinsic to the production and selling of a product “pricing externalities.” The disposal of a product is an external factor, as is the pollution created in its manufacture and the water pollution using it might create. At this point in time, pricing exter nalities remains little more than a theory in books like this one. Much of corporate America would like it to remain this way, and the current administration, like the Reagan administration that preceded it, is only too willing to comply.
Despite an attempt to characterize himself as the “The Environmental President,” President Bush resists any attempt to have the federal govern ment legislate recycling. Although the United States has failed to reach even half the recycling rate targeted by the Environmental Protection Agency (EPA) when Bush was elected four years ago, the president recently promised to veto any bill re-authorizing the nation’s only recycling law (t he weakly-constructed Resource Conservation and Recovery Act).2 This stand flies in the face of growing public sentiment. A 1991 Associated Press poll found that 86% of Americans want a recycling ” requirement.”3 Yet like many in the anti-environmentalist movement, Bush and the corporate powers that have paid his way into the White House say that the “invisible hand” of the marketplace will eventually cope with society’s wastefulness. Ironically, while claiming to represent free marketeers, the government’s laissez faire attitude to our disposable society has separated corporations and consumers from their fiscal responsibility to pay for the waste – and environmental damage-that they directly create. Instead, the taxpayers of a city or town (who foot the bill of garbage disposal), or the citizens of the nation in general (who have to suffer from bad water or pay to clean up waterways), have no choice but to finance the environmentally destructive behavior of others.
Allen Hershkowitz, a senior scientist with the Natural Resources Defense Council, explained the need to price externalities during his testimony to a Senate Committee investigating recycling in March 1992. “I am always a taxpayer,” Hershkowitz said. “But I am only sometimes a consumer and then only for certain items. My waste disposal costs should precisely reflect the amount of waste I generate.”4
United States citizens spent more than $30 billion disposing of solid, non-hazardous waste in 1991; by 1995, that figure is projected to exceed $45 billion.5 T his amounts to hundreds of dollars annually per household. Yet in virtually all of America, a family which conscientiously recycles their waste pays the same share of this disposal bill as one which creates fifty times the amount of garbage. The polluter does not pay- everyone pays. Indeed, by allowing this free ride at the expense of the public at large, we have built a system in which there is a built-in economic incentive not to act conscientiously. Companies can profit from selling “NEW! IMPROVED! CONVENIENT!” disposable packaging or environmentally detrimental products. Consumers who purchase them and “enjoy” their convenience toss the package away, to be carted off and dealt with at the public’s expense. What has evolved, from an environmental perspective, is a welfare system in which the practices of the most wasteful are subsidized by the taxes of the least wasteful.
MOTHER EARTH HAS HAD ENOUGH
The inevitable outcome of our disposable economy is not hard to see. One need only look at the mountains of garbage overflowing landfills across the nation. The Environmental Protection Agency estimates that during the past decade, two-thirds of the nation’s landfills have closed. An additional 50% of those that exist today are expected to be stuffed to capacity by the mid-1990s.6 In places like New York City, disposal costs have skyrocketed, reaching $200 a ton. Since 1979, five of New York’s six landfills have filled up and closed down, leaving only the 2,000 acre Fresh Kills site in Staten Island. The largest landfill in the world, Fresh Kills is expected to reach capacity within a decade or so, when it will be nearly as tall as the Washington Monument.7 New York already exports 8,000 tons of trash a day to dumps across America. Yet it has managed to recycle just 1,100 tons a day-scarcely 5% of its total waste stream.8 This is less than half of a legally mandated recycling target.
