Pollute and Profit Now; Let Someone Else Pay Later
(Published in the EarthSphere Blog. Cover Image: Fortunes were made in Oregon City from mills on the banks of the river during the 1800s and 1900s. When the good times stopped rolling, taxpayers were left to foot the bill of cleaning up this post-industrial menagerie of derelict factories. By WM House; ArcheanArt)
I received a dozen or more political emails on Monday, but one from Congressman Earl Blumenauer caught my attention with his opening line:
“It’s simple: If you pollute — you should pay!”
I sighed and muttered a few things I won’t print, but he does make it sound simple. His comment also flies in the face of two hundred years of American industry. The traditional mantra of both businesses and consumers is, “It pays to pollute.” The reason why is everyone benefits financially in the short term. Companies see more profit and consumers get lower prices. The business model is simple — pollute and profit now; let someone else pay later.
If you manufacture a widget for $50 and sell it for $100, you have a handsome profit of $50 per item. However, producing that object creates toxic waste byproducts that require disposal. If your business chooses to neutralize and dispose of the waste in an environmentally responsible way, the cost per widget increases to $90, severely damaging profits. Option two is to buy a large plot of land beside your factory and bury the waste below the ground. This option costs $10 per widget, so you choose the second option to maximize your profits.
The $40 per widget cost to responsibly dispose of the toxic materials has not gone away; you have simply deferred it. Because the government doesn’t require you to cover the full cost of your operations, they provide you with an environmental subsidy. Years later, when your business is defunct, and you have banked your profits, the site is declared an environmental hazard, and the taxpayer foots the cost of cleaning up. This business model is why we have more than 1,300 superfund sites in the United States.
The Status Quo
When it comes to health and social care subsidies, we see conservatives foaming at the mouth for policies making individuals stand on their own two feet and pay their way. We are told this is the “American Way,” and the government shouldn’t be in the business of subsidies. But apply this same philosophy to business, and you quickly find that subsidies are the “American Way,” including environmental subsidies. Suddenly everybody wants to maintain the status quo.
American consumers would probably have a nervous breakdown if the cost of carbon pollution was baked into the price of gasoline and natural gas. Seattle city council voted in favor of eliminating its climate pollution within a decade, and the knives came out. About a third of the city’s carbon footprint comes from burning natural gas for heating and cooking. Legislation to ban gas hookups in new buildings ran into immediate and fierce opposition — a coordinated effort masterminded by Puget Sound Energy, Seattle’s gas supplier. The natural gas business is built around environmental subsidies. Everyone wants 100 percent carbon-free power, but no one wants to pay the price. Consumers abhor higher prices, and businesses don’t want lower profits.
Every time we dump untreated waste into a river, release industrial toxins, or pump greenhouse gases into the atmosphere, we are using an environmental subsidy. We are receiving a product without paying its full cost. Manufacturing relies on this principle, and consumers are addicted to it. So much so that we often fail even to recognize what is happening.
A recent article on NBC News, “How Norilsk, in the Russian Arctic, became one of the most polluted places on Earth,” provides a close look at one end-member result of our modern business practices.
The article is a good but depressing read. Norilsk got its industrial start as a forced-labor camp in the Soviet Gulag system. Taking a page from the pre-civil war American South, they realized free labor increases a business’s viability. To be sure, there was no cotton being grown near the north pole, but there was a lot of precious metal to be mined — palladium, nickel, platinum, cobalt, and copper.
Like all good businesses, they also sought to cut production costs (i.e. increase profits) by using the available, pristine Arctic land and air as a huge garbage dump for refuse from their mining and production operations. The results were predictable; polluted rivers, barren landscapes full of dead and dying trees, and smokestacks belching more sulfur dioxide than anywhere else on the planet.
Ironically, the business of polluting has become essential to the world’s new focus on reducing carbon emissions by changing to electric vehicles. High-purity Class 1 nickel is critical in electric vehicle production, and Norilsk is the world’s leading producer of this product.
It is hard to undo hundreds of years of bad habits, and we now find ourselves in the business of choosing between the lesser of two evils. Massive Arctic and atmospheric pollution becomes the tradeoff for cleaner vehicles. Remember, it’s not that we don’t have the technology to produce without pollution; we simply won’t or can’t pay the price for it. But there is no free lunch.
The economics of pollution — Environmental subsidies are baked into our economic system (by WM House; ArcheanWeb)
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How Norilsk, in the Russian Arctic, became one of the most polluted places on Earth (by Marianne Lavelle; NBC News)