CitiesGoGreen - October 2008 - (Page 28) Natural Market Forces Can Restore Nature and Cut Taxes “Sin taxes” are a well-known way to raise revenue and alter unwanted behavior. How can we apply this concept to environmental issues? by John Lombard ow can we discourage destructive environmental behaviors, pay for ecosystem restoration and reduce general taxes, all at once? Let the market do the work—with taxes or fees correcting our present enormous subsidies for environmental degradation. We can call the resulting charges “environmental sin taxes,” or to focus on the mechanisms at work (and to avoid the “tword”), call them “natural market forces.” I’ll use both phrases in this article. Like existing sin taxes on cigarettes and alcohol, natural market forces would address public costs created by destructive private behaviors. Today, all of society bears the cost of these behaviors— through expensive corrective actions or, more frequently, by accepting ongoing environmental losses as though they are inevitable. Any economist will tell you that it makes more sense to charge the party causing the destruction. Lately, economists are lining up in support of this approach nationally or even globally to address greenhouse gas emissions. But why stop there? The principle is widely applicable, and generally better suited to local or state 28 H The virtues of environmental sin taxes • Incorporates environmental costs into decision-making • Non-regulatory, allows individualized responses • Flexibility to address needs of different ecosystems, nuances of behavior • Powerful form of education, linked to activity • Can be linked to reductions in other taxes governments, since most environmental impacts are greatest close by. Would environmental sin taxes single out business, or developers, as the culprits? No. In fact, we all receive these subsidies to degrade the environment, and we behave accordingly. Take water, for example, a profoundly important issue throughout the West, and increasingly much of the rest of the country. When we pay our water bills, we pay only to have our water delivered to our taps, stored until we are ready to use it, and cleaned to meet drinking water standards. We don’t pay a dime to take water out of our streams and aquifers. There are profound environmental costs from behaviors we all engage in, which are easy to ignore because we do not pay for them as a result of our behavior. What harm does my morning shower do? By itself, not much. Added to all of my other uses of water and those of my neighbors, a lot. I live in the Puget Sound region, in Western Washington where we collectively withdraw at least 250 billion gallons per year from our natural systems, and we use less water per person than a lot of other parts of the country. It doesn’t take an ecologist to understand this has profound consequences for fish and wildlife. A tax (or fee, if you like) averaging 1/10cent per gallon would likely raise more than $200 million a year in the Puget Sound region, at the cost to a typical homeowner of only about $5 a month. The tax could be higher in summer, when October 2008 http://citiesgogreen.com/issues/october-2008/current-feature/natural-market-forces-can-restore-nature-and-cut-taxes http://citiesgogreen.com/issues/october-2008/current-feature/natural-market-forces-can-restore-nature-and-cut-taxes http://citiesgogreen.com
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