Ron Paul Wants to Abolish the EPA

No surprise there. And he offers a conventional libertarian bromide as a substitute for the regulatory agency: "Polluters should answer directly to property owners in court for the damages they create...." For years, small minorities of economists and libertarians calling themselves "free-market environmentalists" (see, e.g., here and here) have argued that common-law property protections, by themselves, can and would supply efficient, even optimal, levels of environmental protection. They would certainly be right, if we lived in the mythical world of the "Coase theorem," in which information is complete and transacting is costless (see here). Indeed, if we lived in that world, we wouldn't even need property law or courts to resolve environmental disputes as parties in the free market would costlessly bargain to optimal allocations of pollution. But, as Coase himself acknowledged many times (see id.), the world we live in is not at all like the world of the "Coase theorem." In the real world, theories of free-market environmentalism are dangerously misguided because of transaction costs and the real limitations of common-law solutions to environmental problems.

Here's what Coase had to write about environmental protection in his 1959 article on "The Federal Communications Commission" (see here, p. 29):

[I]f many people are harmed and there are several sources of pollution, it is more difficult to reach a satisfactory solution through the market. When the transfer of rights has to come about as a result of market transactions carried out between large numbers of people or organizations acting jointly, the process of negotiation may be so difficult and time-consuming as to make such transfers a practical impossibility. Even the enforcement of rights through the courts may not be easy. It may be costly to discover who it is that is causing the trouble. And, when it is not in the interest of any single person or organization to bring suit, the problems involved in arranging joint actions represent a further obstacle. As a practical matter, the market may become too costly to operate.

In these circumstances, it may be preferable to impose special regulations (whether embodied in a statute or brought about as a result of the rulings of an administrative agency).

 Peter Grossman and I build on Coase's arguments in Chapter 15 of our book, Principles of Law and Economics (Aspen 2011), pp. 397-8:

The causation-proof problems Coase recognizes are especially important. Many pollutants travel long distances, and pollution-related diseases can have long latency periods. To prevail in court, plaintiffs must be able to trace their harm to a particular pollution source that might be located hundreds of miles away, and prove that their harm was proximately caused by exposure to a certain pollutant that may have occurred several decades ago. This evidentiary burden is often unbearable, and always very expensive. Moreover, common-law courts have traditionally restricted nuisance remedies to cases involving visible air pollution, such as smoke and dust; bad odors were usually not enough to state a claim. But, of course, many harmful pollutants - including some of the most toxic - are invisible. 

In addition to causation-proof problems, common-law remedies only protect environmental resources subject to property rights; they do not protect unowned, common-pool resources, regardless of social value.

The problems raised, respectively, by Coase and Cole and Grossman bear on Paul's belief that common-law causes of action provide sufficient remedies for environmental harms, but ultimately they are inapposite to his opposition to EPA and large-scale environmental regulation because Paul is not a welfare-consequentialist. As true-believing libertarian, Paul is more interested in maximizing individual liberty than overall social welfare (although he might believe that maximizing the former would maximize the later). Paul's strict libertarianism distinguishes him from his rivals for the Republican presidential nomination. While they mostly pander to anti-environmental interest groups, Paul's environmental position is principled. But, if implemented as policy, it would be disastrous for the health and welfare of the American people.

Who (or What) Killed the Obama Ozone Rule?

In today's New York Times (here), John Broder takes us inside the White House to explore the political machinations that resulted in the demise of the EPA's proposed ozone standards under the Clean Air Act. I have my doubts about certain aspects of the story, including the insinuation that OIRA chief Cass Sunstein was somehow out to "make his mark" by stomping down the EPA rule. However, Broder's overall story does strongly support an argument I make in my new paper on the political uses and abuses of cost-benefit analysis (CBA) (here), that the Obama Administration's CBA for its ozone rule played a significant political role in its demise. The Obama standard would have generated fewer net social benefits (on median estimates) than the Bush standard it would have replaced. It was, relatively speaking, less efficient. Thus, it would have been politically difficult to justify, especially heading into an election year. No doubt other, purely political considerations also played a part in the President's decision, but the fact that the CBA played any significant role is noteworthy, especially considering the Clean Air Act's express prohibition on cost-considerations in setting  air quality standards. Simply put, as I argue in my new paper, cost considerations matter even when the law says they cannot.

