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Charging for environmentally damaging activities
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he Clinton administ,,,,,.. has pledged to increase investment, improve education and health care, reduce the deficit, and ease the economic burden. How can the revenues needed for these ends be raised fairly and in ways that do not depress the economy? The most rational answer is to make more use of “green fees,” or charges on environmentally damaging activities. Problems such as pollution, traffic congestion, and inefficient use of resources cost hundreds of billions of dollars in illness, natural resource damage, and higher industrial expenses. Green fees can be used to address such problems more efficiently than commandand-control regulations, and can raise tens of billions of dollars in added revenues. Moreover, raising needed revenues in this way is far less burdensome than increasing tax rates on payrolls, incomes, or profits-the very rewards that stimulate economic progress. The logic of green fees is just as powerful for state and local governments. The recession has forced them to cut spending and raise taxes, but tax increases spell double economic trouble. Besides discouraging work and investment, as federal taxes do, state and local tax hikes trigger the flight of labor and capital to areas with lower taxes. It
&,,ided out of property taxes, people have little reason to care about how much they discard. This problem can be corrected by charging households the full incremental costs of waste disposal through a ”pay by the bag” system. In communities with such systems in place, raising the collection fee per 32-nal baE from zero to $1.50 tvpicaly d u c e s solid waste volime by 18%. If the pay-by-the-bag system is combined with curbside recycling, waste volume typically falls by about 30%,and the savings from lower landfill costs more than offset the costs of recycling programs. Adopted nationwide in communities where landfill costs are moderate or high, such programs would generate revenues of $6.3 billion and net savings of $432 million annually. Traffic is also ripe for green fees. Anyone who drives knows that traffic is getting worse all the time. Stop-and-go conditions prevail in nearly 70% of the nation’s rushhour trafik. In worst-case Los Angeles, the time and fuel wasted by traffic congestion cost $8 billion in 1986-$3 a day for every vehicle on the road. Americans m wasting 8 billion hours a year stuck in traffic, and no relief is in sight. Congestion tolls could free up traffic while generating nearly $100 billion in state or local revenues. Again, the principle is to make the people who do the damage pay for it. Drivers may fume about traffic, but they ignore the fact that by entering a crowded highway they delay everyone else and make accidents likelier. Tolls based on what each additional car costs all the LJ,,a=yLLJ
in ways that improve local environmental quality than in ways that drive away businesses and workers. Our analysis at the World Resources Institute [Washington, DCI shows that the United States could shift $100 billion to $150 billion in federal, state, and local taxes from economic “mods” such as income I
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Problems such as pollution, traffic congestion, and inefficient use of resources cost hundreds of billions of dollars.. . the principle [of green fees] is to make the people who do the damage pay for it.”
Views are insightful commentaries on timely environmental topics, repmsent an author’s opinion, and do not necessarily represent a position of the society or editors. Contrasting views are invited. 214 Environ. Sci. Technoi., Voi. 27, No. 2, 1993
and investment to environmental “ills” such as pollution and waste. Annual dividends of $50 billion to $80 billion would be reaped in the form of reduced environmental damage and greater economic productivity. Consider the trash problem, for instance. Landfills in many areas are filling up, and landfill construction has been slowed by tougher environmental standards and community resistance. But, because trash disposal
001 3-936ws3/o927-214$04.00/0 0 1993 American Chemical Society
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Toxicology n anthology of the most up-to-dateinformation regarding the mechanisms of toxicology and the methods for studying same. Taken from the ACSjournal. Chemical Research in Toxicology.the 21 articles were selected both for their timeliness and the quality of their content.Collectively. they convey the sense of excitement that exists when chemistly and toxicology interface. The variety of structural classes of toxic agents and the range of biological effects they induce present an infinite number of interest. ing challenges involving such techniques of modern mechanistic and theOretiCal chemistry as structure elucidation. chemical analysis and synthesis.and physical characterization. With that in mind. the editor has grouped the material into four areas of concern: Toxic Agents and Their Actions: Enzvmes of Activation. Inactivation, and Repair: Pipica1 Methods: and
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Macromoletular Modification.
