The effect of people on the natural Earth is an issue that confronts our society today. The Intergovernmental Panel on Climate Change claims that there’s more than 90 percent probability that human polluting activities over the past two and a half centuries have caused the Earth to warm. Human induced pollution is a problem that has sparked the creation of more government bureaucracy worldwide including the Environmental Protection Agency in America and more recently in Australia, the Environmental Protection Authority (EPA). Political parties such as The Greens are also attempting to combat this issue and are having a growing influence on the public. In writing this article, I aim to examine briefly: what the arguments against pollution are, who is responsible, what our solutions are (and whether they’ve been effective) and also what our solutions should be as we go into the future.
What is the issue with pollution?
Pollution has been responsible for the rapid development of a wide variety of goods and services that we enjoy today as a first world nation. Mobile phones, automobiles, laptops, iPad’s, televisions and even toothbrushes would not exist if it wasn’t for some form of pollution. Climate change lobbyists, activists and others sometimes argue as if the issue is one of pollution versus no pollution; however this is neither a desirable nor feasible objective. Instead, we must find an “appropriate” level of pollution in which the benefits of contaminating the environment outweigh the costs. Human pollution could easily be stopped if each of us held our breath long enough, however the costs would clearly outweigh the benefits. All vehicles could be taken off the road in order to eliminate the effect of the greenhouse gases expelled from cars, trucks etc. but the result would include: drastic increases in the price of agricultural and industrial goods, enormous increases in unemployment and landslide drops in productivity amongst other economic and social disasters. Our standard of life would deprecate many of us to extreme hardship and perhaps even death for some people. Having clean air comes at a cost just as the goods and services we buy do, hence we must decide whether the costs we are imposing on our society’s productive growth is worth the reduction in human pollution. The difficulty with solving the issue of pollution occurs because it is a contention of subjective nature. Someone who rides his/her bike as their primary form of transport might consider cars a source of pollution however others will see them as an efficient travel method. Some may complain about the environmental damage that energy companies are causing, but again others may see them as a great source of fuel for the community. Regulating products due to their pollutant levels may win favour with some but will inevitably hurt others. In my opinion, the approach of coercion, rules and orders to control pollution is the primary obstacle when trying to resolve today’s environmental problem simply because it can be such a subjective issue. Pollution in my eyes is merely a quandary of more or less, nothing else.
Who is responsible?
In the case of pollution, there is a habit of making the issue one of good versus bad. As if evil capitalistic, profit seeking firms are exploiting our natural Earth in order to make a few bucks and good, noble government lobbyists and officials are here to stop them and protect the people. The true responsibility of pollution however does not lie with the electricity company that burns coal or the mining company that contaminates the soil, but rather it lies with the consumer. The consumer encourages businesses to continue making environmentally “unfriendly” products by purchasing the goods and services (e.g. electricity, cars, Televisions) that these businesses provide. The process would work like this. Suppose the population of Australia increases. There would be an increased demand for electricity (for heating, lighting, cooking, refrigerating etc.). The additional electricity consumers will begin making payments to an energy company, and this will gives the company the incentive to burn additional coal, natural gas, oil etc. in order to generate enough electricity to meet the increased demands of their customer base. As a result, there will be additional amounts of carbon dioxide, sulfur dioxide and other gases which are released into the atmosphere causing the Earth to heat up, sea levels to rise, air quality to decline amongst many other harmful effects. On the plus side, the consumer gets electricity in return, which will ultimately lead to his/her higher standard of living. Pollution can be reduced very easily, but the cost will have to be borne on the consumer and at the expense of his/her standard of living. In my opinion, the consumer should pay for the damage caused to the environment and third parties because of the decision to use an environmentally harmful good or service, and this article will go into further detail on how this could be approached in a more efficient method than is currently being used in the final section. Lastly, it is an illusion when environmental activists and others say that it is in the best interests of everyone to “protect” the environment; the truth is that pollution is here because the majority of us, as consumers are enjoying the fruits of human ingenuity in being able to use the Earth’s resources to promote an ever more productive society. As consumers we must be aware that the word “protect” really means to abuse our interests and choices.
What is our current solution? Is it effective?