As many other municipalities, battle lines have been drawn between those New Yorkers who believe expensive new incinerators must be built to accomodate garbage, and those who would increase recycling. Powerful local construction and waste management interests, not surprisingly, back the spending of $1.4 billion in taxpayer money for sweetheart contracts to build superburners. Despite the fact that curbside recycling only reaches a fraction of city residents, the powers that be have already attempted to deem recycling a failure. They argue that advances in design make incinera tors safe and clean. But a thorough analysis of the city’s waste disposal options by City Comptroller Elizabeth Holtzman’s office challenged these claims. Although she acknowledged that new high tech “particle catchers” can remove 99.4% of particles rising from incinerator fumes, Holtzman noted that an incineration plan would nonetheless triple the amount of particles currently escaping into the air. This, in a city already out of compliance with the federal Clean Air Act, where 29% of children screened had dangerous levels of lead in their blood.9
Across the country, grassroots community campaigns are challenging the construction of new trash incinerators backed by local business lobbies. When faced with the environmental consequences of other forms of disposal, Americans want to recycle. According to the National Solid Waste Management Association, curbside collection programs for recy cling have grown to 3,500 from just 600 programs three years ago. The programs, nearly half of which are mandatory, reach some 15 million people and thousands of offices1.0 Tens of millions of other Americans recycle voluntarily, without such programs. A recent national survey by Directions for Decisions, a New York research company, found that 62% of Americans set aside newspapers and magazines for recycling, and 85% make an effort to recycle cans and glass and plastic containers.1 1
The problem is not a lack of public will, but an absence of private want. The very industries which expend enormous amounts of energy to create the materials in the first place are simply not willing to do what is necessary to reuse them. And in the absence of legislation, why should they? As long as it remains more profitable for industry to manufacture from “virgin” material, bring the new packages to market and allow the public to foot the bill of disposal, they will continue to do so. As long as the environmental costs associated with the manufacturing process – the pollution of our water, land and air – can be passed on to the public pocketbook to deal with, recycling is a logistical headache that industry would rather not think about.
THE “FREE MARKET” IS NOT RECYCLING
In August 1988, while running for president, George Bush declared that he would like to see America surpass a national recycling rate of 25 % during his first term in office. After he was elected, the EPA attempted to coax industry into voluntarily reaching this target. Four years later, the nation’s recycling rate has scarcely improved and hovers below 14%.12
Not surprisingly, it is in the one industry that state governments have taken steps to legislate recycled content requirements that the private sector has managed significant progress in resource recovery. Newspapers, which constitute about 8% of all solid waste, are being recycled in greater quantities, thanks to minimum recycled content mandates forced upon the newspaper industry in states like California and Arizona. Because newspa pers in at least seven states must now use a significant percentage of old newspaper in their newsprint,13 a reliable market for such paper has been created. This has created a boom for recycled newspapers; according to the American Association of Newspaper Publishers (ANPA), the capacity of newsprint mills to produce recycled newsprint increased more than 100% between 1989 and 1992. Within the next two years, the Association estimates that the number of recycled newsprint facilities will increase by an additional 50%.14
Nonetheless, the newspaper industry bemoans the threat of govern ment regulation which stirred it to act in the first place. “The bad news is that ‘market development’ has caught the imagination of lawmakers,” an ANPA publication warned its readers last year. “Some want to ‘develop the market’ through legislation whether the market needs developing or not. And it doesn’t. It will work better if left alone. Markets usually do.”15
Tell that to municipalities across the country trying to unload their recycled glass or plastics. Between January 1990 and June 1991, the average price paid by processors for recyclable clear glass in the United States dropped from $25 per ton to less than $5 per ton. During the same 18-month period, the price of recycled “PET” plastic dropped from 86 cents per pound to 40 cents per pound.1 6 T his market collapse came on top of the precipitous fall in old newspaper prices, which tumbled from $60 per ton in late 1987, to a late 1991 price of less than zero.17 And these are the prices for separated, delivered recyclables. Nowadays, some towns must pay as much as $49 a ton just to “sell” a processing plant its recyclable materials. Even the once strong market for office wastepaper has collapsed; in 1992, about 250,000 more tons of office paper will be collected than can be reused. And the future only looks worse. According to the Environmen tal Defense Fund, 4 million tons of office paper will be collected in 1995, with a market for only 800,000 tons available. This means that municipali ties will collect five times more paper than they will be able to recycle.1 8
It’s no wonder that municipalities across the country which had once dreamed of paying for recycling from the sale of materials are having their hopes shattered. In Briarcliff Manor, New York, for example, environmen tally concerned citizens ran a recycling center for twenty years, accepting material from neighboring Westchester County communities. But in Janu ary 1992, the town was forced to close down its operation. It simply could not afford to be in the recycling “business” any longer.19
Does this mean that recycling is a victim of its own success? Conser vative economists would have you think so. “Recycling programs are efficient when they are able to turn a profit,” Jerry Taylor, director of natural resource studies at the Cato Institute, a conservative think tank, told The Wall Street Journal in January 1992. “The best way to tell if something should be recycled is whether it’s already being recycled because of market forces. If you need government intervention to achieve recycling, then it probably will distort the markets.”2 0
Taylor’s view reflects that of the Bush/Reagan administrations and, not coincidentally, big business. Market forces are somehow sacrosanct, and any “intervention” is viewed as economically counterproductive. Somehow, their free market fantasy magically transforms the cost of waste disposal and environmental pollution into thin air. (Clean thin air, of course.)
