Government regulation helps internalize costs of the Market

 “Progressive Conservative MPP Michael Harris (Kitchener—Conestoga) wants to eliminate two programs run by government-mandated organizations that oversee the recycling of hazardous materials and electronic waste.

Industries pay estimated recycling fees to Stewardship Ontario, which handles hazardous waste, and Ontario Electronic Stewardship, which is responsible for electronic waste.

‘There is no reason why producers of hazardous and electronic waste should be obligated to pay eco fees to unaccountable government monopolies,’ he said.”

  • Tories would deregulate recycling of hazardous waste, trashing eco-fees, by Alex Consiglio (Toronto Star), Wednesday, November 21, 2012

 

Laissez-Faire Conservatives confuse me. They argue that a government solution is always the wrong approach. This is even when a government solution is the only viable approach. Think about the car insurance market. It only works because of one rule: it is an offence in all provinces to drive without car insurance. This one rule insures that all potential costs created by a market can be accounted for. Therefore, the role of Governments is indispensable when it comes to internalizing costs that the market cannot deal with or when it comes to dealing with rogue private market actors known as free riders.

These truths are especially true in the field of environmental policy. For, as most economists admit, private sector players tend to have trouble internalizing the costs of pollution. People or corporations have been known to dump hazardous materials because it may be easier and/or cheaper than the alternative.

I learned this truth through direct observation. One of first jobs was provided through a joint project. Run by FutureWatch Environment & Development Education Partners and the Metro Toronto and Region Conservation Authority (MTRCA), it allowed me to see how one organization regulates nature. For, MTRCA ran a number of parks and nature reserves in the Greater Toronto Area; and as a consequence, they also ran a number of educational programmes, services or opportunities.

One of the opportunities that I remember was The Yellow Fish Road Program. It is meant to be an awareness campaign. Children would paint yellow fishes around sewers. This service’s aim was simple. Through word of mouth and having physical symbols, people would be reminded or informed of how the watershed worked. Or put differently, storm drains are often directly connected to the rivers, lakes and local ground water.  Consequently, if one poured chemicals into the storm drain, they would pollute the environment. Or as noted by the website “lostrivers.ca”, “Most people are not aware that household hazardous wastes have a serious impact on our rivers and lakes and that the most stormwater entering the drains on our streets flows directly into a local stream, river or Lake Ontario, without any treatment at a sewage treatment plant. Traces of hazardous wastes such as motor oil, paints, household cleansers, pesticides and solvents which have made their way from neighbourhood streets have been detected in our local waters.”

This is not to say that there were not government attempts to recycle hazardous materials, for there were. When I was at the MTRCA, local fire halls would accept hazardous material. These services allowed citizens and business to properly dispose of chemicals, if they chose to. However, as one can see, those recycling programmes always depended on the citizen being proactive and generally citizens would not be. That is why awareness campaigns, like the Yellow Fish Road Program, existed. To remind citizens to take advantage of recycling programmes instead of polluting Toronto Area Rivers – like the Don and the Humber.

Now, if one listens to the Progressive Conservative MPP Michael Harris (Kitchener—Conestoga) or Tim Hudak, for that matter, one would be under the impression that the market should have come to the rescue. Yet, the reality was very different because the private sector did not present a solution. The Government of Ontario had to act. We know this because of the evidence.  Toronto City Council on September 7th, 1989 established the ‘Interim Task Force on the Don River Clean-Up’ because the private sector would not act. Citizens and City Councillors pursued a simple goal: to clean-up the Don River by the year 2001 so that the entire city could enjoy it. However, this is not the only evidence that government action is required. The MTRCA’s successor – the Toronto and Region Conservation Authority – still runs the Yellow Fish Road Awareness Program. Therefore, it is not surprising that the Government of Ontario brought forth supervision, regulations and fees to ensure the proper disposal of hazardous materials.

Since other governments have acted similarly, one can see that the actions of the McGuinty Government, in this respect, were quite reasonable. P.E.I. launched a similar recycling programme. (P.E.I. launches paint recycling, CBC News, Last Updated: Sep 6, 2012 9:35 AM AT).  The Government acted by passing itsEnvironmental Protection Act. It provided a framework through which paint distributors, manufacturers and retailers could fund the project.  Consequently, to ensure the environment, private actors were forced to pay a small fee for each paint purchase, from 20 cents to $1.50.

