Wednesday, April 12, 2017

Seven Reasons Why Gutting EPA is Bad for Business

The Trump Administration plans massive cuts to EPA’s budgets (the latest numbers suggest a cut of around thirty percent).  For people who care about environmental quality, this is very alarming.  But suppose you don’t personally value blue skies, clear lungs, clean water, or any other environmental amenity, and instead care only about the well-being of American businesses (suppose, also, that you do still acknowledge the reality that other people do value those things).  Would you have any reason share the concerns about the proposed EPA budget cuts?  The answer, I think, is yes, and here are just a few reasons why.

  1. Your business may sell environmental quality. Imagine that you run a beachfront hotel, or sell real estate in an area with natural amenities, or you manufacture clothing or equipment for outdoor recreation, or you’re a rafting or fishing guide, or you own a restaurant near a national park, or you sell bottled or tap water, or you run a ski area threatened by warming temperatures.  Environmental quality is the part of the good you’re selling, but you probably can’t protect it on your own.  For that, you’ll need regulatory oversight, which means you’ll need something like EPA.
  2. Your business may depend upon environmental quality for manufacturing inputs. Many businesses depend upon a quality environment for their raw materials.  Clean water, for example, isn’t just a human health need.  It’s also important for many manufacturing processes.  If your manufacturing plant can’t use tap water because it’s too polluted—which recently happened to a GM factory in Flint, Michigan—replacing that water could cost you a lot of money.  If your city has to pay higher treatment costs because its source water is contaminated, those costs will likely be passed on to businesses.  Similar issues can arise if dirty air damages crops or forests, if lost pollinators lead to damaged crops, or if damaged habitat quality leads to declining fish catches.
  3. Environmental quality may help your business recruit. I used to live in Maine, and quality of life—including environmental quality—was a huge part of Maine employers’ recruiting pitches.  Live here, the argument went, and these beaches and rivers and lakes can be part of your daily life (it was a pretty good pitch).  Companies in many other parts of the country can offer the same argument.  Indeed, in an international recruiting battle with, say, Beijing or New Delhi, any American metropolitan area could offer those arguments, largely because of our history of EPA-led environmental protection.  But if the environmental quality goes away, so too does the recruiting pitch. 
  4. Your employees (or their family members) may drink water and breathe air. You might not think of environmental health problems as a business expense.  But they are; if an employee’s daughter has a pollution-induced asthma attack, that employee is probably staying home for a day, or coming to work with a lot of extra stress.  Either way, productivity drops.  Similarly, if lead exposure does permanent damage to a child’s intelligence, that child’s economic productivity is also likely to drop.  A healthy population provides a major economic asset (among other benefits).  And that’s an asset we ought to grow, not give up.
  5. Your business model may depend upon environmental mandates. The Trump Administration’s rhetoric includes mantra-like accusations that environmental regulations kill jobs.  But there are many jobs that owe some of their value, if not their entire existence, to environmental regulation.  Many companies’ business models revolve around finding ways to reconcile environmental protection and economic activity.  The environmental consulting industry, which helps businesses figure out how to comply with environmental regulations while continuing to make money, is one example.  Wetlands mitigation bankers are another.  Manufacturers and installers of energy efficiency technologies are a third.  The list could go on and on.  Without regulatory oversight from EPA, the incentive to hire these businesses would diminish, if not disappear. 
  6. Your business may want clarity about its environmental obligations. Sometimes businesses need help understanding their environmental obligations.  Businesses will often turn to consultants or lawyers for the answers—thus creating work, and jobs, for the lawyers and consultants—but sometimes they will want a cheaper explanation (and sometimes the consultants and lawyers also have questions).  A well-staffed environmental regulatory agency can answer those questions when people call, or can put out guidance documents that anticipate the questions before they are asked.  In other words, it can provide regulated entities with clarity and predictability, both of which can be very valuable.  But if one-third of the office staff are gone, there may be no one to put out those guidance documents or answer the calls.
  7. Your business may require innovative regulation. Suppose your business model is new, and existing regulations cover its operations—but not very well.  You might want regulatory changes that are responsive to the unique needs of your business while also providing the public (and your employees) with the traditional protections of environmental laws.  That will mean asking government to work with you to come up with new regulations or new permitting approaches.  A well-staffed agency can provide that kind of support.  But an agency with bare-bones staffing—or much less than that—is highly unlikely to take on the labor-intensive task of coming up with new and better ways to regulate.  Instead, your business is likely to remain burdened with rigid, potentially obsolete obligations.

There is a broader point here.  Quite often, we think of relationships between environmental regulators and businesses as adversarial, and sometimes that traditional view is accurate.  But business-regulator relationships are also often collaborative, and those collaborative relationships have played a huge part in improving our environmental quality in many ways at the same time our economy has grown.  Because collaboration requires staff time, gutting EPA means cutting that collaboration.  That will leave many businesses worse off.

- Dave Owen

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