Overfilled landfills is only one reason that recycling is important . Another is the energy wasted to create unneeded packaging and products. According to environmentalist Lester R. Brown, steel produced from scrap uses just one-third the amount of energy as steel made from scratch, while newsprint made from recycled paper takes one-fourth to three fifths less energy to make than newsprint from virgin wood pulp. 21According to the Conservatree Paper Company of San Francisco, every ton of recycled paper saves enough energy to power the average American home for six months. (It also conserves 17 trees, 7,000 gallons of water, and keeps nearly 60 pounds of air pollution effluents out of the air.)
In addition to the immeasurable damage caused by acid rain, the burning of fossil fuels to manufacture new materials and packaging con tributes to worldwide global warming trends. The United States has the dubious distinction of ranking first among world nations for the amount of carbon dioxide emissions we release into the air. With less than one twentieth of the world’s population, America contributes nearly one fourth of the world’s carbon dioxide emissions. Yet because the Bush Administra tion feels compelled to wed the nation’s future to sustaining our polluting economy, the U.S. faces the hypocritical posture of pressuring developing nations to preserve their rain forests (which absorb carbon dioxide), while being the only industrialized country in the world to oppose an interna tional cap on carbon dioxide emissions.22 W hen added to President Bush’s recent initiative to cut down four million acres of publicly owned ancient forests in the Pacific Northwest, America’s role in the international envi ronmentalist community has become nothing short of embarrassing2.3
Perhaps the most compelling case for recycling is the pollution and waste caused as a byproduct of manufacturing. The $30 billion a year that taxpayers spend to dispose of solid waste is on ly the post-consumer segment of the nation’s garbage bill. It does not include the estimated $80 billion per year which EDA Chairman William Reilly estimates that the public and private sectors of the American economy spend addressing environmental problems, like polluted air and hazardous waste disposal.24 This pre-consumer aspect of the waste stream actually generates even more waste than the waste created by the disposal of the manufactured products themselves. While American households and offices generate roughly 200 million tons of solid waste per year, industry and government produce an estimated 300 million tons of hazardous wastes, which require special treatment. In this area, as in global warming emissions, the U.S. has distinguished itself as a paragon of wastefulness. According to Joel Hirschorn, an environmental-technology consultant cited in late 1991 by The Wall Street Journal, the U.S. generates five times the amount of waste that Japan does for every dollar of goods sold.25
Much of this pollution results from fabricating man-made materials from scratch. The byproduct of cleaning and refilling a bottle of beer for the thirtieth time (which is how many lives most beer bottles have in countries like Germany and Denmark) is not much-just a bit of water soiled by harmless traces of beer. The United States manufactures more than 40 billion glass bottles and jars each year. If two-thirds of the glass containers used were refilled ten times each, we would halve the number of containers that were being thrown away- and halve the amount of hazardous waste being created to manufacture the bottles in the first place. Instead, bottlers continue to churn out new glass and plastic containers at ever-increasing rates, unwilling to acknowledge any responsibility for the waste they generate. Despite returnable “bottle bills” in some states, America is actually doing far less recycling of such containers than it used to. Nowa days, less than 10% of the beer and soda sold in the U.S. comes in returnable containers, versus 84% sold in such containers in 1964.26
An even stronger case could be made for reducing the quantity of potentially toxic materials that the nation manufactures. Every recharge able battery used by a consumer replaces 400 batteries which no longer need to go through the complex, chemical-intensive process of fabrication. Disposing of one rechargable instead of 400 throwaway batteries also reduces the amount of solid waste. What’s more, because the disposal of batteries entails the risk of mercury poisoning seeping into waterways, the likelihood of such risk is also reduced by a factor of 400.
