EQIP in the News

This article recently appeared in the NY Times. Often we see critics of commodity programs and the payments made to what some believe are otherwise profitable individuals and corporations who don't need them. But I've not often seen critics of payments geared at garnering environmental compliance. The matter is, I think, more complicated.

On the one hand, I have not heard of an EQIP program for coal-fired power plants. That is, the costs of environmental regulation are generally not offset by an infusion of funds from the regulating body. But that statement oversimplifies matters somewhat. Stormwater programs that are currently being undertaken under the command of the Clean Water Act are the subject of some level of government expenditure from the regulating level and nonpoint source pollution has long been the subject of state-level planning with the consequences of failing to plan existing only in the loss of federal funding (whether that is a carrot or a stick is an interesting question). So how, exactly, do EQIP funds for livestock production facilities differ from expenditures geared at municipalities or nonpoint source polluters? Or do they? That is, more broadly, is there any good argument for governmental funding when it comes to command-and-control approaches to environmental harms.

Read the rest of this post . . . .One argument concerning the difference between stormwater regulation and livestock producers of the concentrated sort would run something like this: The costs imposed by the federal regulation of stromwater is hoisted upon lower levels of government--political subdivisions and the states. Thus, in order to protect the individuals in those governments from increasing tax burdens, the costs should be shared by the regulating government, redistributing the tax burden to a broader swath of people. But it seems difficult to muster much from this argument. Should the concentration of an economic burden have an impact on how we choose to offer cost-sharing with regulation? If so, it would seem to me that the more concentrated the regulatory cost becomes, the more important it would be to accompany that regulation with funding.

Another argument would run something like this: these regulations are meant to internalize the external costs of production agriculture's land uses. If we compensate by taking money from taxpayers (the very folks who are harmed by the land use) and giving it to environmental offenders to stop their conduct, then all we are doing is changing the form of the taxpayer burden from an environmental one to a monetary one (though the monetary cost may be less than the environmental costs).

This argument makes one necessary assumption. That is, it assumes that the external effects of polluting land uses are negative. Some would argue that when a landowner changes his land use to avoid these problems, he is providing a positive benefit to outsiders for which he should be compensated. This question, of course, relies upon the initial allocation of rights. That is, if the property owner was, as a baseline, privileged to do what he has been doing, then the forced change is a positive externality. If not, then it is negative. As Mr. Ruhl recently put it, farmers tend to look at the benefits from changing their land use patterns as positive externalities for which they should be compensated. And, even though they are willing to make these changes, the costs associated with them make their adoption impossible.

It is somewhat easier to think of better management practices for crop production and stormwater programs as positive externalities, but it is difficult to figure out why. One factor would seem to be how long the old practices giving rise to these harms have been in place. However, mandating change based on new information about environmental consequences does not necessarily equate with providing benefits to the public that the public should pay for. On the other hand, time would account for the distain some attribute to paying large livestock facilities not to pollute. These facilities are relatively new. They are "industrial." They are therefore harmful and their external costs need to be contained.

None of these arguments strongly suggest that livestock facilities should or should not be compensated for the regulatory costs imposed through environmental regulation. At bottom, if pollution is a negative externality (and I think there are fine arguments that it is), then it would seem difficult (if not antithetical) to provide compensation. If engaging in more environmentally sound land uses is the provision of a service to the public, then compensation may be justified. And this dichotomy would seem to be true for coal-fired powerplants, livestock facilities, stormwater programs, and nonpoint sources.

Let's run with the negative externality view of environmentally harmful land uses. Why do we pay some people to stop harming us, but not others? I think there is one important practical piece of the puzzle that is often overlooked. That argument goes something like this: regulation as internalization is fine, as far as it goes. Implementation is another matter. And with some sorts of polluting conduct, regulation just won't achieve the environmental benefits that the regulations have in mind, unless accompanied by cost-sharing. So with the many folks who contribute to stormwater pollution, implementation is feasible only with cost sharing to local governments who are charged with implementation. With production agriculture, the dispersed nature of the industry and the large number of actors to regulate, the matter is somewhat the same: you won't get effective implementation unless you provide funding when it comes to dealing with the widely dispersed (but harmful) land uses. Otherwise noncompliance will be the norm and, given the dispersion, detection will be difficult.

But that is not to say that the article does not make a good point. Its main thesis is that large confined production facilities should not be paid. This resonates in the same sense that the power plant resonates. And the confinement, like the power plant, may not raise the same sort of detection and monitoring difficulties. That is, as animal production becomes more concentrated, enforcement and monitoring become more feasible and, thus, the need for cost-sharing to garner compliance diminishes. If this line of reasoning is correct, then I suppose there should be a size limitation on cost sharing. That is, the smaller producers who are more widely dispersed and harder to regulate should be given a carrot. Not because we think they should be paid to stop their harmful conduct, but rather because it is necessary for implementation. And if we start to look more at nonpoint source pollution, as opposed to the confined livestock sector, maybe that is a justification for cost-sharing for those offenders (if, of course, they are offenders and not unwilling benefit providers).