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Go Green . . .

By cutting government.

Sep 12, 2011, Vol. 16, No. 48 • By ELI LEHRER & BEN SCHREIBER
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In 1950, real estate developers looking to satisfy postwar America’s burgeoning demand for housing decided that Assateague Island, a sandy slice of land off the Maryland and Virginia coasts, would make a good place for a new neighborhood. Using federal and state funds, they built a road running almost half the length of the island and leveled land for houses. It was not the first development effort in the area. In the 1930s, the New Deal-era Army Corps of Engineers opened a navigation channel to improve shipping and expand beaches in nearby Ocean City, Maryland. Other federal programs encouraged fishing and the construction of jetties. Local boosters on the Eastern Shore talked of a bridge linking the island to the mainland. Assateague, it seemed, might soon become an Ocean City suburb. 

Beach Photo

Assateague Island

The neighborhood was never built. Today, Assateague is almost entirely wild (if not natural). Parts of the island became a bird sanctuary in the 1940s, and a National Seashore was established on other parts in the late 1960s. These parks, however, didn’t deter commercial developers. Through the late 1970s the island seemed likely to remain a hot potato tossed between conservation and development interests. Many investors held onto land hoping to develop it after the government built more infrastructure. 

But things changed. In 1982, President Reagan signed into law the Coastal Barrier Resources Act. The law establishes the rule that the federal government will not help the private sector do anything to develop barrier islands like Assateague: It won’t underwrite flood insurance, won’t build most roads, and won’t subsidize mortgages. In all, 53 federal programs that encourage development no longer function on barrier islands.

The law changed everything on Assa-teague. While a few private landholdings (mostly hunting camps) remained until the middle of the last decade, talk of developing Assa-teague stopped. And it’s a good thing. Assa-teague is essentially an overgrown sandbar, and any structure built there is likely to wash away eventually. As a “barrier,” furthermore, the island’s unaltered presence can slow hurricanes and absorb storm surges. The two million visitors who flock to Assateague every year add far more to the local economy than a few subdivisions ever would have. 

And Assateague isn’t alone. Today, what’s called the John H. Chaffee Coastal Barrier Resources System covers 3.1 million acres of land similar to Assateague. And all this environmental protection has saved taxpayers over $1 billion that would have been spent on harmful development, according to the Fish and Wildlife Service office that oversees the system. 

The story of Assateague, and the way withdrawing government subsidies preserved it, is instructive for those intent on reducing the federal budget deficit: Selectively cutting spending can help the environment.

It’s simple. The federal government consumes about a quarter of the United States’ GDP, owns more real estate, uses more energy, employs more people, and has more cars than any other entity. The government’s size allows it to invest in projects on a scale that private entities cannot. That means decisions the federal government undertakes have outsize impacts—which means outsize damage when the government makes spending choices that are bad for the environment. Our organizations, Friends of the Earth and the Heartland Institute, have joined with the Ralph Nader-founded consumer advocacy group Public Citizen and deficit hawk Taxpayers for Common Sense to issue a report entitled “Green Scissors 2011” that shows just how much government spending is both wasteful and environmentally destructive. There’s a lot: up to $380 billion over the next five years.

Those who follow environmental and budget issues may already know of some government programs that harm the environment. For example, the $50 billion-plus five-year tab for ethanol subsidies—which the Senate voted to end in June—has brought millions of acres of previously wild land under cultivation, increased the use of chemical fertilizers, and wasted billions of gallons of water. And there are indirect ethanol subsidies too. The federally backed “Clean Cities” program—untouched by the Senate—has largely been a subsidy to the corn industry hidden under the guise of oil savings. 

But the subsidies go much further. In fact, conventional fossil fuels, the sources of energy that tend to produce the greatest carbon emissions and most asthma-attack and lung-cancer-causing particulate pollution, receive even more largess than ethanol. More than $8 billion in Department of Energy loan guarantees for coal plants (many of which would be built anyway with private investor funding) provide enormous taxpayer support for the dirtiest of all widely used fuels. Oil interests—subsidized mainly via huge tax benefits like an “intangible drilling cost” tax advantage that reduces Treasury revenue by almost $20 billion a decade—also get big subsidies. One example: a half-billion dollars that the government will pay this year alone to support fossil fuel research efforts that profitable energy companies could easily finance on their own.

But even some programs with undeniable green bona fides, like tax credits for people who purchase fuel-efficient hybrid cars, have ended up having dubious environmental benefits. Although the hybrid tax credit very likely accelerated the purchase of early, fuel-efficient cars like the Toyota Prius and Ford Fusion, the program’s insistence on withdrawing eligibility from the companies that sold the most hybrids meant the program eventually became a subsidy for companies that were late to the game. In 2010, $200 million of tax credits went mostly to people who bought less efficient cars from companies like GM and BMW, creating a government tax break for cars that used more gas than models that were no longer eligible. 

In fact, many of the dated, silly programs that good government watchdogs often cite as egregious examples of waste are equally destructive to the environment. Direct subsidies to commodity crop growers (roughly $12.5 billion a year) lead to cultivation of land that would otherwise be wild and subsidize environmentally harmful agricultural practices. Payments to airlines that fly to small “essential air service” airports (about $180 million a year) lead to wasted fuel, encourage inefficient travel, and don’t even save much time for travelers. 

Some policies actually pay businesses to exploit publicly owned resources. For example, royalties charged to timber and paper companies that log National Forests don’t even cover the cost of the federally funded road building and other services those companies receive. Similarly, programs that lease grazing land to ranchers net about $120 million a year in losses for taxpayers. Federal hard rock mining laws, likewise, give away valuable minerals found on public lands for free and allow companies to claim public land for less than $5 an acre. While it’s possible to disagree as to what should be done about these programs—there are cases for selling certain lands outright at market prices, raising the royalty fees in others, and banning all exploitation in others—it is clear that the current royalty structure for the use of federal resources amounts to a straightforward subsidy for big business.

Extreme voices that favor abolishing every environmental law under the sun are missing the point. While our organizations do not always agree on what is a pollutant, we can agree that laws should require polluters to pay for the costs they impose on -others. There is also clearly a role for government in paying for basic research to improve understanding of fundamental scientific principles—as opposed to the product development ventures the Bush and Obama administrations have funded lavishly—because that function has never been widely performed in modern times without public sector support. Government should also maintain parks, refuges, and wilderness areas. 

But many subsidies for energy, agriculture, transportation, land development, and research result in far more environmental harm than good. Cutting waste while protecting the environment: It’s one of the rare propositions these days on which both the right and left can agree.

Eli Lehrer is vice president of the Heartland Institute. Ben Schreiber is a climate and energy tax analyst at Friends of the Earth.

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