In purely economic terms, the nation indirectly pays far more when a consumer chooses to buy 400 disposable batteries instead of one recharge able. Yet these costs are never added to the price of the throwaway batteries. An Environmental Impact Fee tacked onto disposable batteries would make them cost more, while the absence of a fee on rechargeables would make them a comparatively better buy. Money raised by this fee could be earmarked to pay for programs to recycle consumer batteries, thereby addressing one of the most toxic components of the household waste stream.
Left to its own devices, the “invisible hand” of the marketplace will encourage consumers to purchase disposable batteries, so that the seller can sell (and manufacture) 400 batteries. It is clear that the marketplace is doing nothing to value the benefits of recycling in its “invisible hand” calcula tions. Many Americans, dismayed by the inability of their towns to get rid of the piles of bottles that they so conscientiously clean and recycle, feel that the marketplace needs a good governmental kick in the ass. This was reflected in the 1991 Associated Press poll in which 86% of the respondents wanted to see a recycling “requirement” enacted. Yet the one federal agency entrusted with safeguarding our environment does not see it the same way.
According to EPA spokeswoman Lauren Malone, her agency is not eager to get involved in regulating recycling efforts. “We’re interested in less of a government role-not more,” she told me during a telephone interview. 27Undeterred,environmentalists have been trying to pressure the EPA to develop recycled material content guidelines that at least allow consumers to know when they are really buying recycled material-or when the only thing that is recycled about a product is a marketer’s jump onto a trendy bandwagon.
Currently, the EPA allows paper made from sawdust to be designated “recycled paper.” Such paper does not have to contain a shred of p,iper actually recycled from consumers. Various forms of paper (phone books, newspapers, cartons, computer paper, etc.) are the fastest growing segment of the waste stream, accounting for 40% of all municipal solid waste. It is not reassuring that the EPA is still stuck in the “all government is bad government” rhetoric. Nor does the fact that the paper recycling rate in the United States has decreased 35% since 1951 offer any encouragement.
Many representatives of industry feel quite comfortable with the federal government’s inaction on recycling regulation. Alan Blakely, the director of public affairs for the National Solid Waste Association, is skeptical of any effort by the government to legislate recycling. He believes that when the landfills near heavily populated areas fill up, the big cities can simply truck their garbage to less populated areas. “We’re not running out of space,” he explains. “This is an enormous country. There are communi ties that are finding economic benefits in landfills. It will be a growing trend in the future as they attract more garbage.”
OTHER NATIONS RECYCLE MORE – MUCH MORE
An extensive report by the Congressional Research Service, issued in November 1991, compared the recycling of packaging waste in the United States to other industrialized nations. It found that out of 18 countries for which glass recycling data was available, the United States ranked dead last with a rate of 13 %. Five European countries, including Germany, had glass recycling rates exceeding 50%-four times as high. In paper recycling, the United States also lagged behind most other nations, ranking 15th out of 18 countries.3°
While the White House is busy threatening to veto any form of recycling requirement legislation that makes it through Congress, Euro pean governments are embracing bold new initiatives. These initiatives generally shift the responsibility for disposing of packaging from the average taxpayer to the manufacturers-those who create the waste. One of the key concepts in shifting this responsibility is called “source reduc tion.” When industry is made responsible for paying for the recycling of its own packaging, the logic goes, it will produce less of it. In the Netherlands, a June 1991 binding agreement between the Dutch government and industry stipulated that by the year 2000, industry would take back 90% of all packaging materials. Strong economic incentives were immediately applied as well, including a hefty 60 cent deposit on all plastic bottles for water and soda. At this price, it is the rare bottle which ends up in a landfill. Supermarkets are forbidden from supplying free shopping bags, which means people reuse their old ones or pay the equivalent of an Environmen tal Impact Fee for a new one.3 1 To enhance the likelihood that their recycling programs will work, the Dutch have even temporarily suspended the construction of all new municipal incinerators .32
The world’s most ambitious recycling program was passed by the German legislature in April 1991. The bold new system carries the “pol luter pays” theory to its logical conclusion. Put simply, the law mandates that manufacturers are now forced to “internalize” waste management costs by collecting, recycling, and disposing of all the packaging waste they create. The law, born out of the quintupling of landfill costs in Germany during the past four years, is designed to reduce the amount of waste currently being landfilled by a full 90% before the year 2000.33
To achieve this, the German Government has set tough targets, some of which have already taken effect. For example, since April 1992, retailers are required to provide marked bins to recycle all secondary packaging. This means that after a customer pays for a product, she can leave its package right there in the very store which has profited by the sale. In a combination carrot/stick approach, the German system encourages indus try to recycle on its own by making it punitively costly not to. Retailers and manufacturers have a choice. They can either collect, and refund, a 30 cent deposit for virtually all “primary” packages (like detergent and beverage containers), or they can collectively, through an industry group, assume responsibility for the collection, sorting and recycling of all packaging. German industry has chosen the latter route. Under the new “Green Dot” system, a private corporation called DSD assures the collection of all packages identified with a Green Dot. Manufacturers pay the DSD a licensing fee (which varies according to the volume of a package} to use the Green Dot. The cost is passed on to consumers, who then do not have to pay a deposit on the Green Dot products they purchase. The DSD will be privately financed by an estimated $1.2 billion annually from fees paid on more than 80 billion packages .