When is Command-and-Control Efficient? Evidence from the Field

"Command-and-control" is a derisive label usually applied (mainly by economists) to traditional forms of environmental regulation including technology-based "design standards" and "performance standards" (which are non-tradable quota limits). In most of the environmental instrument-choice literature, "command-and-control" is considered generally inefficient both nominally and relative to so-called "economic instruments,"* which include effluent taxes and cap-and-trade (a performance standard with trading of pollution rights or allowances).

More than a decade ago, Peter Grossman and I published a long article (a pre-publication version is here), with an unusually long title, in the Wisconsin Law Review about the limitations of cap-and-trade and effluent taxes as substitutes for traditional forms of quantity-based regulations.** In “When is Command-and-Control Efficient? Institutions, Technology, and the Comparative Efficiency of Alternative Regulatory Regimes for Environmental Protection,” we explained why, as a matter of both theory and historical experience, traditional forms of environmental regulation have sometimes been, and sometimes remain, more efficient and effective than so-called “economic instruments” mainly because of monitoring and enforcement cost differentials. In at least some cases, command-and-control regulations, particularly technology-based standards, can have administrative cost advantages that offset, or more than offset, the admitted compliance-cost advantages of cap-and-trade or effluent taxes.

One important implication of our analysis in that article is that compliance costs are not the sole concern in environmental protection (although they are often treated as such by economists*). Rather, society should be concerned with minimizing the total costs of environmental protection, which are the sum of compliance costs, administrative (monitoring and enforcement) costs, and residual pollution costs. See, e.g., Peter Z. Grossman and Daniel H. Cole, "Toward a Total Cost Approach to Environmental Instrument Choice," in T. Swanson & R. Zerbe (eds), An Introduction to the Law and Economics of Environmental Policy: Issues in Institutional Design, 20 Research in Law & Economics 225 (2002) (see here). Moreover, it is a mistake to presume that minimizing compliance costs necessarily minimizes total costs, as if differential administrative or residual pollution costs are either insignificant or inevitably move in the same direction as compliance costs.

In the years since we published our Wisconsin Law Review article, it has been cited hundreds of times (more often by legal scholars than by economists). To date, our analysis and findings have not been substantially challenged. Now comes a new article in the October 2011 issue of The American Economic Review providing further empirical support for sometimes preferring traditional forms of regulations over "economic instruments."

In “Clearing the Air? The Effects of Gasoline Content Regulation on Air Quality,” co-authors Maxmiliian Auffhammer and Ryan Kellogg, analyze empirical data on national and state-level (California) gasoline-content regulations, and find that the more flexible federal approach has virtually zero cost-effectiveness (costs of compliance were minimized but at the price of completely nullifying the environmental effect of the regulation), but California's more stringent set of traditional regulations have reduced substantially emissions that contribute to low-level ozone pollution, albeit at higher cost of compliance (but providing substantial net social benefits). Here is their abstract:

This paper examines whether US gasoline content regulations, which impose substantial costs on consumers, have successfully reduced ozone pollution. We take advantage of spatial and temporal variation in the regulations' implementation to show that federal gasoline standards, which allow refiners flexibility in choosing a compliance mechanism, did not improve air quality. This outcome occurred because minimizing the cost of compliance does not reduce emissions of those compounds most prone to forming ozone. In California, however, we find that precisely targeted, inflexible regulations requiring the removal of particularly harmful compounds significantly improved air quality.

The empirical information and conclusions of Aufhammer and Kellogg's article further support Cole and Grossman's conclusion that command-and-control regulations are sometimes (but certainly not always) more effective and efficient than market-based mechanisms. Where our analysis focused on differential administrative costs that sometimes favor design standards, Aufhammer and Kellogg have a somewhat different concern, that more flexible regulatory mechanisms, by focusing myopically on the minimization of compliance costs, might fail to achieve emissions reductions necessary to achieve the (exogenous) environmental goal. For reasons that should be obvious, a regulation with zero cost-effectiveness (purchasing at some positive cost zero additional increments of environmental protection) cannot be considered efficient, let alone more efficient than another regulation, albeit one with higher compliance costs, but which actually furthers the environmental protection goal (assuming the goal itself is economically sensible).