If, one though that this was the end of the history lesson, one would be mistaken. For, History tells us that when municipalities in Ontario started to roll out Blue Box programmes, municipalities had to acknowledge that that there would be a cost. They had to discuss this cost with their citizens and move forward on a simple basis: recycling might be more expensive than dumping the city’s garbage into a landfill. However, those short term costs had long term benefits. That is without having a dump close by, citizens would have a cleaner community in which to live. This is how government and governing works. Government, especially in a democracy, needs to lead. That can only happen if governments can identify issues and come up with solutions. To do this, Governments need to be a trusted agency. By acting in an open in an honest and open way – according to rules created by a proscribed system – Government can obtain and retain that trust. This is why we pass Laws in open session. This is why our Laws our published. We do this for the betterment of us all. This is how Governments have settled issues in P.E.I. and in Ontario. Sometimes, Government action is the only solution.

For, we know what happens when Governments do not act or when Governments are not involved in recycling programmes: those programmes underperform. Just look at Call2Recycle®. For the most part, it is a private sector initiative. They describe themselves as “a product stewardship organization managing the only no-cost battery and cellphone collection program in North America.” So, in different words, they recycle batteries and cellphones without charging the person who donates their batteries or cellphones. Call2Recycle’s® statistics indicate that only 67% of Americans and 75% of Canadians intend to use their service. While, only 47% of Americans and 55% of Canadians have recycled a battery or cellphone last year. However, this is only one data point. Let us look further into private recycling programmes.

In 2002, CBC reporter Erica Johnson looked into the issue of the disposal of high tech and hazardous trash (Tossing your computer? Read this first, by Erica Johnson; Producer: Ines Colabrese; Researcher: Colman Jones; Broadcast: Oct 22, 2002). As she noted, in a broadcast and on-line, “Canadians have come to rely heavily on high-tech conveniences – cellphones, fax machines, and computers. Some of us say our lives now depend on them. But what happens when they’re no longer useful? They become high-tech trash — a dirty secret the Canadian government is doing little about.”  She went on to say that high-tech equipment and hazardous materials – such as PVC insulation, lead, mercury, cadmium and phosphorus – are often shipped to China in contravention of Chinese Law and the Basel Convention. The Basel Convention, an international treaty we signed onto, tries to ensure that hazardous material is recycled in the most responsible manner. By violating it, we are generally violating our own ethics and standards. With that being said, if our own programmes are violating international law, what does this say about us?

Yet, this was not the only CBC report. Emily Chung’s report was even more damning. For, she noted that US defence computers were donated with data still on them. (B.C. students buy sensitive U.S. defence data for $40 in Africa, CBC.ca, Last Updated: Wednesday, December 16, 2009). So not only were donated computers not being recycled, they were also giving away the secrets of our closest military ally. Again, we see the same principle: the Basel Convention was breached by Free Market Participants.

Such underperformance in a recycling programme leads to toxic waste that is not disposed of properly. This might mean that a battery which needs to be recycled might end up in a local swamp and poison someone’s drinking water. Or as we are increasingly finding, it might end up in the ocean. The problem with that is simple: the Ocean is full. Coastal areas in North American and Hawaii are seeing Plastic Waste roll onto their beaches. The waste is from the East, Europe and North America.

What is even worse is what scientists are finding. On most beaches in the world – even beaches without human contact – scientists are finding microscope grains of plastic in the sand. Given that more and more studies are also linking plastics with Cancer, one can say that the plastic that we do not dispose of properly might just end up in us. For we know that plankton, fish and some animals that are ingesting the plastic that we produce. So, one would argue it is only a matter of time for what we produce to enter us through the water we drink, the food we eat or the air we breathe.

That is, if this is not happening already. On July 8, 2004, Dr. Barbara Yaffe, Toronto’s Acting Medical Officer of Health, “released a study estimating that five common air pollutants contribute to about 1,700 premature deaths and 6,000 hospital admissions in Toronto each year.” (Press Release: Study shows Toronto’s air pollution harms thousands of residents, Medical Officer of Health calls for action on air quality). Therefore, the cost of our neglect could be high.

Therefore, when Progressive Conservative MPP Michael Harris (Kitchener—Conestoga) declares that he wishes to eliminate two programs run that mandate and oversee the recycling of hazardous materials and electronic waste, one should ask does this policy make sense. Evidence tells us that eliminating programmes that ensure the safe disposal of hazardous material does not make sense. When we have done this in other fields, we have seen the loss of life. One does not have to think hard to remember the loss of life caused in Walkerton or the illness caused by contamination of meat processed by Maple Leaf Foods (2008) or XL Foods (2012). If we care about ourselves, our neighbours or “the Other”, eliminating government mandated recycling programmes for hazardous materials would be crazy. If we care about general benefit of society, we know that we need to keep this form of Government intrusion because it benefits us all.

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