New way to save bay

The Baltimore Sun

Reading the recent reports on the Chesapeake Bay Program at 25, I smell a whiff of "Who lost the Chesapeake Bay?"

We should recognize that managing the impact of 16 million Americans on the bay was always going to be difficult. What exactly the problem is, what to do to fix it, and how to make that happen - these are complicated issues that the Chesapeake Bay Program, the state and federal partnership established to clean up the bay, needed to sort out. It should not surprise anyone if we have not yet gotten it right.

But it is time to try new approaches. While we have made great strides in some areas, such as wastewater treatment, if we do not find more robust solutions in other areas, such as stormwater and agricultural runoff, the bay program's goals will not be met.

Early in the history of the bay program, an effort was made to bring together state and federal policymakers to recommend viable market policies for achieving the goals of the Chesapeake Bay Agreement. Unfortunately, that effort fizzled out and the bay program partners adopted a voluntary approach to the cleanup instead.

This voluntary approach has, in the best light, brought together state agency staff with people who have an economic stake in some activity that generates pollution and others who know technologies for mitigating that pollution. Together, they suggest voluntary programs to reduce pollution, and these programs are then pitched to either state lawmakers or federal agencies for funding.

Some of these efforts have generated significant reductions in pollution. But not nearly enough has been achieved to attain the goals that the region's governors committed to in the Chesapeake 2000 Agreement. Furthermore, this approach has put the burden of paying for such reductions on taxpayers.

Given that the environment is a public good, a compelling argument can be made for using public funds to achieve environmental restoration and protection. The problem is, it is difficult to ensure that public funds are used efficiently to obtain the cheapest pollution reductions first - and, thereby, the most reduction possible for any given expenditure.

The importance of this problem can be seen from the following example. If there are three pollution reduction practices, A, B and C, and if A achieves pollution reduction at a cost of $1 per unit, B achieves reduction at a cost of $5 per unit and C does so at $10 a unit, then for $1,000 dollars, you can either buy 1,000 units or 200 units or 100 units of pollution reduction. The rational buyer who wants the most pollution reduction for the least money would choose A and buy 1,000 units of pollution reduction.

In the real world, these choices are often less clear, and sometimes the financial burden is spread around in the name of "fairness" even if it makes little economic sense. We spend on A, B and C and hope that we get the most pollution reduction possible. But if we are not buying the cheapest reduction alternatives first, then we are not buying as much pollution reduction as we could.

Now that a wide cross-section of those involved in the bay program admit that things do not look good for achieving the goals, at least by 2010, there is a growing interest in pursuing regulatory solutions to the problem. But because regulations may not fully take into account the cost efficiency of practices, it is highly likely that such regulations will be neither politically nor economically sustainable.

The alternative to standard command-and-control regulations for achieving pollution goals is to set pollution limits for our tributaries and let the stakeholders figure out how to meet them. In other words, we can create a market for pollution reduction, and let it work.

Market mechanisms were not covered in the education of most of the scientists who tend to drive policy decisions at the bay program. But there is promise in the air. The admission that the voluntary approach has not achieved the Chesapeake Bay Program's goals is a first step. Now bay restoration leaders need to look outside the physical and life science disciplines and consider some economically based approaches.

Robert Wieland is a resource economist working to expand the application of economic analysis in environmental decision-making. This column is distributed by Bay Journal News Service.

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