David Millimet, Economics, A Weaker EPA May Not Mean The Environment Goes To Hell But It Could Lead To Greater Disparities Between States

FiveThirtyEight

Originally Posted: April 7, 2017

Last week, President Trump signed a broad executive order that’s primarily aimed at promoting the use of coal and curbing Obama-era efforts to reduce America’s greenhouse-gas emissions. The Trump administration sees its new rules as a crucial path to creating coal-industry jobs and making America energy-independent — though economists say it’s unlikely to achieve those goals. Meanwhile, among people concerned about the risks of long-term climate change, the order has been interpreted as an attack, a dismantling of environmental protections, and an example of the president’s particular animosity toward the Environmental Protection Agency.

But if Trump really does have an ax to grind with the EPA, he’s not the first world leader to sit down at that whetstone. Politicians in the United States and Russia have taken steps, at various points, to curb the power of their countries’ centralized environmental regulatory agencies, roll back national environmental protections or cut the funding necessary for regulatory enforcement. But these efforts, while damaging to the environment in some cases, don’t seem to have led to long-term, universal reductions in environmental quality. Instead, experts say, the results have mainly come in the form of slower progress on environmental protections and the exacerbation of regional differences as local governments respond to changes in federal policy.

First off, a caveat: This is a difficult thing to study. Seemingly straightforward reviews of historical facts have come up with contradictory results. This is partly because although the policy changes are national, the results are often highly variable by region. At the same time, there is more than one way for a government to go war against its own environmental protection system — and the specific tactics used seem to affect the outcome. Finally, attempts at analysis are further complicated by both the difficulty of teasing apart causation and correlation and the general shortage of examples to study.

“Actual cases of deregulation are rare,” wrote Arthur Mol, an environmental scientist at the University of Wageningen in the Netherlands. He said in an email that, while President Ronald Reagan’s administration was marked by a rhetoric of deregulation, it didn’t really eliminate many active regulations. To a certain extent, that seems to parallel what’s happening now under Trump. While headlines talk about this new executive order “rolling back” President Barack Obama’s Clean Power Plan, the reality is that the Obama plan hadn’t yet gone into effect anyway. Similarly, Mol wrote that during the Reagan years, “What we have seen is a stagnation in environmental regulation during an era when many environmental laws and regulation were still being constructed. So it really felt as a set back on the environment, but it was rather a stalemate position.”

That’s not to say that the Reagan administration, especially in the first couple years of his first term, didn’t create a lot of upheaval for the EPA. In his first months in office, Reagan cut the EPA budget and the budget for renewable energy development. He also put the agency under the administration of Anne Gorsuch (later Burford),1 who believed that the EPA was too big and that it put too many limitations on business. She was administrator for just 22 months from 1981 to 1983, but during that time, the agency’s employment numbers were cut by 22 percent, and its research and development budget fell by 45 percent. Federal-level enforcement of environmental regulation plummeted, too — by 1982, EPA enforcement had fallen 73 percent from 1977 levels. At the beginning of 1982, the states were responsible for about 64 percent of the enforcement of air-quality standards related to factory emissions. By the end of the year, the share of state responsibility had risen to 90 percent.

But there’s not much evidence that Reagan and Gorsuch actually harmed the environment. The pattern of defunding federal environmental protection and decentralizing enforcement shifted at least somewhat after Gorsuch was found in contempt of Congress in December 1982 and was eventually replaced by the EPA’s founding administrator, William Ruckelshaus, who reversed some of her policies and, in general, took a different approach to the agency, said William Andreen, a law professor at the University of Alabama who studies how the creation of the EPA changed environmental outcomes in the United States. Andreen agreed with the assessment that regulations weren’t eliminated during the Gorsuch years. And, given the specific changes made and the fact that most people want clean air and water, he said we shouldn’t be terribly surprised that it’s tough to find a clear signal of major, widespread environmental degradation resulting from her tenure.