Aufhammer and Kellogg's empirical analysis provides a welcome reminder that social scientists, legal scholars, and policy analysts should not neglect or underestimate the potential of traditional command-and-control instruments in the environmental policy mix.

---------------------------------

*In effect, all forms of regulation are economic instruments. Even technology-based standards function by raising the costs of polluting activity, which shifts the supply curve outward and (assuming some price elasticity of demand) reduces the rate of demand for pollution-intensive goods. What economists really mean when they use the phrase "economic instruments" is "economically more efficient instruments." This presumes that the compliance cost advantage of cap-and-trade and effluent taxes means that they necessarily have lower total costs than command-and-control instruments. As noted above, this presumption is unwarranted.

** Unfortunately the full, final published versions of the three articles cited in this post are not freely downloadable on the Web. Each, however, is available behind a pay-wall.

The Indy Star Rarely Misses An Opportunity to Create a Misimpression

A headline from today's edition (see here): "House blocks EPA on coal ash." In case anyone was confused by this, allow me to clarify. The House of Representatives voted to block EPA's proposal to increase regulation of coal ash, which is a by-product of electricity generation from coal containing toxic chemicals. However, the House vote cannot, by itself, block EPA's regulation. That would require a corresponding vote in the Senate, plus the President's signature (or a subsequent super-majority vote in Congress to override a presidential veto). So, the bottom line is that, contrary to the Star's headline, the House has not blocked the new EPA rule.

Regulatory Cost-Benefit Analysis and Collective Action

A new, expanded, and improved draft of my paper of that title can be downloaded from SSRN. Here is the abstract:

This updated draft paper explores the significant role Regulatory Cost-Benefit Analysis (RCBA) plays in facilitating or impeding collective action. Through case studies, the paper shows that well-constructed RCBAs have (1) facilitated collective action (including in cases where explicit consideration of costs is legally prohibited) by muting political opposition; and (2) helped to obstruct welfare-reducing rules from being promulgated. RCBAs can of course be manipulated to obstruct social welfare-improving collective action or to promote inefficient policies. However, the fact that RCBAs require transparency makes those efforts liable to discovery and disclosure, as in the case of the Bush Administration's failed "Clear Skies" initiative. The paper concludes with an assessment of implications of the case studies for our understanding of the role of RCBA in the regulatory process, and with a call for more qualitative and quantitative empirical research on the use and abuse of RCBA as a political tool in legislative and regulatory processes.

Joint Investigation Team Releases Final Report on the Causes of the Deepwater Horizon Disaster

Both volumes, as well as appendices, of the report can be found here, along with recommendations for averting such disasters in the future.

Obama and Ozone

According to reports in the New York Times (here) and other sources, President Obama is forcing EPA to back down from proposed regulations that would tighten up national air quality standards for ground-level ozone, which is a precursor to smog, much to the consternation of environmentalists. The EPA already had tightened up the ozone standard in March 2008, during the waning days of the Bush Administration, from 0.084 parts per million (ppm) to 0.075 ppm. Shortly after taking office, the Obama Administration announced a reconsideration of the ozone standard based on its belief that the science supported an even more stringent standard than the one the Bush Administration adopted.

The legal basis for the Obama Administration's reconsideration of the Bush Administration's standard is clear. The Clean Air Act requires EPA to set national ambient air quality standards (NAAQSs) to protect the health of the most vulnerable sub-populations in the US, based solely on scientific evidence (Clean Air Act, sec. 109, 42 USC sec. 7409). It cannot consider cost. This understanding of the Clean Air Act's plain language has been consistent since 1970. The US Supreme Court reconfirmed it in Whitman v. American Trucking Assc., 541 US 457 (2001), despite an amicus brief filed by several prominent economists arguing that the agency should not be prohibited from considering costs in deciding whether to adopt or amend NAAQSs.

As a result of its reconsideration of the Bush Administration standard, the Obama EPA proposed (here) reducing the primary NAAQS from 0.075 ppm to somewhere between 0.060 ppm and 0.070 ppm (along with a separate secondary NAAQS based on seasonal fluctuations in emissions). One unusual feature of this proposed rule was its failure to specify a precise numeric target for the ozone NAAQS, which left substantial uncertainty about where on the range between 0.060 and 0.070 it would finally come down. Even if we take it as given that the science supports a reduction in ambient concentration levels, it is difficult to understand why the EPA could not settle on a single number in its proposed regulation.

