Markets typically do not react favorably when uncertainty or sudden changes are introduced.
And any policy that is introduced without fully considering economic impacts will, invariably, introduce unintended change and uncertainty. Further, as it pertains to the “environmental governance” by highly recognized, global regulatory bodies, it is critical that the proposed solution to a problem doesn’t outweigh the problem. As an exercise, then – let’s take a look at some well-respected governing entities, and see if we can identify some economic trends in their Mission Statements:
The USEPA Office of Transportation and Air Quality’s (OTAQ) mission is to protect human health and the environment by:
• Reducing air pollution and greenhouse gas emissions from mobile sources and the fuels that power them.
• Advancing clean fuels and technology.
• Encouraging business practices and travel choices that minimize emissions.
The Mission of the California Air Resources Board as of March 27th, 2012 is:
“To promote and protect public health, welfare and ecological resources through the effective and efficient reduction of air pollutants while recognizing and considering the effects on the economy of the state.” (Emphasis added)
“To provide EU policies with independent, evidence-based scientific and technical support throughout the whole policy cycle. Working in close cooperation with policy Directorates-General, the JRC addresses key societal challenges while stimulating innovation through developing new methods, tools and standards, and sharing its know-how with the Member States, the scientific community and international partners.”
All three Mission Statements are well-written and have lofty, aspirational goals. But only CARB has been deliberate in their intention towards the effects on their economy.
The CARB approach understands that, if a change is introduced too quickly or without economic considerations, things like “black markets” may begin to pop up. At very least, burdened costs are passed along to the consumer, which – in turn – create additional obstacles for the companies that either manufacture or transport goods and services.
It should be stated: this doesn’t mean that environmental changes should not be introduced and encouraged; rather, sound economics must be applied to ensure a smooth transition in an economy.
So, let’s put these two thoughts together:
• economic consideration when implementing environmental regulations
• smaller, lighter, less expensive, easier-to-use field equipment (integrated PEMS)
…which adds up to one thing:
Common-sense information, based on high-quality, low-cost data equals intelligent fuel, emissions, and transportation decisions.
This approach not only works well for developed nations, it is a critical path for developing nations, which we will explore in the next blog issue.