|dc.description.abstract||The decision to examine the economic effects of environmental regulation served both a personal academic interest and a practical career oriented objective. Despite my support for environmental concerns I have always been curious and held some reservations as to the economic ramifications of environmental legislation. It is
my understanding that this reservation was not mine alone, but is shared by
businesses, and individuals who fear the personal negative economic ramifications of
environmental regulation. These societal reservations were exploited in the 1980s by
President Ronald Reagan, who used them to slow the environmental movement and
cut back on environmental legislation. I undertook this project to examine the degree
to which these reservations were valid.
On the more practical side, I am a double major in economics and psychology
with an area of emphasis in public policy and an indescribably desire to practice law.
This project has helped me make a more informed decision regarding a career in
environmental law. Therefore, this decision not only satisfied a personal academic
interest, but served as a test run for a possible career as an environmental attorney.
Given these goals, I structured the project so that it incorporates economics,
the environment, and law. Doing this also meant blending theory and practical
application, as environmental laws are born out of economic and ecological theory,
and implemented in a world where exogenous factors abound. This mix provided an
interesting learning experience as I witnessed the practical application of academic
knowledge for which I have been exposed to during my time at Kalamazoo College.
In order to achieve my objectives I chose to research environmental regulation
in the United States and its economic effects, and then examine an actual
environmental law suit. After discussing my objectives with the law from of Kreis,
Enderle, Callender, and Hudgins, where I am currently employed, they agreed to open
their files on a local environmental suit. The suit is perfect from an analytical
perspective in that it deals with the major pieces of environmental legislation, the
Clean Air and Water Acts, and is against Michigan's largest beef distributor, and
Plainwell's largest employer (with 800 employees). The files and information used in
this paper on the Michigan Department of Environmental Quality (MDEQ) v. Murco
have been released by the President of Murco and are for use in this paper only. The
President of Murco as well as the attorneys at Kreis, Enderle et. al. Would like to
keep the information confidential. Therefore, the paper should not be solicited to any
firms or organizations besides the employees and students at Kalamazoo College.
Understanding and summarizing the main points in the Murco case demanded
the extraction of information from several thousand case documents, as well as
background research and attorney conversations. The paper contains three main
sections, a history of environmental regulation, the MDEQ v. Murco case and
analysis, and a research portion examining the effects of environmental regulation on
productivity, employment, prices, wage rates, and the GNP.
The compilation of research indicates that although there can be substantial
negative economic effects at the local level, the overall effect of environmental
regulation on the national economy is relatively small. Research indicates that
environmental regulation slightly lowers firms productivity, raises their marginal
costs, causing higher prices, and can increase the unemployment rate at the local
level. However, environmental regulation has been shown to positively effect
workers wages in firms surviving regulatory predation, and can actually increase the
overall number of jobs. In addition, although the amount spent on pollution
abatement each year is large, the actual proportion of money spent, relative to the
GNP is actually quite small. Research indicates that the GNP is only slightly lower
with environmental regulation than it would have been without it. Therefore, while
the local effects of environmental regulation may seem quite large, on the national
scale the overall negative effects are minimal at best.
In addition to the negative effects, several social benefits of environmental
regulation are also recognized. These benefits include increased health, lower health
care costs (due to improved health), longer lives, and expanded recreational
opportunity. Although the monetary value of benefits due to environmental
regulation are difficult to determine, when analyzed in respect to the minimal
negative effects of abatement and the inability of decentralized control to protect the
environment, it becomes evident that environmental regulation is not only positive,