As noted earlier, EPA is legally barred from considering costs in setting NAAQSs. Nevertheless, it is required both by statute (the 1995 Unfunded Mandates Reform Act) and several Executive Orders to undertake regulatory impact analyses (RIAs) of all major proposed regulations. Thus, the EPA has to prepare cost-benefit analyses for new and revised NAAQSs, even though it is supposed to ignore them when actually setting the standards.

As I argue in a working paper, which I am currently in the process of revising (an older version can be viewed here), it is ludicrous to suppose that EPA does not consider the cost calculations it is legally required to undertake in setting or revising NAAQSs. The Clean Air Act requires EPA to considering revising NAAQSs for all regulated ("criteria") pollutants, including Ozone, every 5 years. If EPA only relied on the best science, it would almost certainly increase the stringency of its regulations every five years. The fact that NAAQS revisions are the exception rather than the rule since 1970, indicates that cost does play a role, if only informally, in EPA's decision-making. (I take this to be a good thing, though many of my fellow environmental law professors would no doubt disagree. It would be even better, in my estimation, if Congress allowed EPA to consider costs formally.)

In the case of the reconsidered Bush Administration revisions to the NAAQSs for ozone, the Obama EPA's supplemental RIA estimates that the Bush Administration's rule, revising the ozone standard to 0.075 ppm, would yield median net social benefits of $3.1 billion, as compared with $1.4 billion for a standard of 0.070 ppm, $0.7 billion for 0.065 ppm, and -4.8 billion for 0.060 ppm (all discounted at a constant rate of 7%). The figure below (from page S1-8 of the RIA) shows the range of costs and benefits under alternative standards. The bottom line is that the Bush Administration's selection of a 0.075 ppm yields higher net social benefits than any of the alternative standards the Obama Administration was considering.

The question that naturally arises, of course, is whether President Obama's decision to retreat from reconsideration of the Bush Administration's ozone standard is related at all (and, if so, to what extent) to the regulatory impact analysis. It would be naive to suppose that the decision had nothing to do with the cost-benefit analysis, especially given the political stakes. As the country approaches a presidential election year with a very shaky (to say the least) economy and high employment, President Obama would find it difficult and highly inconvenient to defend regulatory choices that are not significantly and obviously social-welfare maximizing. The EPA's RIA indicates that a shift from the Bush Administration's 0.075 ppm standard for ozone to a standard somewhere between 0.060 and 0.070 ppm would not significantly nor obviously enhance social welfare.

Of course, the Obama Administration cannot explicitly defend its decision to abandon its proposed tightening of the ozone NAAQs without violating the clear terms of the Clean Air Act (although Dan Farber, at Legal Planet, argues plausibly that the timing of the Obama proposal, prior to the next mandatory 5-year review in 2013, might exempt it from the Clean Air Act's prohibition on consideration of costs). However, if I am right that cost considerations, as well as practical politics, always play a role regardless of the letter of the law, then it seems much more likely than not that Obama's decision was substantially determined by EPA's RIA. Just as a positive cost-benefit analysis can insulate the EPA from negative political fall-out from new or revised regulations, so a negative cost-benefit analysis can create a political obstruction to regulation, even when costs are not supposed to count.

Between now and November 2012, we should not expect to see any new regulations emerging from the Obama Administration, including the EPA, that do not clearly and overwhelmingly pass a cost-benefit test, regardless of any legal constraints on the consideration of costs.

A FURTHER THOUGHT: The Obama Administration's withdrawal of the ozone NAAQSs from reconsideration opens the door for possible litigation, in which environmental plaintiffs would challenge the Bush Administration's decision to reset the primary NAAQS at 0.075 instead of some lower level. The scientific basis for that lawsuit would be the same as the scientific basis for the Obama Administration's reconsideration of the rule. If they prevail, the court would likely order the Obama Administration to re-open its reconsideration of the rule, which it could then do without having to take as much (if any) political heat for the results.

Indeed, this debacle over the ozone standards is yet another example of political ineptness by the Obama Administration. Lawsuits against the Bush standards already were filed when the Obama Administration took office. Instead of preempting those lawsuits by announcing that it would voluntarily reconsider the standards, the Administration probably should have let the lawsuits proceed before acting.

