Saving Puget Sound is an economic problem

The laws and regulations that protect it from the most egregious dumping work pretty well, but the only way to finance the prevention of non-point-source pollution is to impose fees.
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The laws and regulations that protect it from the most egregious dumping work pretty well, but the only way to finance the prevention of non-point-source pollution is to impose fees.

Ross Anderson's May 23 commentary "Puget Sound perennial" was accurate and darkly humorous. As a region, we have attempted to address these issues for 30 years. We've had a generation of studies, reviews, and recommendations. Even though we know Puget Sound is in deep trouble, the problems fester because we, as a community, have demonstrated no will to modify our behaviors.

The fundamental problem is economic. Puget Sound is a classic environmental commons, i.e. a resource collectively held and shared. We all have access. We derive increased benefit with increased use. We use it for recreation and resources. And, most important with regard to its environmental health, we use it as a dump.

We have created laws and regulations that are intended to protect it from the most egregious dumping. They work pretty well. Citizens are much better educated. We dump far less toxic material (like heavy metals, PCBs, etc.) compared to 50 years ago. Yet back then, Puget Sound was still fairly healthy, while today, it's sick and getting sicker. Why?

It takes no further study to demonstrate that non-point-source pollution from a population of 3.5 million people is the fundamental problem facing Puget Sound today. We dump so much junk into our Puget Sound, it really doesn't stand a chance. And by the Puget Sound Regional Council's projections, we will add 1.7 million people and 1.2 million jobs in the central Puget Sound metro area in the next 33 years.

Consider just one element: daily use of 2 million vehicles, with four tires per vehicle wearing out every four years and then flushed into Puget Sound via storm drains. That's 2 million tires per year, finely ground, flushed into the bottom of the Sound. Add oil, add transmission fluid, add fertilizer, add sewage, etc. The clear problem is the lot of us and the non-point-source pollution we create.

Non-point-source pollution is an externalized cost of our economic activity. Externalized costs are real costs, but they do not show up in the pricing information for the market system as a whole. So when I pay $400 for a set of tires, none of that money goes to cleaning up the pollution that occurs as those tires wear out. Those real economic costs are "externalized" — they show up as pollution that is destroying our Puget Sound. So by way of example, if the actual, full cost of those 2 million annual tires, the oil, transmission fluid, fertilizer, sewage, etc., included keeping Puget Sound immaculately clean, we would assess user fees and taxes sufficient to mitigate their annual environmental consequences. Those user fees and taxes would be utilized for comprehensive road-drainage filtering, sedimentary traps, etc. Under that scenario, the externalized costs that we call pollution would be paid for.

Here is the fundamental question facing us: How do we create an economic model of incentives and disincentives that will cause us to quit using Puget Sound as a dump? Finding an answer to this question is critical. Laws and regulations can prevent egregious dumping. But that approach cannot provide the daily, fundamental economic reminders that would cause each of us to husband resources, use our energy wisely, and pay the true costs of environmental mitigation. This is demonstrated by almost every example cited in a recent Seattle Times series, "Failing Our Sound."

Only an economic solution will work for non-point-source pollution. Only an economic solution will generate sufficient resources for the problem at hand. Ultimately, protecting Puget Sound will require a broad range of user fees and taxes that are earmarked for direct action in protecting the resource. Those user fees must then be channeled through the private sector to implement a comprehensive strategy of traps and filters that will truly protect the Sound from introduction of pollutants.

User fees require political will but can accomplish several things simultaneously. First, user fees can generate the very substantial revenues necessary for a restoration project this ambitious. Second, user fees can be designed to inhibit those activities that ultimately cause the greatest amounts of pollution. Third, user fees are a direct revenue solution that can address the economic problem of externalized costs. Finally, when user fees are in balance with externalized costs, by definition no further pollution will be taking place!

As a region, we can easily watch the Puget Sound Partnership spend $1 billion or $2 billion dollars a year on our "Failing Sound" and achieve very limited results. But if we are not prepared to define and face the underlying economic problem, will most certainly continue to ruin this body of water.

If we truly want to save the Puget Sound, we must find a way to stop subsidizing environmental degradation. Moreover, our policymakers must come to understand and accept that:

  • This is first an economic problem.
  • We cannot plan or regulate our way out of it.
  • Science and technical fixes cannot overcome pricing signals that result in overwhelming externalized costs.
  • No bureaucracy can direct the changes required.
  • Only appropriate incentives and disincentives will actually modify our collective behaviors.

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