The Green Dot system goes further. It manages to “close the recycling loop” by insuring that there will be a market to reuse the material it collects- and is legally obligated to recycle. In order to get the Green Dot from DSD, a manufacturer must only use packaging that recycling compa nies have guaranteed, in advance, that it can reuse, regardless of the cost. Therefore if manufacturers find it expensive to recycle the plastics they package with, they will be forced to use other forms of packaging, pass the costs on to the consumer, or lose money.
It is still too early to tell how close the German Government will be able to come to its highly ambitious targets, which include collecting and sorting 90% of glass and metals and 80% of other materials by July 1995. Early reports indicate that the intended goal of source reduction has already had some effect. For instance, when the British division of Colgate Palmolive was unable to obtain a Green Dot for the boxes around its toothpaste tubes, it simply opted to sell the product without the boxes. When faced with the prospect of paying for the waste they generate, manufacturers are likely to undergo some startling realizations about how much packaging is truly necessary.
How AN ENVIRONMENTAL IMPACT FEE WOULD WORK
In a sense, the German Green Dot system encourages the same sort of conservationist behavior as an Environmental Impact Fee system. The difference is that the German system does so indirectly, without bringing the consumer’s decision into the equation. It also makes no allowances for any impact to the environment other than waste disposal.
A direct, prepaid Environmental Impact Fee (EIF) makes the “polluter pays” theory a powerful reality. The assessment of such fees would not be a simple matter. Indeed, a number of experts I discussed this proposal with believed that such fees for various packages and products would be impossible to assess with any accuracy. Yet few Americans would argue that our nation would be better off without the Food and Drug Adminis tration (FDA), a federal agency entrusted with the life and death decisions determining which, among hundreds of new drugs, ought to be made legally available to the public. The FDA must consider hundreds of factors in the formulation of each of its decisions. Likewise, an Environmental Impact Agency would employ qualified scientists to make their best estimates of the costs to the environment of various forms of packaging, pollutants, and manufacturing processes.
One immediate effect of an EIF would be “source reduction.” Consumers would generally prefer to pay for as little packaging as possible and would gravitate to those products that carried less packaging-and lower fees. Every product would contain a notice of how large an Environmental Impact Fee had been tacked on. For example, a disposable plastic soda bottle might be marked, “EIF = 11 cents,” while a refilled glass bottle could be marked “EIF = 1 cent.” This would inform citizens, for the first time, of the relative effect that their purchases have on the environment, allowing them to be ecologically “smart” consumers. In the same way, industry would have to become smarter users of our natural resources. For example, in 1989 nearly half of all magazines published in the U.S. were discarded without ever reaching a consumer. More than 1.2 billion magazines were sent to newsstands, returned unread, then sent to landfills across the country.35 If publishers had to add even a small EIF fee to their publication costs, they might implement a more efficient distribution system. Not only would fewer magazineswind up in landfills, but less ink would be used, less energy would be expended, less pollution would be created. Source reduc tion nips the environmental waste problem in the bud- nothing is more effective than not creating unnecessary material in the first place.