Coming This November...

The Fallacious Republican Attacks on the EPA

Dan Farber has an excellent post at Legal Planet (here) explaining (a) why the current House of Representatives is the most anti-environmental-protection ever and (b) how the anti-EPA views of many House Republicans are faith-based, rather than fact-based. The fact of the matter is that environmental regulation in general has very little impact either on overall levels of economic growth or jobs. The only saving grace is that none of the House bills Dan mentions seems likely to become law any time soon.

EPA Tries to Reboot the Acid Rain Trading Program

I've been too busy (with the move, knee surgery, and all) to keep up with EPA's new sulfur dioxide and nitrogen oxide regulations under the Clean Air Act, which were finalized this past week (see here). These rules are especially important because the extremely successful acid rain trading program has been moribund for more than a year, largely because of legal uncertainties stemming in part from a 2008 court ruling overturning the 2005 Clean Air Interstate Rule (CAIR). I  previously posted (here and here) on the death of trading under the acid rain program.

Instead of describing the new rules myself (I haven't had time yet to actually read them), let me refer you to the description from economist Richard Woodward, which has been reprinted at the Environmental Economics blog (here). I may have more to say about the rules myself, once I've had a chance to read and digest them.

The Costs of Complying with Environmental Regulations

Dan Farber explains (here) why those costs cannot possibly have a large negative impact on jobs and the overall economy. And it's important to note that Dan's analysis is based on the most pessimistic (and dubious) estimates of regulatory costs. The fact of the matter is that federal environmental regulations, overall, provide substantial net social benefits.

Another Setback for US Climate Policy?

Today's edition of The Guardian (here) reports that President Obama has signaled his intention to order a two-year delay in the implementation of EPA's proposed rules to limit greenhouse gas emissions under the Clean Air Act. Notwithstanding that the Clean Air Act is not well suited to dealing with climate change, the President's retreat is yet another sign that his Administration does not consider climate change a significant enough priority to fight for against the tide of Republican (and some Democratic) opposition.

This continues the one-step-forward, two-steps-back approach to climate policy that has characterized the Obama Administration so far. After identifying climate change as a key issue for his first term, President Obama declined to expend the political capital necessary to obtain Senate action on a climate bill that already had been approved (thanks largely to the efforts of Speaker Pelosi) in the House. EPA regulation of greenhouse gases under the Clean Air Act was supposed to be a back-up plan that would move US climate policy forward while spurring reluctant legislators to support special climate legislation to minimize compliance costs for regulated industries, e.g., through specially designed emissions trading and offset programs. Now, having already conceded the fight on special climate legislation, and faced with radical Republican threats to bring the federal government to a halt, President Obama appears ready to, in effect, put all federal climate policy on the back-burner until after the next presidential election.

Is this capitulation or good tactical politics? The one argument I can see for the later conclusion is that by delaying EPA regulations for two years, the President might forestall Republican efforts to emasculate the agency. That assumes, of course, that such Republican efforts have a serious prospect of working. Moreover, Obama's plan (if that's what it is) could backfire, if it simply emboldens radical conservatives, who already have inserted into funding bills measures to reduce EPA's authority to regulate hazardous air pollutants such as mercury (see here). How credible will President Obama's threats to veto such legislation be if he is known to capitulate at every turn?

EPA to Issue New Regulations to Regulate Toxins in Drinking Water

While it faces Republican attempts not just to prevent it from regulating greenhouse gases under the Clean Air Act (see here), but to shut it down entirely (see here), the EPA, to its credit, pressing ahead with plans to issue much-needed regulations to reduce and prevent contamination of drinking water supplies by carcinogenic and toxic substances that are commonly found in drinking water supplies. The New York Times has the story here. The EPA's official announcement is here.

Unfortunately, Republicans are playing politics with a very important federal agency that has contributed greatly to improving public health and welfare since its creation in 1970. Not all EPA regulations are well-founded, efficient or effective (and those specific regulations should be amended or eliminated), but many EPA regulations and programs are both effective and efficient. Indeed, the Clean Air Act is, overall, among the most effective and efficient government social-welfare programs ever implemented.

