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Costs and Benefits
conduct some form of self-evaluation and planning processes, that they employ market incentives (such as economic cost-benefit analyses of technology options), and
promote “preventive” and proactive approaches to solving environmental problems.
At a minimum, this literature argues that regulators can support firm innovations,
technology transfer, and productivity enhancement through technical assistance and
pooling of learning among firms.
POSITIVE PUBLICITY AND ASSOCIATED INCREASED REVENUE
Companies that have voluntarily reduced toxic chemicals used by their facilities
have benefited economically by being viewed as environmentally conscientious.
In a survey of participating facilities conducted by the Massachusetts Toxic Use
Reduction Program, 39 percent of the respondents saw some benefit to the improved
environmental image they received as a result of participation in the program.
Although the majority of respondents did not see any benefit, increasing public
awareness of environmental issues may result in the increased value of products that
are deemed to be more environmentally responsible.
The 2005 Indiana Pollution Prevention Annual Report (Office of Pollution
Prevention and Technical Assistance 2005) reported that a dry cleaning company
in Evansville, Indiana, converted from a hazardous dry cleaning solvent, perchloroethylene, to a nonhazardous, environmentally friendly solvent. To do so, the company
had to invest $225,000 in new equipment, and the new solvent costs the company
an extra $9 per gallon. However, the company has absorbed the extra costs without
raising prices for the customer, with the expectation that customers will appreciate
the product benefits and do more business as a result. The company was a Pollution
Prevention/Source Reduction award winner.
REDUCED REGULATORY BURDEN
There can be significant costs associated with regulatory compliance, both for individual companies and for regulatory agencies; however, the costs are typically more
than recovered in other ways. One of us was recently working with Quantico Marine
Corps Base on a treatment plant that needed to reduce total nitrogen discharges to
the Chesapeake Bay. An organic substrate was to be added to the wastewater so that
nitrates could be biologically converted to gaseous nitrogen. Typically, clients find
that methanol is the most cost-effective chemical for this purpose. The client chose
to use acetic acid, despite it costing twice the cost of methanol, because acetic acid is
less toxic (and not regulated under the TRI program). However, the reduced regulatory cost more than made up for the additional cost for chemical for the base. As a
sidelight on the TRI program, if the client were a municipality, rather than a Marine
Corps Base, it would not have needed to report methanol releases because municipal
treatment plants are exempt from TRI reporting.
Reducing the regulatory burden has been an effective approach for encouraging
companies to reduce pollution. According to the Wisconsin DNR Environmental
Cooperation Pilot Program: 2007 Progress Report (October 31, 2007), between
1996 and 2006, the Northern Engraving Corporation (NEC) reduced VOC use by
Costs and Benefits
conduct some form of self-evaluation and planning processes, that they employ market incentives (such as economic cost-benefit analyses of technology options), and
promote “preventive” and proactive approaches to solving environmental problems.
At a minimum, this literature argues that regulators can support firm innovations,
technology transfer, and productivity enhancement through technical assistance and
pooling of learning among firms.
POSITIVE PUBLICITY AND ASSOCIATED INCREASED REVENUE
Companies that have voluntarily reduced toxic chemicals used by their facilities
have benefited economically by being viewed as environmentally conscientious.
In a survey of participating facilities conducted by the Massachusetts Toxic Use
Reduction Program, 39 percent of the respondents saw some benefit to the improved
environmental image they received as a result of participation in the program.
Although the majority of respondents did not see any benefit, increasing public
awareness of environmental issues may result in the increased value of products that
are deemed to be more environmentally responsible.
The 2005 Indiana Pollution Prevention Annual Report (Office of Pollution
Prevention and Technical Assistance 2005) reported that a dry cleaning company
in Evansville, Indiana, converted from a hazardous dry cleaning solvent, perchloroethylene, to a nonhazardous, environmentally friendly solvent. To do so, the company
had to invest $225,000 in new equipment, and the new solvent costs the company
an extra $9 per gallon. However, the company has absorbed the extra costs without
raising prices for the customer, with the expectation that customers will appreciate
the product benefits and do more business as a result. The company was a Pollution
Prevention/Source Reduction award winner.
REDUCED REGULATORY BURDEN
There can be significant costs associated with regulatory compliance, both for individual companies and for regulatory agencies; however, the costs are typically more
than recovered in other ways. One of us was recently working with Quantico Marine
Corps Base on a treatment plant that needed to reduce total nitrogen discharges to
the Chesapeake Bay. An organic substrate was to be added to the wastewater so that
nitrates could be biologically converted to gaseous nitrogen. Typically, clients find
that methanol is the most cost-effective chemical for this purpose. The client chose
to use acetic acid, despite it costing twice the cost of methanol, because acetic acid is
less toxic (and not regulated under the TRI program). However, the reduced regulatory cost more than made up for the additional cost for chemical for the base. As a
sidelight on the TRI program, if the client were a municipality, rather than a Marine
Corps Base, it would not have needed to report methanol releases because municipal
treatment plants are exempt from TRI reporting.
Reducing the regulatory burden has been an effective approach for encouraging
companies to reduce pollution. According to the Wisconsin DNR Environmental
Cooperation Pilot Program: 2007 Progress Report (October 31, 2007), between
1996 and 2006, the Northern Engraving Corporation (NEC) reduced VOC use by