The amount of each Environmental Impact Fee (EIF) would vary widely depending on numerous factors. For example, nowadays a ream of 500 sheets of paper manufactured from ” virgin,” unrecycled timber might cost $6, or 10% less than paper of equal quality made from recycled paper. This price differential has to do with economies of scale- many more mills of much larger size are equipped to handle virgin paper. It also has to do with the fact that the higher environmental costs of the energy pollution and waste associated with virgin paper are never directly passed on to the consumer or the manufacturer . But if such virgin paper were assessed with a 20% EIF, it would cost $7.20. The recycled paper, starting from a base cost of $6.60, would carry a far smaller EIF. This fee could vary from 2 cents to 30 cents, to work in considerations such as how much “post consumer” waste paper was used to make the recycled paper, how energy efficient the recycling/fabrication process was, and how much pollution was created in the process.
Such a system would get corporate America to do what it does best: figure out ways to make better, lower-priced products. The difference with an EIF system would be that a prime consideration in pricing products competitively would involve sustaining the lowest fees possible. Billions would be spent researching and applying new forms of less bulky packag ing which created less pollution and required less energy to manufacture . Recycled material would become a prime component of lower priced products. Therefore the demand for post-consumer recycled material from municipal collection centers would skyrocket, as would the price for such materials. Local governments could increase their recycling efforts, partly with the revenue such sales would generate.
In Denmark, Environmental Impact Fee-type charges for new bever age containers, which ranged from 2 cents for large milk jugs to 35 cents for two-liter soda bottles, now raise $13 per person per year.3 6 I recently spent six weeks in Denmark, shopping regularly with Danish friends. I never heard a word of complaint over the fees-and never saw a returnable bottle find its way into a garbage pail. What’s more, the pro-conservationist Danish economy is among the healthiest in Europe. Similar beverage charges in the U.S. would raise about $3.4 billion per year. Since beverage containers make up about 5% of America’s non-organic solid waste stream,3 7 the Environmental Impact Agency could conceivably raise nearly $70 billion by charging a similar fee based upon the disposal cost of all goods used by consumers. This figure assumes there would be no source reduction, or further recycling, if such fees were enacted.
Of course, if people had to pay these fees, they would buy goods in recycled packages, which would be considerably cheaper because they would carry much lower Environmental Impact Fees. Inevitably, less than $70 billion of annual disposal-based fees would be collected. This figure does not include fees which would be assessed based upon the pollution created in the fabrication and use of manufactured products. Even without the tens of billions which could (and should) be generated by a carbon dioxide tax on gasoline, and even allowing for some degree of change in the wasteful packaging habits of manufacturers, an Environmental Impact Agency could expect to collect at least $60 billion per year.
Such figures ought to be put in perspective. In 1993, the federal government will spend about one tenth this amount, or $7 billion, on the environment through the Environmental Protection Agency. It seems like a tremendous amount of money-and indeed, such a budget could allow the federal government to spend nine times as much as we do now to benefit the environment. But looked at another way, allocating $60 billion in environmental user fees does not seem unsustainable when compared to the estimated $70 billion spent each year on packaging, or the $130 billion spent on advertising. Moreover, an EIF would dramatically reduce the environmental clean-up and trash disposal costs American taxpayers must now pay, regardless of the extent to which we currently recycle or consume. What would the Environmental Impact Agency (EIA) do with all this money? Create jobs, for one thing. Recycling involves the labor intensive tasks of collecting, then meticulously separating different materials. Some of that is done by homeowners, but further separation always needs to be done at collection centers and recycling mills. The EIA could grant tax subsidies to local governments and employers who employ out of work soldiers, homeless people, welfare recipients, and former drug addicts or convicts. In certain areas, the EIA might choose to directly open its own recycling centers, which could eventually become as commonplace as video rental shops. For organic trash and yard waste, the EIF could subsidize, or even supervise, the creation of processing plants to transform such garbage into fertilizer. With some $60 billion, the EIA could earmark $10 billion for R&D, $10 billion for environmentally beneficial programs through international agencies like the United Nations, and still have $40 billion left to support as many as 2 million new jobs, through subsidies and direct employment. A program much like the Works Progress Administration (WPA) could be created -the largest jobs works program since the depression. Instead of spending as much as $50,000 per year to keep a 20- year-old drug peddler in jail on a 15-year mandatory sentence, he could take a $15,000 a year job sorting recyclable materials, then advance to a
$25,000 a year managerial or administrative position, all within the new agency. Instead of having an excess of soldiers expending energy running unnecessary training missions because the government doesn’t know what to do with them at home, they could be hired to install wind generators or clean toxic waste dumps. Jobs could be offered to homeless people or able bodied welfare recipients. These jobs would remove such employees from lifestyles which drain both the economy and individual dignity, and allow them to pay taxes and earn their livelihoods by creating a direct benefit to society.
