The goal of the Clean Water Act is straightforward: the U.S. has a national goal of zero discharge into our public waterways. The Environmental Protection Agency (EPA) put a variety of measures in place in order to implement that goal yet, most of the time, we forgo the fundamental principal behind the Clean Water Act. It’s forgotten. We need to remember that goal, pick up where we left off, and measure our success or failure against it.
The U.S. Department of Agriculture (USDA) and the EPA have forced an experiment in economic theory on the American public. Instead of making it illegal to pollute, federal agencies have been promoting a “free-market solution” to “internalize the externalities,” making pollution part of the cost of doing business. They give polluters leeway to pollute by creating a market for it.
In theory, they can get pollution reductions from “non-point sources” of pollution such as farm runoff, which is currently largely unregulated and unmeasured. If they file a plan for pollution abatement, these farms can sell these purported reductions in pollution, which may or may not exist, to “point sources” of pollution, such as a factory or a sewage treatment plant. The point source can now pollute as long as they have bought these theoretical reductions from non-point sources. This idea goes by the name of Water Quality Trading, or WQT.
WQT is, at best, untested. A Rutgers University examination of four case studies in WQT somehow counted a project where no trades actually took place as “successful.” Two others were not really trading programs at all, but exceedance taxes for not meeting standards. The remaining project was a regulatory program that didn’t actually test the kind of markets that the traders hope to set up, since it didn’t trade between point sources and non-point sources.
WQT can allow “hot spots” or localized areas where pollution continues unabated, focusing on a given endpoint of potential water pollution and ignoring what can happen at a higher point in the watershed. It assumes, incorrectly, that since the total amount dumped in the overall watershed will not go up, local conditions will not get worse. (Anyone who has ever cleaned a tub knows that where the dirt is deposited matters, and that there is an uneven result of depositing dirt.) And, not only is there a dearth of enforcement, but there’s a lack of monitoring or measurement of the alleged “reductions.” It’s the “running on faith” approach to pollution control. We don’t know for sure if the reductions that are counted are even real, let alone reductions that wouldn’t have happened without the program.
Despite great fanfare and significant seed money to promote trading, Food & Water Watch has been unable to find a single successful trading scheme in the country, despite many attempts across several states. Nonetheless, the USDA and EPA continue to push for acceptance of this unproven idea that turns traditional environmental protection on its head. Indeed, the USDA has started an office whose sole job is to catalyze the development of markets for ecosystem services.
Without regard for the goal of the Clean Water Act, which is to eliminate pollution, the USDA has clearly decided that there is only one way forward. And they are planning to spend $2 million this year alone to push it.
The philosopher George Santayana once said that, “Fanaticism consists in redoubling your efforts when you have forgotten your aim.” WQT is an unproven approach that will claw back some of the hard fought environmental victories we’ve won through the years. It is not in keeping with the stated goals of the Clean Water Act. Despite that, it seems that the USDA and EPA have decided that they will redouble their efforts supporting WQT.
That’s not economics, and it’s not even government. It’s pure fanaticism.
For more information on pollution trading, please check out our report, “Bad Credit: How Pollution Trading Fails the Environment.”