The approach to controlling pollution has been the same approach to many other aspects of society worldwide, including the trucking industry, food and drug industry, and education industry. The attitude is to erect another government bureaucracy that has the power to enforce orders. In America, the Environmental Protection Agency was established in 1970. In it’s first eight years the agency’s budget increased seven-fold and it currently has $7.89 billion of taxpayer’s money to spend. In Australia, the Environmental Protection Authority (EPA) was established in 2012 to “deliver environmental outcomes to the people of NSW” and it has been granted discretionary legal power. The issue with this is that it deals with pollution as if it is a court battle when it is simply a matter of more or less. The EPA regulates businesses by putting a limit on how much carbon (or how much coal, oil etc.) they can produce. They also issue licenses to businesses which they feel are environmentally satisfactory, thus giving them the right to carry out their business legally. Both regulation and licensures restrict the supply of businesses in a given industry. By forcing companies to obtain licenses and comply with carbon limits, we are restricting the amount of companies that will be willing to get involved in industries such as mining, energy and gas due to the higher costs and more time consuming process of starting up and expanding. When competition is reduced between businesses (as a direct effect of government regulation) the end result is always a higher price for the consumer. The consumer will have to bear the cost anyway if we are to reduce pollution, however regulations provide little information on the costs and benefits of the reduction in pollution. In other words the consumer may be paying too dear a cost for the benefit of clean air. In addition, by establishing regulations we are openly protecting big businesses from smaller competitors who can’t afford the time and money that the bureaucratic process forces them to succumb too. It is always the larger companies who have the money to spend on persuading the bureaucrats to obtain a license or to reduce regulation rather than the small business who does not get any government attention because it simply lacks the financial backing to argue for a favourable outcome. Not only that, the fines for breaking regulations end up being much more burdensome on the small companies than the large. To take a recent example, Mining company: Whitehaven Coal Pty Ltd had to pay a $15,000 fine for breaching the conditions of it’s license by producing a mere 6.8% extra coal than it’s limit of 2,000,000 tonnes per year. Caltex was also recently fined $15,000 for a water polluting incident in November. Whilst this system appears fair, Whitehaven Coal is only worth $1 billion while Caltex is worth $9 billion dollars. Caltex will recover much quicker than Whitehaven coal because the fine represents a much smaller fraction of the company’s wealth than it does for Whitehaven. Hence the result is to give Caltex a legally assisted competitive advantage over the much smaller, Whitehaven Coal. The question is who benefits and who suffers from this process? Society as a whole may benefit from drastically reduced pollution levels but because the regulatory system provides no efficient mechanism to assure the weighing up of costs and benefits, society may be paying too dear a price in terms of the standard of living we are giving up for this reduction in pollution. As consumers we are paying the costs of regulation that is given to businesses, although I don’t believe consumers have seen huge increases in the costs of their environmentally “unfriendly” products, it could potentially end up like this if we continue to grow bureaucracy and increase government controls. As taxpayers, we are suffering from more of our personal income being taken away and being given to another government organisation supposedly for our benefit. Finally as business owners, licensures and regulations will make it difficult to begin and expand mining companies, energy companies etc. unless the business is well established. In that case the regulation will help large businesses protect themselves against competition from smaller competitors.
In my opinion, the bureaucratic approach to the environment does not provide a good measurement of the costs and benefits of having different levels of pollution and the regulations are simply not flexible or adjustable enough to be viable. Instead it creates another legal barrier that prevents almost everyone from achieving their desired objectives.
What should our solution be?
In a society where the cooperation of individuals is voluntary, no exchange will occur unless it benefits both parties. A common example of this is when people line up outside the school cafeteria to give up some of their money for the food that the canteen has to offer. The students benefit because they get to eat and the cafeteria owners benefit because they make a profit which they can use to spend on other goods and services. This system of voluntary cooperation is called the “market” and it is an effective tool for ensuring the benefits of every situation outweigh the costs when everyone who enters a deal or trade is identifiable. However this system falters when the deals between two or more groups affect “third parties” who had no intention of entering the deal. This is the case with pollution. An individual may be willing to give up quality air for electricity however other people (who cannot be identified) would be affected from that same poor quality air even though they did not involve themselves in the transaction. In such a situation, government intervention can be used to solve the issue. Setting up a government bureaucracy to regulate pollution is one method but as shown, this is simply not an effective method. In my opinion a carbon tax would be the best way to deal with the problem. Like regulation, it makes consumers responsible for their own pollution (as they now have to pay higher prices for their products due to the increased costs on businesses). Also like regulation, a tax will prevent some companies from starting due to the higher costs however it will be much easier to coordinate, it will not require additional bureaucracy and it will be much more easily adjustable. The key is to start small (although I have no clue what an appropriate price would be) and slowly tune the tax so that the costs of reducing pollution (in terms of the goods and services and living standard we sacrifice) is worth the cleaner air we get in return. The goods and services that require a lot of pollution to be emitted for it’s creation will rise heavily in price and those goods and services that emit little or no pollution will become significantly cheaper by comparison. This will provide the incentive for consumers to switch to greener products and by the same hand, businesses will also be incentivised to produce greener goods and services to meet changing consumer demand. On a more political note, by removing the bureaucracy we will allow businesses to be conducted fairly. Instead of companies competing to influence government for agreeable rulings in regards to regulation and licenses they will compete only for the customer. This will prevent the unfair competitive advantage that large businesses have because they often have much more money to spend on influencing government than smaller companies do. It will allow more resources to be dedicated to a more efficient and effective consumer product and it will reduce the chance of corruption that may occur when government officials and large businesses collaborate. Finally it deals with the pollution concern, not in terms of court enforceable orders but rather in terms of costs and benefits. Fines and removal of licenses will no longer occur as a punishment to businesses who exceeded their production limit because the only production limit set will be by the quantity consumers can afford. The carbon tax has been removed in Australia (perhaps because it’s burden was too large) however in my opinion this tax is the best approach that has been suggested.
In conclusion, this article has provided a short explanation and given a brief insight into what the true issue of pollution is, who is responsible and what we need to do as a nation and as a globe going forward. We must remember that it is in the industrialised and developed countries such as Australia, the U.S., Britain etc. where we have clean air and water. In America, carbon monoxide levels have decreased 84% from 1980-2013, nitrogen dioxide has decreased by 60% in the same time period and sulfur dioxide has decreased by 81%. Development has created new environmental issues however it has gotten rid of many other issues. To take an example, steam trains were the dominant railway transport from the early 1800s until the mid-1900s; however their energy efficiency level was only 10%, meaning that most of the coal that was burned was released into the atmosphere as sulfur dioxide, carbon dioxide and nitrogen oxides. The invention of the diesel engine allowed energy efficiency to increase to about 35% making trains even more environmentally friendly and today, electric trains are becoming the predominant form of railway travel and they are much more energy efficient than diesel run trains. So as we can see, the natural byproduct of progress is a cleaner environment. Unfortunately when we hinder this progress unnecessarily through regulatory government bodies, everyone suffers as a result.