The Environmental Impact Agency would be administered like a quasi-public corporation, with autonomy over the use of the funds it generates. The beauty of such a system is that it would be self-financing. Yet the biggest obstacle to an Environmental Impact Fee system would be public resistance to what might be regarded as new direct “taxes”-even if they simply displaced existing indirect taxes. “Every bit of research we have done has indicated that the public will not pay more for any product even if it’s better for the environment- and they will not support a tax or pre tax,” explains Anthony Kassell, president of Environmental Research Associates. Based in Princeton, New Jersey, Kassell’s organization is the nation’s largest environmental research firm. Even though the costs of disposal and environmental clean-up are paid by all taxpayers through local and federal taxes, Kassell says, “when the price is absorbed at the end, it’s not as visible as when you have to pay more up front.”38
Other environmental experts, like Allen Hershkowitz, Senior Scien tist for the Natural Resources Defense Council, prefer the German Green Dot system. But this approach leaves important societal decisions to industry. An Environmental Impact Fee system would let consumers decide, at the point of purchase, how much they are willing to pay for packaging and pollution . In this way, we would “vote” on a product’s environmental impact every time we made a purchase. We would also benefit, directly, when we choose to refill containers we return to stores or when we buy concentrated detergent that requires less packaging. Indeed, those who dismiss an EIF as a burdensome new tax are mistaken . Nobody will have to pay the fees. In fact, for the first time those who make environmentally beneficial decisions will be in a position to benefit, eco nomically, through relatively lower prices, for these decisions. Since the average taxpayer’s garbage collection costs will presumably decrease and there will be less pollution to pay to clean up, some people would pay less with an EIF system. And the argument that this is a “consumption tax,” that is regressive because it hurts the poor by making them pay the same rate as the rich is also untrue. In fact, an EIF system would provide those with limited incomes a way to avoid the fees by using refillables, collecting deposits on a wider variety of products, and even selling certain recyclable products they find to redeemers. Special ” refillable ” supermarkets would spring up to service those who, for reasons of income or environmental sensitivity, would chose to buy goods in bulk, reusing their own packaging . And unlike our current system, which provides no economic incentive for refilling or recycling, such activities would pay off.
Despite criticism of the political viability of an Environmental Impact Fee system, most experts acknowledge that externalizing environmental costs, one way or another, must occur if recycling is to succeed. Congress man Al Swift, from Washington State, chairs the House Subcommittee on Transportation and Hazardous Materials. Swift is trying to work a bill through congress which would reauthorize the Resource Conservation and Recovery Act. The bill, which mandates a mild collection of waste manage ment and recycling targets, is facing an uphill battle and a veto from President Bush. Congressman Swift found the Environmental Impact Fee proposal a “rational approach” which he would be curious to see tested. “It will be a long time before recycling makes sense if you don’t do something.” he said. “I would like to see a public poll of a tax to deal with environmental impacts. We need to look at economic incentives … because there has not been the care made by industry to try to minimize waste.”
Ironically, one of the loudest advocates of major changes is not an environmentalist organization but a group of 48 powerful international business leaders called the Business Council for Sustainable Development. On 7 May 1992, the council issued a report in Geneva called “Changing Courses.” Headed by maverick Swiss billionaire Stephan Schmidheiny, the group included the top executives of Chevron, Du Pont, Nippon Steel, Mitsubishi, Volkswagen, and Royal Dutch Shell. After 20 months of debate, the council’s report argued that the most successful companies in the future will be those that are “eco-efficient,” because such behavior uses fewer resources, creates less waste and pollution, and results in higher profits. According to The New York Times account, the group recom mended “that the prices of all goods and services gradually be adjusted to reflect environmental costs-the cost of production, use, recycling and disposal. “Because such costs were not integrated in prices by government and business in the past,” it says, “industrialization has generally been characterized by depletion of resources and high levels of pollution.”
