In 2005, former RFF president and senior fellow Paul Portney ended his 33-year stint at RFF and headed west to become the dean of the Eller College of Management at the University of Arizona. In a recent interview I conducted for Resources magazine, he discussed how this move changed his perspective on environmental policymaking and the challenges posed by inequality, climate change, and water availability. An excerpt of that conversation follows; read the interview in its entirety at http://www.rff.org/Publications/Resources/Pages/189-QA.aspx.
Q: Once you moved to Arizona, how did your view of the landscape of environmental policy writ large in America expand beyond a Washington perspective?
A: Going out West gives you a different perspective on things. People don’t live and breathe what happens in Section 502b, Subsection c of an environmental regulation. They have bigger things on their plate: “How am I going to make a living, grow my business, and keep my house at a time when the economy is cratering?” After all, when I started as dean, the economy was just beginning to melt down.
There also is a bigger appreciation in the West for land use issues than environmental regulatory policy issues. Arizona, in particular, is a big agricultural state. It’s also a big mining state. So when I talked to people or read the papers there, they were more concerned with whether the Rosemont Copper Mine would get permitted than with power plant regulation or water pollution controls.
But it’s also the case that had I moved to California from Washington, my experience would have been different because California is much more engaged in environmental regulation—more so than even Washington now. In Arizona, they still have that frontier mentality. “The least government we can have is the best” is the sentiment of many in Arizona. I recently retired and moved to California, and I really went from one extreme to the other.
Q: You mentioned the economic meltdown, and it strikes me that one of the conversations we’ve had over the last year or so at RFF concerns the issue of economic inequality and the fact that people are reluctant to reach into their pockets and pay for public goods when they are struggling to make ends meet. At the same time, many of the environmental solutions that might make sense on the economist’s blackboard can have regressive consequences. How do you see this intersection between inequality and the need to safeguard the environment today and for future generations?
A: I think one of the real challenges that the environmental advocacy community faces is that if inequality persists or gets worse, it’s going to be hard to maintain the same kind of public support for environmental protection measures as was the case, say, between 1970 and 2000.
For people who care about continuing to protect the environment, we have to find a way to ease the burden on not just those in the bottom income bracket but increasingly even those at the lower middle part of the spectrum. Over the last 15 years, income per capita for those in the middle has stagnated or even decreased a little bit.
I’m on the board of a small, publicly traded electric utility in Missouri, and we are finishing up two major investments: putting a new air quality control system on a coal plant and replacing coal units and a couple of inefficient gas units with a combined cycle unit at another plant. Together, those two investments will cost the company $300 million and may increase electricity rates—I don’t know—10 percent, let’s say. That’s in a relatively poor part of the country. I think people are going to be more sensitive to this kind of thing in the future and are going to be asking, “Well, what’s this going to cost?” Their support will be partially conditional on that cost.
Q: That becomes an ethical problem and also a political problem. The idea that if you tax an environmental “bad” people will use less of it has come into wide acceptance. But so often the response from policymakers is “You know, I love market-based approaches. Now if you can just do it without increasing the prices voters face, we have a deal.”
A: I think that’s true, and I think that’s why when you hear discussions about, say, a carbon tax, the conversation usually goes “Okay, great; we’re going to tax carbon. What taxes are we going to reduce?”
A carbon tax would have to be revenue neutral in able to make it politically palatable—certainly to almost all Republicans and maybe to some Democrats, too. If you want a carbon tax, for every dollar in carbon tax revenue that you expect to raise, you’re going to have to reduce other taxes—whether on labor or capital or corporate income—by just as much. So it’s definitely a challenge. My concern is if you look at the prospects for the US budget in the years ahead, we’re going to need some revenue “positivity,” not just neutrality.
Read the rest of the interview at http://www.rff.org/research/publications/view-environmental-policy-landscape-outside-beltway-interview-paul-portney.