Organic, analytical. biological. and environ. mental chemists and toxicologists will benefit from this book and its emphasis on chemical approaches to the solution of toxicologically interesting problems. Lawrence J. Marnett. Editor Vanderbilt University 294 pages (1992) Paperbound ISBN: 04412.24283 $26.95 Text 516.95 American Chemical Society Dir::ibLrio:
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216 Environ. Sci. Technol.. Vol. 27, No. 2, 1993
other drivers on a busy highway would allocate road capacity more efficiently. Our analysis, based on a model originally prepared by the Department of Transportation, shows that tolls set to reflect the costs of delays would range from zero to $2.10 for a typical 10-mile trip and would reduce rush-hour traffic by 11% on the busiest highways. Such tolls would generate annual revenues of $44 billion and net savings exceeding $4 billion in reduced travel time. To cover all costs, including road accidents, tolls would be about $3.60 for a 10mile trip, reducing traffic by 22% and generating revenues of $98 billion as well as savings of $11billion per year. We could build our way out of the problem instead, but only by spending about $50 billion on road construction over the next six years. This solution would sap resources that might better be spent on health care, education, or upkeep of our existing transportation infrastructure and its aging roads and bridges. Carbon dioxide is another prime target for green fees, especially now that the Senate has ratified the international climate treaty to reduce greenhouse gas emissions. Again, there is an economic rationale for taking environmental action. If the worst global warming forecasts come true, our nation will have to spend enormous sums to build coastal defenses and new water supply and drainage systems, meet new energy demands, and make up for the loss of harvests. By holding the line on carbon emissions and thus curbing the extent of damage, we can avoid these costs. An efficient way to reduce emissions would be to tax fossil fuels. Rates would be pegged to carbon content, which means that coal, oil, and natural gas would be taxed at different rates. One congressional proposal would phase in a carbon tax of about $30 per ton over five years to stabilize U.S. emissions at 1990 levels by the year 2000, generating revenues of $36 billion by the fifth year. Offsetting tax cuts could mitigate the impact of a carbon tax on low-income households a n d coal-mining communities. To be sure, carbon tax strategies should be weighed in an international context. But even a unilaterally adopted carbon tax could improve our economy if it were part of a tax shift like the one we recommend-and not only because importing less oil would improve our bal-
ance of payments. In the long run, the key to any nation’s competitiveness is improving the productivity of its workforce, which requires adequate capital investment. Coupling a carbon tax with lower tax rates on income and investment would create incentives for such investments. Clearly, restructuring our tax system to provide a more rational framework of market incentives can simultaneously improve environmental quality and make the American economy much more competitive. Would a “green” tax shift be politically feasible? It might well be. When asked whether they favor higher taxes, most Americans answer with a resounding no. But if asked whether they would rather be taxed on their energy use and trash generation than on their earnings and investments, they would very likely answer yes. Today, the only way most of us can pay lower taxes is to earn less. Environmental charges would let us lower our tax bills by acting on our principlesfor instance, by saving energy, recycling, or bicycling to work. In that scenario, virtue is its own, but not its only, reward. This article is adapted from the report, “Green Fees: How a Tax Shift Can Work for the Environment and the Economy,” published in 1992 by the World Resources Institute, 1709 New York Ave. N.W.. Washington,DC 20006; ( 2 0 2 ) 6386300.
Robert Repetto is a vice president and senior economist at the World Resources Institute [WRII, a center for policy research on globol environmental and resource issues. Previouslv he was u professor at Harvord Universiiy, on adviser to the World Bank Economic Planning Board of Eosi Pakistan, and a staff member of Ford Foundation, India.
Roger C.Dower is a senior associate and direcior of W s Climate. Energy, and Pollution program. He was previously a manager ot the Congressional Budget Office, reseorch director at the Environmental L a w Institute, and an economic consultant in the Executive Office of the President of the United States.
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