Astute observers of the business community recognize that the current system is indefensible. A special report in the 8 September 1990 issue of The Economist magazine noted, “Only if prices are set to reflect the true cost of using environmental resources will companies start to value them as they value labor and capital, and aim to improve their productivity in their use of the environment as they strive for higher productivity of labour and capital.” Far from hurting business, an EIF system would encourage American companies to increase their environmental competitiveness and eventually, their profits. The Economist said it best: “For far-sighted companies, the environment may turn out to be the biggest opportunity for enterprise and invention the industrial world has ever seen.”
REFOCUSING THE NATION’S RESEARCH EFFORTS
If one sixth of the new Environmental Impact Agency’s budget was committed to testing products and research, it could create the environ mental equivalent of a Manhattan Project. The difference would be that the money-perhaps $10 billion a year- would go to studying and developing technology to help the planet – not destroy it. That would be 20 times as much as the federal government now spends for such research.
And what a difference it would make. The arms buildup of the Reagan-Bush years has diverted the best and the brightest of the nation’s scientists and engineers to economic sinkholes like the Strategic Defense Initiative. While theJapanese and German governments far outstrip America for civilian R&D in technological areas that increase economic competi tiveness, the United States spends billions developing new forms of warfare. Currently 75% of all federally funded research and development is spent by the Pentagon-41 Planes and missiles are built, often to sit out their useless lives in hangars or silos, or be tested during incredibly expensive training missions, only to return to their storage areas, waiting for the time in the not too distant future when they become obsolete. Then it becomes time to push the weaponry onto the international arms market where the United States is now unrivaled as the world’s number one purveyor of instruments of destruction.
It doesn’t take an economist to understand that committing the lion’s share of our R&D to the military does little to build the American economy. Meanwhile, the entire portion of the federal R&D budget that will be committed to the environment in 1993 amounts to just $526 million, which the EPA spends on research. This constitutes about an eighth of what we will spend on Star Wars research. Adjusted for inflation , it is 3% less than was spent by the EPA on research in 198 1.4 2 Reallocating resources and brainpower from the military is not simply a matter of ethical priorities-it is an economic imperative. What would American industry have a better chance of exporting to the rest of the world: a missile-slaying, satellite-based laser that might work sometimes, or a new form of plastic packaging that turned to harmless dust when mixed with scientifically engineered microbes?
By creating a market for environmentally beneficial packaging, the government could get the best minds of both public and private science focusing on patentable, technologically superior ways to package every thing from frozen foods to compact discs. To get some idea of the value of such inventions, one need only look at the success of the Rausing family of Sweden. The Rausings are among the richest families in the world, all from selling the Tetra Pak, a unique carton for packaging liquids like milk so that they can sit on shelves for months without refrigeration. In 1989, the Tetra Pak collected annual revenues of $3.7 billion from 109 countries. Forbes Magazine estimates that the Rausings are worth nearly $10 billion, 43 which probably makes the Tetra Pak the most valuable privately patented invention of all time.
THE CHOICE: WELFARE FOR THE WASTEFUL OR A CONSERVA TIONIST SOCIETY
Echoing the voices of the least progressive elements of American
industry, the United States Chamber of Commerce recently recommended that a 16% national recycling rate would be “remarkable.” Despite the environmental hazards associated with it, the Chamber advised further incineration, which it predicted would ultimately “process” 70% of all municipal waste.44 On the other end of the spectrum, Barry Commoner, the environmentalist who ran for president on the Citizens Party ticket in 1980, believes that an efficient, environmentally-enlightened America could even- tually recycle a full 84% of the trash stream.45 ,
The implementation of an Environmental Impact Fee would herald an era of environmentally responsible capitalism. In the process, we would replace a disposable society with a conservationist economy. To those who argue that the free market could not bear it, I say that the free market bears the higher costs of a throwaway economy right now. It comes down to whether we will have a system of welfare for the wasteful, or one in which environmentally beneficial decisions are directly rewarded. One road leads to the ever-spiralling creation of carbon dioxide emissions and toxic rivers, of a nation stripped of its precious natural resources and marred by ever larger garbage dumps. The other leads to a society that wastes less, conserves more, and attempts to strike a balance between consumerism and the desperate needs of our planet. The options are clear. Business, acting on its own, will not make this choice for us. A conservationist economy lies within our reach, but only if we create it.