Climate Change | Environmental Law Institute

Of Econs and Humans — Theory, Moral Licensing, and Crowding Out

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Author

Bruce Rich

Current Issue

January-February 2018

Issue

The award of the 2017 Nobel Prize for economics to Richard Thaler highlights the recognition that human behavior is more complex and irrational than the assumptions of conventional, still prevalent economic models. Psychologist Daniel Kahneman, who received the economics Nobel in 2002, described his astonishment that “our two disciplines seemed to be studying different species, which . . . Richard Thaler later dubbed Econs and Humans.” Kahneman warned of “theory induced blindness: once you accept a theory it is extraordinarily difficult to notice its flaws.”

This debate is of extraordinary importance for the future of various national and international environmental programs. Many may rely on assumptions that are questionable, and in some cases perverse in their environmental consequences.

A 2013 study in Energy Policy examined the impacts of a water conservation program in a Massachusetts housing complex on overall electricity consumption, including impacts on household CO2 emissions. Participants reduced their water consumption by 6 percent, but electricity use increased by 5.6 percent compared with a control group. The reduced water use cut energy consumption for hot water heating, but overall increases in electricity use exceeded these energy reductions by two-fold. Taking into account EPA estimates of electricity lost in production, transmission, and delivery, energy use increases with associated upstream losses were six times greater than the energy saved through reduced hot water heating.

The authors state that “adoption of a more environment friendly choice in one domain may actually increase the likelihood of less environment friendly behavior in other areas.” At root is “moral licensing,” whereby people feel that socially or morally praiseworthy efforts in one area lessens the need to act in other areas. They warn that “a considerable amount” of environmental programs and funds might “actually have a much smaller — or even a negative impact on CO2 emissions” than evaluations indicate.

As early as 1970, Robert M. Titmus, a professor at the London School of Economics, concluded that economic incentives for blood donors in the UK adversely affected, i.e., “crowded out,” donors’ main motivation: altruism and civic duty. Increasing payments for blood donations, he found, can actually decrease blood supply. Since then evidence has grown that some economic-incentive programs to promote publicly desirable activities are perverse in their consequences.

Studies in Switzerland, Wisconsin, Nevada, and Washington state on public approval of proposed nuclear waste disposal facilities found higher acceptance when the motivation is the greater public good or civic duty, and that the introduction of economic incentives reduces public acceptance, sometimes more than 50 percent.

In the past, many economists examined empirically expressed preferences without analyzing the impact of external material incentives on intrinsic psychological and cultural values. Yet this distinction, and the interrelationship between external and internal motivation, is critical for understanding how a program to change environmental behavior may work. Already in 1997, a Swiss study concluded that “where public spirit prevails,” using price incentives may crowd out civic duty, and actually make achieving the goals of a particular project more difficult. The authors urged that price incentives should be “reconsidered in all areas where intrinsic motivation can empirically shown to be important.”

Sometimes it is argued that while the crowding out phenomenon might apply to populations in richer countries, developing nations would be more responsive to economic incentives. A 2015 American Political Science Review article concluded that private economic incentives in a World Bank eco-development project in the Himalayas had a “negative and significant” impact on existing non-economic psychological and cultural motivation to conserve forests in the project population.

Those reporting that the project reduced formerly intrinsic cultural motivations for forest conservation in favor of economic incentives had “lower levels of conservationist behavior” than those who continued to cite the primacy of cultural and environmental values. Collective and community material benefits did have a positive correlation on environmental motivation. But community approaches to resource management, as opposed to private ownership models, are often not favored by governments and aid agencies.

The Indian and American authors warn that many sustainable- and ecodevelopment projects appear to be based on unfounded, simplistic assumptions about the correlation between small household economic incentives and achieving environmental goals. In fact, such “sustainable development projects can have the perverse effect of undermining their own environmental goals.”

Of econs and humans — theory, moral licensing, and crowding out.