This also helps explain why teasing apart correlation and causation on this kind of question is so difficult, said David Millimet, professor of economics at Southern Methodist University in Dallas. What you’re really asking is this: How would the world be different today if the only variable you changed was whether or not Anne Gorsuch led the EPA for a couple years in the early ’80s? “Can we ever really figure that out?” he said. “No, not really.”

But Millimet and others have tried, using statistical analysis to account for a variety of variables that Reagan and Gorsuch had no control over. The researchers’ methods vary, which is why their results do, too. In 2003, Millimet published a study on the effects of Reagan administration policies that shifted the job of enforcing environmental regulations to the states. He found that, by the mid-1980s, states were pushing each other toward improved environmental outcomes in a sort of intergovernmental game of one-upmanship. An earlier study, from 2000, didn’t come up with that result but did conclude that this decentralization of enforcement didn’t make environmental outcomes worse than they otherwise would have been. On the other hand, just because Reagan and Gorsuch don’t seem to have stopped the long-term movement toward environmental protection doesn’t mean that decentralization will always have no effect. For instance, a 2006 study of state-level surface-mining regulations found that states can, at least sometimes, push each other into a race to the bottom on environmental protection and that this effect seems to hinge on what each state sees its frenemy states — similar states that it competes with economically — doing.

That finding is particularly interesting in light of what happened when Russia turned its version of the EPA into a subdivision of a different agency that is more focused on industrial development of natural resources. The environmental regulator lost most of its power and independence, said D.J. Peterson, an analyst who has published academic research on the topic and advises corporations on international politics and economics. That reorganization took place in 2000, and outside observers are still trying to sort out the impacts. But one effect researchers have noted is that the mantle of environmental protection might have shifted to regional governments, which didn’t diminish its quality significantly — at least not in regions that were relatively well-off and where the economy was not particularly dependent on industries that might want regulatory concessions.

The research on Russia squares with what we know from U.S. polling, which shows that wealthier states tend to have higher levels of support for strong environmental regulation — which the Trump administration alluded to in a press briefing on the new executive order, when a senior official said a strong economy was the best way to protect the environment — and that states with strong ties to the oil and gas industry tend to have lower levels of support. It’s easy to see, then, how California and West Virginia could end up with different environmental futures in a hypothetical world where the EPA didn’t exist.

That possibility makes a lot of sense to Millimet. “We refer to this as heterogeneity,” he said. “The big picture in all of economics is this general realization that not everybody responds to policy change in the same way.” In fact, he said, this is kind of the flip side of one of the philosophical arguments in favor of decentralization — that it allows policy to respond to local preferences. If decentralization can do that, it can also probably produce a situation where one state’s environment remains relatively well-protected while another’s slowly becomes more polluted.

Overall, we probably shouldn’t expect the new executive order to devastate the environment or stop environmental protection in its tracks. The analysis of an economic consulting firm suggests that the order will just further delay the already-slow process of reducing greenhouse-gas emissions in this country. Under Obama’s Clean Power Plan, the Rhodium Group expected U.S. emissions to be 21 percent below 2005 levels by 2025, The Washington Post noted. Without the plan, the company would expect U.S.emissions to be 14 percent below 2005 levels instead. It’s impossible to know exactly how much the Trump administration — and other legislators empowered by the White House’s deregulatory attitude — will affect the country’s environmental health. History certainly suggests that it’s a lot easier to talk about deregulation than it is to do it. That said, failing to centralize greenhouse-gas-reduction efforts at the federal level could lead to a two-tiered system where richer states end up with lower-emissions energy sources — and that difference can mean big disparities in public health, given that burning coal is associated with a whole range of health problems, not just climate change. In the end, an executive order that is supposed to be good news for coal country could be bad for it instead. READ MORE

By | 2017-04-10T08:37:43+00:00 April 10th, 2017|Dedman College of Humanities and Sciences, Dedman College Research, Economics, Faculty News|Comments Off on David Millimet, Economics, A Weaker EPA May Not Mean The Environment Goes To Hell But It Could Lead To Greater Disparities Between States