Green Grow the Incentives

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Illustration by Leigh Guldig

Illustration by Leigh Guldig

Economic inducements are increasingly being used to aid the environment

By Rona Kobell

When Congress passed the Clean Water Act in 1972, the federal government acquired the power to set limits on the amount of pollution that industries could discharge into waterways. The law complemented the Clean Air Act of 1963, which limited contamination of the atmosphere. In those days, much of the nation’s pollution came from factories. The government was able to fine polluters and in some cases shut them down. That was its primary line of defense against harm to the environment.

Today, many of our environmental ills do not come from factories. They come from the way we live. We can no longer look only to the law for cures to our pollution problems. We must look also to ourselves.

Our federal, state, and local governments – as well as nongovernmental entities – understand this changing dynamic. That’s why they have turned increasingly to the use of economic incentives to alter people’s behaviors in an effort to benefit the environment.

Consider some of these behaviors: If we buy homes in a suburb that’s a 50-minute commute from work, we most likely are supporting a sprawl policy that encourages fragmentation of forestland and farmland. And if we stop for dinner on that commute, chances are the food we bought was grown cheaply, using agricultural methods that pile nitrogen and phosphorus onto soil and allow it to run off into our waterways.

What to do? The federal and state governments have realized that a greener life costs more, and they’ve been willing to offer incentives in the form of public money to help build and sustain it. Homeowners can receive public grants to install solar and geothermal heating that reduce the use of oil and gas, or rain barrels and rain gardens to reduce storm water runoff. In Lancaster, Pennsylvania, residents can receive grants from federal, state, nonprofit, and corporate sources to install green roofs that help cut down on runoff and cool the city.

A long-distance commuter can receive a tax credit of $2,500 if she buys a Toyota Prius – a car that gets twice the miles per gallon as a regular sedan. Looking at a Leaf? Last year, the federal government offered a $7,500 tax credit for those who bought Nissan’s latest plug-in vehicle. Reducing the damage done by cars is no small goal, as evidenced by the fact that one-third of the pollution in the Chesapeake Bay comes from atmospheric deposition of nitrogen – much of that from fossil fuel vehicles.

These measures work. Air pollution is on the decline in Maryland, in part because commuters are choosing more fuel-efficient vehicles (with some thanks owed to economic incentives from the government), and in part because they’re choosing to drive less.

Many states have long offered economic benefits to landowners who promise not to develop their property. Maryland has a companion program to preserve rural land and to keep farmers farming, and a third initiative, Program Open Space, in which the state buys property and turns it into parkland or wildlife habitat.

Economic incentives have made the most difference in curbing pollution from farms. Shortly after Congress passed the Clean Water Act, the farm lobby won an exemption. States and the federal government regulate farms that raise large numbers of hogs, chickens, and cows. But crop farms and those with smaller numbers of animals are not subject to the same environmental regulations.

The federal and state governments have realized that a greener life costs more, and they’ve been willing to offer incentives in the form of public money to help build and sustain it.

So, the federal government, with help from the states, pays farmers to plant buffers to stop runoff from entering the creeks on their property. It pays farmers to plant cover crops so the land will not lie fallow in the winter, and a beneficial crop – such as barley or winter wheat – will take up the soil’s nutrients. On cattle farms, the governments also pay farmers to fence streams so animals do not enter them. On poultry farms, public funds cover most of the tab for concrete pads that minimize the spreading of manure outside chicken houses.

Maryland money, for example, has helped two farmers install bioreactors that will convert nitrate from water into harmless nitrogen gas. One Pennsylvania farmer recently installed an anaerobic digester that turns cow manure into power. Half of the $1.1 million cost was paid by state and federal grants. The Pennsylvania man is following the example of dairy farmers in Vermont, who have made a cottage industry out of selling cow power to state utilities. It has turned out to be a great hedge against low milk prices, as well as another example of how economic incentives can encourage new practices that are kinder to the environment.

Strong laws and robust enforcement help protect the environment. But economic incentives can get us the rest of the way. We all want to do the right thing. Sometimes, we just need a little help paying for it.


Rona Kobell, a staff writer at Bay Journal, studied economic approaches to environmental sustainability while a Knight-Wallace Fellow at the University of Michigan.

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