New Essay Examines 50 Years of Environmental Protection Policy Evolution

Doug Gavel
As we approach the 50^th anniversary of the passage of the U.S. Clean Air Act, one of the most consequential environmental laws ever passed by Congress, today’s polarized politics in Washington seemingly precludes (?) the possibility of any similar bipartisan legislation anytime soon. In a new essay published in the Journal of Economic Perspectives, Harvard Kennedy School Professor Robert Stavins, director of the Harvard Environmental Economics Program and the Harvard Project on Climate Agreements, and MIT Sloan School of Management Professor Emeritus Richard Schmalensee argue that economists and policymakers alike will need to re-frame their thinking for addressing the nation’s current environmental challenges, including climate change, to overcome the tremendous political hurdles that now exist.

The paper examines the past 50 years of domestic environmental protection policy evolution as well as current climate change policies launched by the Obama Administration and the Trump Administration.

“The 1970 Clean Air Act established the basic architecture of the US air pollution control system, it was the first environmental law to give the federal government a serious regulatory role, and it became a model for many subsequent environmental laws in the United States and abroad,” the authors write. The Act itself consisted primarily of so-called command-and-control regulations to clean the country’s polluted air. Subsequent strategies went beyond this, the authors write, to include experiments with emissions trading in the 1970s, the leaded gasoline phasedown in the 1980s, the use of an excise tax and a trading system incorporated into the U.S. approach to complying with the Montreal Protocol, and the path-breaking sulfur dioxide allowance trading program as enacted in the Clean Air Act amendments of 1990.

Stavins and Schmalensee draw several conclusions from their research, writing that supporters of the Clean Air Act would “surely be pleased that despite the fact that real US GDP more than tripled between 1970 and 2017, aggregate emissions of the six criteria pollutants declined by 73 percent.” But they also posit that supporters “would surely be disappointed that environmental policy has become a partisan battleground. It has seemingly become impossible to amend the Clean Air Act or to pass other legislation to address climate change in a serious and economically efficient manner.”

The authors argue that the past five decades of experience have demonstrated “that policies to address climate change and other new environmental problems should be designed to make them more acceptable in the real world of politics,” including “giving greater attention to suboptimal, second-best designs of carbon-pricing regimes,” like earmarking revenues from taxes and/or allowance auctions.

“Economists might also be more effective by sometimes working to catch up with the political world by examining better design of second-best non-pricing climate policy instruments, such as clean energy standards, subsidies for green technologies, and other approaches,” Stavins and Schmalensee conclude.

“Policy Evolution under the Clean Air Act” is published in the Fall 2019 edition of the Journal of Economic Perspectives. Read more about Professor Stavins’ thoughts on the issues covered in the essay on his blog, “An Economic View of the Environment.”