Final Report of the Commission on the Deepwater Horizon Oil Spill

The Commission, appointed by President Obama and co-chaired by former Democratic Senator Bob Graham and former EPA chief (under Bush I) William Reilly, makes numerous recommendations for improving offshor drilling safety and environmental protection, including the following:

•  Congress should create an independent safety agency within the Department of the Interior to oversee all aspects of offshore drilling safety.
• When drafting offshore oil leases, under existing statutory authorities, Interior should ensure that the industry pays the costs of regulatory oversight, as do other regulated industries, such as telecommunications. Those regulatory oversight costs should include the budget of the new independent safety agency (see above) and oil-spill response planning, which should be borne by the agency, rather than American taxpayers.
• With respect to the increased risks associated with deepwater drilling in areas with less well understood geologies, Interior should toughen its baseline prescriptive safety regulations and require oil companies to demonstrate that they have undertaken thorough risk assessments and are prepared to manage all risks pertaining to planned operations.
• Congress should enact a statute that would create within the Interior Department a distinct environmental science office headed by a chief scientist with well-specified responsibilities regarding environmental review and protection.
• The oil and gas industry should adopt, as some other high-risk industries already have, a "Safety Institute," as an industry-created, self-policing entity responsible for developing, adopting, and enforcing standards of excellence to ensure continuous improvement in safety. 
• Each house of Congress should assign a committee with responsibility for conducting annual oversight hearings to consider the state of technology, application of safety processes, and environmental protection in offshore oil exploration and drilling.
• The President should seek increased funding for agencies with oil-spill response responsibilities, including Interior and the Coast Guard.
• The President should create an inter-agency review process for oil-spill response planning. Final response plans should be made publicly available.
• Interior, the Coast Guard, and the Department of Energy should develop in-house expertise to effectively oversee containment operations in the immediate aftermath of a well blowout.
• As a permit condition for deepwater drilling, Interior should require oil and gas companies to (a) design wells in ways that anticipate the potential need for containment should a blowout occur and to (b) have immediate access to containment technologies.
• Congress should significantly increase the Oil Polllution Act's liability cap and financial responsibility requirements for offshore facilities.

Many of the Commission's recommendations are based on its analysis of what other countries, such as Norway and the UK, already require. The full report, supporting documents, and a press kit that contains "Highlights of Key Recommendations" can be viewed here.

On This Date

On January 11, 1908, President Theodore Roosevelt ended debates in Congress about whether the Grand Canyon should be preserved or developed (for hydro-power and minerals) by declaring it a National Monument, under authority granted by Congress in the Antiquities Act of 1906. This move, controversial at the time, protected what has become the most popular natural tourist attraction in the United States against the designs of developers, while Congress dithered. It was not until 1919 that Congress finally designated the Grand Canyon as a National Park.

Well, That Didn't Take Long

From The New York Times (here):

On the first full day of legislative business, House Republicans introduced measures on Wednesday to block the environmental agency’s proposed regulation of greenhouse gases and new rules limiting toxic air emissions from cement factories.

The Republicans will tell you, supported by absolutely no evidence, that "job-killing" EPA regulations are a significant cause of unemployment. Don't you believe it.  

On This Date

On December 28, 1973, President Richard M. Nixon signed into law the Endangered Species Act. As originally enacted, the ESA sought to protect the existence of endangered and threatened animal and plant species for their own sakes, that is, regardless of their utility to humans and regardless of cost. Though the Act was subsequently watered down to permit the extinction of species in cases where the cost of preservation is deemed too high (by the Endangered Species Committee or "God Squad"), the Act remains a rare example of true environmental legislation (in contrast, for example, to most pollution-control laws, such as the Clean Air Act and the Clean Water Act, which are primarily public health statutes).

Wagner, Fisher and Pascual on the Use of Models in Environmental Policy

Liz Fisher (Oxford), Wendy Wagner (Texas), and Pasky Pascual (US EPA) have recently published two articles on the use and abuse of scientific and social-scientific models in environmental policy.

E. Fisher, P. Pascual, and W. Wagner, "Understanding Environmental Models in Their Legal and Regulatory Context," Journal of Environmental Law 22(2):251-283 (2010).

