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March 30, 2015

Should the U.S. Government Regulate Sustainability?

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It is my belief that the purpose of government is to prevent harm and to promote the general welfare.

So it follows that I believe that when government implements federal regulations on sustainability, they do so to protect consumers from harming themselves.

The present regulations are to ensure that the population continues to have access to all the water, materials and resources that are needed for human health and to provide for future generations.

This being said, I do not believe restrictions are effective in incentivizing innovation for a more sustainable world.

By setting federal regulations you are actually taking away the incentive to creatively solve environmental problems. The reason being, most companies view federal regulations for sustainability as a financial burden that makes them less competitive.

The mindset is to pay the fee or buy the new, more “green” equipment so that the government will move along and let the company conduct business as usual. This results in a divorce between the idea of sustainable practices and business objectives, which fosters hostility, not innovation, when it comes to sustainable processes.

So if regulations are destructive to sustainable innovation, logic follows that we should take them away and let free market capitalism work its wonders. There are two problems with this view: one is that we don’t know how long it would take the free market to regulate itself; it could be a long time before businesses decided for themselves to implement sustainable practices, in which time the environment would become increasing more polluted (though you can also argue that the government is incredibly slow and businesses would probably be faster).

The second, and to me more pressing, is that although the free market approach might work if we were paying the real price of petroleum or other natural capital, Hawken and the Lovins continuously remind us in Natural Capitalism: The Next Industrial Revolution, that our market doesn’t take the real price of natural capital into account when we produce and consume products.

Due to this oversight, and the fact that our government has further muddled the real price by implementing subsidies or heavy taxes on varying products, we can’t rely on the free market alone.

Assuming government subsidies and taxes are still in place, a better system would to be to prevail upon the government to reduce or dispose of regulations for minimum standards and instead provide incentives to innovate sustainable processes that are in line with business objectives.

An example of this can be seen in a quote of Mark Posson’s:

“Streamlined and expedited permitting for projects incorporating sustainable development practices, such as LEED, will encourage proponents to invest in improved practices to avoid extensive permitting.”

Another example would be to take cap and trade fees and, instead of having the businesses pay the government, require that these fees be reinvested in developing a more efficient and sustainable supply chain. This would bolster innovation and could potentially give the business a competitive advantage in the global market.

The government should be involved in the global reach toward sustainability. However, current methods of regulation are counterproductive to business innovation in sustainability. These regulations should be disposed of and new incentives should be implemented to reward businesses for sustainable innovation and efficiency with regard to natural capital. I believe that this would result in a more innovative and sustainable market and would, most likely, give the innovators a competitive advantage in the marketplace.

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Relephant:

Tax Inversion: An Unethical & Un-American Practice.

 

Author: Samantha Cole-Johnson

Editor: Travis May

Photo: Wikipedia

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