Targeting environmental outcomes: thirty wasted years

What sort of environmental policy are we seeking? What are our goals? What should be our goals? Such questions arise when we read that, for instance, operating carbon capture and storage would increase direct emissions of NOx [nitrous oxides] and particulate matter by nearly a half and a third, respectively, because of additional fuel burned, and increase direct NH3 emissions significantly because of the assumed degradation of the amine-based solvent. From Air pollution impacts from carbon capture and storage (CCS) [pdf], EEA Technical report No 14/2011

...or when we reading about road vehicles, we realize that:

their tyres  brakes and wear and tear on the road also produce dangerous pollutants, which get worse the heavier vehicles are. How green is your electric vehicle, really?, the Economist, 10 August

...and that electric vehicles are heavier than their internal combustion equivalents. Clearly, there are significant environmental trade-offs here: we can reduce emissions of greenhouse gases, but at the cost of increased emissions of other air pollutants. Currently, policy is made without much consideration of these trade-offs: an apparent emergency, such as climate change, dominates policymakers' thinking so much that the impacts of addressing it are neglected. So, for another example, the environmental costs of generating electricity using wind turbines (with non-biodegradable blades) or solar energy (with loses to biodiversity) are ignored. 

It's quite possible that, in the long run, the policymakers have chosen correctly and that climate change is a real emergency that merits increased pollution of the atmosphere with nitrous oxides,, particulates from tyres, etc and the loss of biodiversity. There are very few instances where one human activity, whether it produces energy or anything else, does not have a negative environmental impact. So, mining and using the filthiest coal to generate electricity has, and still does, bring heat and light to poor people at low cost, while polluting the air and costing the lives of miners. Once the negative impacts become impossible to ignore, and society becomes wealthier, we make efforts to regulate or price the negative impacts.

How is this policymaking approach working? I think the consensus would be: not very well. As well as climate change with all its attendant dangers, we are facing biodiversity loss, overfishing, water and air pollution, and other depredations at all scales. But we can't  expect policymakers to weigh up all the impacts of our activities and price or regulate them accordingly, and to do so on a continuous basis to ensure that policy keeps up with scientific advances (just one current possibility here) and the growth of our knowledge about scientific relationships.

So I propose a different method. The current system reacts to problems when they become politically unavoidable, and then tries to identify and address their causes. My method would be instead to specify acceptable ranges of indicators of environmental health, including human, animal and plant health, and supply incentives for people to ensure that the targeted indicators remain within those ranges for a sustained period. In short, to target environmental goals and reward those who achieve them.

My suggested way of doing this at the national level would be for the government to issue Environmental Policy Bonds. These bonds would not bear interest, but would be redeemable once the specified environmental targets had been achieved and sustained. The bonds would be tradeable and, could have a very long-term focus, encouraging people to research, refine and undertake activities directed toward one or all of the targeted goals. In this, and in other ways, they would have several advantages over current policymaking:

• We'd be targeting outcomes, for which there is more consensus than for the means to achieve them.  

• People can identify more readily with explicit environmental goals than with the means to achieve them, which means that there would be more engagement with the public when developing environmental policy, which in turns means more buy-in, which I consider to be essential.

• The target outcomes would be stable and have a very long-term focus: essential if we are to encourage new ways of achieving our environmental goals.
  

If national governments successfully implemented Environmental Policy Bonds, they could conceivably collectively issue bonds targeting global environmental objectives, encompassing, for example, the health of the seas and atmospheric pollution as well as climate change and biodiversity loss. I have to admit that that looks extremely unlikely, especially as the concept has been in the public arena now for more than thirty years, and only a non-tradeable variant (Social Impact Bonds) has so far been tried. As I explain here and here tradeability is absolutely necessary if we want to achieve broad, long-term goals. Perhaps, rather than wait for government to change the way it does things, we should try to engage with philanthropists. I've tried and had no luck, but perhaps my readers will be more successful.