Environmental models are playing an increasingly important role in most jurisdictions and giving rise to disputes. Despite this fact, lawyers and policy-makers have overlooked models and not engaged critically with them. This is a problematic state of affairs. Modelling is a semi-autonomous, interdisciplinary activity concerned with developing representations of systems and is used to evaluate regulatory behaviour to ensure it is legitimate. Models are thus relevant to lawyers and policy-makers but need to be engaged with critically due to technical, institutional, interdisciplinary, and evaluative complexities in their operation. Lawyers and policy-makers must thus think more carefully about models and in doing so reflect on the nature of their own disciplines and fields.

W. Wagner, E. Fischer and P. Pascual, "Misunderstanding Models in Environmental and Public Health Regulation," N.Y.U. Environmental Law Journal 18:293-356 (2010).

Computational models are fundamental to environmental regulation, yet their capabilities tend to be misunderstood by policymakers. Rather than rely on models to illuminate dynamic and uncertain relationships in natural settings, policymakers too often use models as "answer machines." This fundamental misperception that models can generate decisive facts leads to a perverse negative feedback loop that begins with policymaking itself and radiates into the science of modeling and into regulatory deliberations where participants can exploit the misunderstanding in strategic ways. This paper documents the pervasive misperception of models as truth machines in U.S. regulation and the multi-layered problems that result from this misunderstanding. The paper concludes with a series of proposals for making better use of models in environmental policy analysis.

These two excellent articles underscore a point that I have been arguing for a long time: legal scholars and lawyers must approach law-making and law-enforcement processes more like social scientists. This is true not only for administrative processes, such as environmental law-making, but for constitutional interpretation and common-law judging as well. Judges (as judges) rarely, if ever, engage in formal model-building as they seek to "discover" common-law rules and decide cases, but that hardly means they work without models, which, sometimes at least, can be inferred from their decisions. Ultimately, to understand the law, one must try, at least, to understand the models (formal or informal, shared or idiosyncratic) of the participants in law-making and law-enforcement processes.

Thatcherism on Steroids in the UK

I previously posted (here) about the Tory/Lib Dem Coalition's plan to privatize some of the UK's national forest reserve in order to help bring down the public debt. Today's The Guardian reports (here) that the privatization might well include all state-owned English trees. Not even Baroness Thatcher ever contemplated such a thing. I don't know whether Terry Anderson and other "free-market environmentalists" are advising the current UK government, but the idea is a bad one for a whole hosts of reasons, only some of which are addressed in the article.

The article's author John Vidal expresses concern that foreign interests might buy up all the state timberlands and clearcut them for use as renewable energy or to exploit subsurface resources, including coal. At first glance, this seems far-fetched. After all, economic theory suggests that private woodland owners should conserve (not preserve) timber resources to maximize their long-rune economic value. However, as the Canadian economist and mathematician Colin Clark demonstrated in a couple of articles he published in 1973, complete exploitation of a scarce resources might be an optimal strategy under some circumstances. And there is a good deal of empirical evidence, from both the UK and the US, of private timber owners doing exactly what most economists say they would never do. Indeed, the UK's Forestry Commission was founded in 1919 precisely because timber harvesting on private lands was close to denuding Britain of trees.

The forests of largest concern, when it comes to privatization, are those with the greatest public values attached to them, which would surely include ancient woodlands and sites of special scientific interest. For those sites in particular, privatization would likely be a disaster because, even if private owners can be expected to engage in conservation, their conservation decisions will seek to maximize their private utility, not public welfare.

One way that at least some of these concerns might be ameliorated is for the government to issue new regulations on harvesting privately owned timber. However, such regulations would reduce the market value of the timberlands at auction by some uncertain amount, which would be contrary to the government's expressed concern with paying down the debt.

Public opposition to the wholesale privatization of forest reserves is growing. And politics rather than economics will, as always, have the final say. I remain cautiously optimistic that this short-sighted plan to privatize - corporatize would probably be a better word - the UK's entire woodland patrimony will be aborted.

Supreme Court Grants Certiorari in AEP v. Connecticut

Ann Carlson has the story here at Legal Planet. The case involves a claim by state and private plaintiffs that power plant emissions of carbon dioxide and other greenhouse gases constitute a federal common-law public nuisance. Among the numerous interesting issues in the case are whether the plaintiffs have standing to sue, whether the common-law claims are preempted by the Clean Air Act. I agree with Ann that the Court is likely to rule against the plaintiffs on both counts.