Policy Paper — MARKET-BASED ENVIRONMENTAL POLICIES: A Conservative Approach

Part I: Introduction

As a Republican organization, Republicans for Environmental Protection believes that environmental protection is fully consistent with traditional conservative principles. One such conservative principle is that an effectively functioning private market is the most efficient tool for organizing a nation’s economy. However, like all human institutions, markets are imperfect. As Benjamin Franklin said: “The market is a fine servant, but a poor master.”

Unfettered markets originating in the Industrial Revolution and continuing through modern times have been responsible for a wide array of environmental problems that impose numerous direct and indirect health and economic costs upon citizens. Pollution, resource depletion and other costly environmental damage have occurred as a result of expediency, subsidies, information gaps, and other distortions that cause market failures. Carefully designed public policies can correct such failures, enabling markets to work more effectively and delivering tangible gains in environmental quality at the lowest practical cost.

Part II: The Environment, Democracy and Markets

Securing environmental gains through better functioning markets is vital. The environment is a commonly held endowment of ‘natural capital that provides essential ecological services necessary for public health and economic prosperity. The environment, especially undeveloped natural areas, has enormous national heritage value as well.

Protection of natural capital and common resources held in trust for the general public is a basic and valid function of democratic government rooted in English law predating the Constitution. Environmental standards established by law and implemented through regulation ensure a level playing field. Without a level playing field, market failure occurs and the public is unfairly forced to subsidize individuals and corporations willing to deplete and damage public resources at public expense.

Part III: Market-based Environmental Policies

Well-designed public policies that harness market forces can eliminate distortions that cause environmental damage, potentially at a cost lower than conventional regulation alone. A proven example of market-based environmental protection is the Clean Air Act's cap-and-trade program. Through cap-and-trade, markets take into account the costs of pollution, thereby creating incentives to substantially reduce emissions while lowering costs of regulatory oversight.

Therefore, whenever possible and appropriate, REP will support and promote the use of proven, market-based environmental protection policies that deliver measurable benefits in order to achieve recognized, science-based environmental quality standards that protect America’s natural resources and cultural heritage.

Part IV: Recommendations

REP supports the use of market-based pilot programs and policies that are promising approaches to meeting the goals of conservation and environmental protection. Examples include the following:

• Cap-and-trade legislation, such as the McCain-Lieberman Climate Stewardship Act, and related policies to reduce emissions of carbon dioxide and other greenhouse gases;
• Output-based pollution standards for utility and industrial boilers that set limits as a percentage of energy produced rather than fuel used, thereby encouraging efficiency;
• Requirements for all power plants to meet modern pollution reduction standards by a fixed deadline, leveling the playing field;
• Rewarding consumers with ‘fee-bates’ for purchasing fuel-efficient motor vehicles, and discouraging purchases of inefficient vehicles;
• Phase out subsidies for extracting raw materials from public lands, e.g. the 1872 Mining Law, and eliminate incentives for below-cost commercial timber sales;
• Economic incentives encouraging landowners to conserve natural areas and wildlife habitat on private property;
• Reform farm programs by phasing out market-distorting commodity crop subsidies and by redirecting funds to farm conservation programs; and
• Providing incentives of various types, including protection from unfair competitive practices, to encourage more environmentally friendly industries such as alternative energy and biological pest control to develop and compete more quickly in the marketplace.