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environmental objectives. Indeed, a UK Government advisor has warned that the population of Britain must be at least halved in order to be environmentally sustainable.14 How this would be carried out, whether by following China’s one child policy, or whether it would be even more sinister with deportations or involuntary executions is another question. In summary, policymakers should be cautious of considering only environmental objectives when developing environmental tax policy, since the danger is that the policy can result in environmental fascism.15
25. PRO POSAL
25.1 PROPOSED ‘MIXED’ SOLUTION
A more practical solution would be to take both factors into account and weigh up the magnitude of each threat, using economic, social and legal considerations. Helm and Pearce argue that it would need to be a special case to require production to cease entirely through a tax. They explain, “…the problem of the market is not the creation of pollution, but rather the wrong amount of it. The optimal level of pollution is only zero in the extreme case that the externality costs require a tax so great that the firm stops production altogether.”16
14 An environmental advisor to the British Prime Minister warned that the UK’s population must fall to 30 million in order to be environmentally sustainable, Leake J and Montague B, ‘UK population must fall to 30m, says Porritt’ The Times, 22/3/2009, <http://www.timesonline.co.uk/tol/news/politics/article5950442.ece>
Accessed 21/3/2010.
Clearly this does not provide a clear-cut solution to valuing the environment as a factor of production, but it does illustrate that environmental reform can take place at a
macro-15 Driessen warns against human lives becoming valued as necessary expenditure for environmental objectives, particularly in the developing world. Driessen P, Eco-Imperialism: Green Power, Black Death (New Delhi:
Academic Foundation, 2005).
16 See Helm and Pearce D, chapter 2, n.46, at 5. For more on this area, see Boswell J and Lee B, Economics, Ethics and the Environment (London: Cavendish, 2002), pp.1-9.
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economic level considering production as a whole. Essentially the environment should be considered highly but alongside social and economic considerations.
25.2 EXCEPTIONAL CIRCUMSTANCES UNDER PROPOSED
SOLUTION
It would require the valuation of social factors to be regarded as exceptionally high to take a no-tolerance approach in any particular case, as happened in the USA with the Clean Air Act 1990 (CAA).17 The case of Whitman v American Trucking Associations18 interpreted Section 10919 of the CAA to forbid the US Environmental Protection Agency (EPA) from taking any non-environmental costs into account when determining standards of air quality.20 The US Supreme Court interpreted the legislation in this way so that the EPA would only give consideration to what was necessary to protect the health of American citizens. Therefore in this case the potential social cost was deemed to be so high as to overrule economic
considerations and became an ‘extreme case’.
25.3 ESTABLISHING LONG-TERM BENEFITS
Arguably the potential long-term economic costs of healthcare in the US due to illnesses caused by poor air quality may have outweighed any short-term economic losses, which could have affected the Judges’ rationale. Policymakers may be minded therefore to seek to
17 42 USC §7409.
18 531 US 457 (2001).
19 42 USC §7409(b)(1).
20 See 531 US 457 (2001), at 465: held that the EPA cannot use a cost-benefit analysis when implementing new quality standards for public health unless the statute expressly provides otherwise. The cost of implementing national air quality standards specifically could not be considered as the level had to be adequate to protect public health, §109, 42 USCA 7409(b).
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establish long-term economic benefits in order to introduces a correct environmental valuation. This may be necessary to overcome the difficulties demonstrated by the EEA (European Environment Agency) who argue that it is frequently challenging to balance the advantages and disadvantages of taking preventative action since the apparent costs of taking it are usually short-term and clear, whilst the costs of not taking the action are “less tangible, less clearly distributed and usually longer term…”21 The EEA itself advocates using both ethical and economic considerations when balancing action versus inaction.22
25.4 APPROPRIATE LEVEL TO INDUCE BEHAVIOURAL
CHANGE
If precise environmental costs prove burdensome or impractical to determine then it may not be possible to set a tax at such a rate which reflects the exact internalisation of negative environmental externalities. Fluctuating prices such as in energy costs may add further complication to the matter. Consequently, the Baumol-Oates23 technique can be more
practical;24 this proposes that when imposing a tax to achieve an environmental objective, the level of taxation must be appropriate to induce the required behavioural change in
taxpayers.25
21 In EEA, Late Lessons from Early Warnings: the Precautionary Principle 1896–2000, Issue Report No. 22 (Luxembourg: Office for Official Publications of the European Communities, 2001) at
3-4.<http://www.eea.europa.eu/publications/environmental_issue_report_2001_22/Issue_Report_No_22.pdf>
Accessed 20/6/2010.
It may be difficult to convince the public to make changes in their lives.
Rachlinski argues that even with scientific evidence demonstrating the dangers of climate change, people may psychologically refuse to alter their lifestyle as they would see it as a
22 Ibid at 4.
23 See n.9.
24 EEA, ‘Market-based Instruments for Environmental Policy in Europe’ (2005) EEA Technical Report 8/2005, at 46.
25 UNEP and the WTO recognise that many countries have been ‘pragmatic’ in using this option: UNEP and WTO, Trade and Climate Change: WTO-UNEP Report (Geneva: WTO Secretariat, 2009) at 96.
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reduction in their living standards.26 He explains that “people become attached to their current level of prosperity.”27 Psychologists refer to this as ‘loss aversion’28
and this topic will be discussed further in Chapter 6.
Ascertaining the correct level of tax is therefore important, as low tax rates for those not prepared to change their lifestyles can be absorbed.29 For example Turner explains that vehicle fuel tax rates in North America are “glaringly inadequate” since from an
environmental standpoint they have been set too low, to the point where they have “failed to wean enough Canadian and US drivers from their preference for gas-guzzling vehicles…”30