by Shawn Regan
The Washington Post reports this week that the EPA is ramping up its efforts to address environmental justice—a concern that director Lisa Jackson calls "the biggest chunk of unfinished business when you think of the environmental landscape."
As the WaPo writes, the EPA has "forced emitters, including container-glass plants, cement plants and oil refineries, to install pollution controls in poor areas struggling with bad air quality."
If pollution lowers land prices, and if poorer households systematically locate in lower-priced communities, any policy designed to break the correlation by targeting firms’ behavior eventually will be reversed by households’ behavior. As long as pollution crops up somewhere, the cycle is likely to repeat itself: land values will fall, the rich will move out, and the poor will move in.Not only will such efforts be ineffective, they may even cause harm to the very residents they purport to benefit:
Moreover, cleaning up pollution in disadvantaged communities may actually harm incumbent residents. The cleanup is likely to trigger gentrification and increase housing costs. These increased housing costs may more than offset the benefit of a cleaner environment. Of course, for those who own their homes, this appreciation represents an appreciation in their housing assets. But most poor households are renters. For them, gentrification represents an increase in rents, which benefits only absentee landlords.Instead, Banzhaf says defining property rights and lowering transactions costs will result in "markets for pollution" emerging. If a community has the right to be free from pollution, polluters must compensate residents to locate in their community.
This market process, borne out of the important work of Ronald Coase, is already happening with many solid waste landfills, and should be the focus of efforts to promote environmental justice. For more on this topic from H. Spencer Banzhaf, see PERC's Policy Series "Environmental Justice: Opportunities Through Markets."