A Shift in the Air, as Transportation Moves to a Lower-Carbon Future

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Author

Kathleen Barrón - Exelon Corporation

Exelon Corporation

Current Issue

January-February 2018

Issue

Transportation electrification represents an important opportunity to reduce reliance on carbon-based fuels and promote energy security. In fact, many believe electricity as a transportation “fuel” is essential to meeting regional, state, and national environmental goals.

Transportation represents approximately one-third of national carbon emissions, occasionally overtaking power generation as the largest source of greenhouse gases in the United States. Transportation also remains one of the more pernicious sources of our most dangerous air pollution, vexing states that host major transportation routes without being able to regulate emissions from vehicles that pass through their jurisdictions.

Without a coordinated electrification effort, transportation’s share of emissions will continue to increase. One of the more promising initiatives in this area is the recent announcement that eight northeastern and mid-Atlantic states have restarted a regional partnership, the Transportation Climate Initiative, with the aim of coordinating policies to accelerate innovation and deployment of electrification to the benefit of consumers, companies, and other stakeholders.

A regional approach will bring more interest and attention, including vehicle stocks and marketing investments from car manufacturers. A multijurisdictional plan allows the participating region to carry more weight with vehicle manufacturers, infrastructure providers, and maintenance and repair services. Regional deployment modeling allows for more comprehensive and cohesive infrastructure planning and charger placement.

And a regional solution provides continuity for customers in a highly traveled region. Currently a disproportionate focus of electric vehicle investment and interest is in California because the state has a unified front in dealing with industry stakeholders. Creating a similar dynamic in the Northeast and Mid-Atlantic will benefit customers and the environment.

TCI states are kicking off listening sessions throughout the region to solicit ideas and engage all affected communities in planning the transportation system of the future, not just for electric passenger vehicles but for public transportation as well. The Georgetown Climate Center and Cambridge Systematics estimate that a regional clean transportation program could reduce carbon emissions between 29 to 40 percent by 2030, increase economic growth between $11.7 billion and $17.7 billion by the same year, and create between 91,000 to 125,000 jobs.

But while regional efforts play out, individual companies can make a difference. The announcement by Volvo earlier this year that it will introduce only vehicles that are powered by electricity by 2019 is important; the penetration of electric vehicles has the capacity to increase greatly if the infrastructure is available to accommodate it. The utility companies I represent, like many around the nation, are engaged in a range of activities to advance electric vehicle adoption.

Utilities can facilitate the adoption of electric vehicles and other electrified transportation in their service territories and beyond. The electric distribution system is their expertise, allowing them to build and maintain the extensive infrastructure needed to support rapid EV growth in a financially viable manner.

Electric utilities are uniquely positioned to ensure charging infrastructure addresses critical public policy priorities, including supporting diverse communities and advancing regional integration and air- and waterquality goals. Gains in one jurisdiction can drive gains in other jurisdictions in the region, creating a domino effect that leads to a critical mass for EV adoption.

Utilities across the United States are investing heavily in electric vehicles through special rates, infrastructure, rebates, chargers, and other activities. EV charging fits within a broader portfolio of potential electricity services, like vehicle-to-grid and demand management that are provided by utilities. Additionally, electricity as a transportation fuel represents a significant opportunity to grow electric load, which improves asset utilization and helps stabilize rates for all users, including low-income customers. Electric companies can provide an array of charging options to EV owners, including options that provide green electricity, further increasing the environmental benefits of EVs.

The internal combustion engine is not dead. Gasoline prices are relatively cheap (absent a carbon price) and national fuel standards are not likely to be tightened in the next few years. But the consumer desire for innovation and environmental performance is stronger than ever. We need to be ready to accommodate it.

A shift in the air, as transportation moves to a lower-carbon future.

By His Acts, Administrator Pruitt Endorses the Club of Rome Report

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Author

Craig M. Pease - Vermont Law School

Vermont Law School

Current Issue

January-February 2018

Issue

Administrator Scott Pruitt recently promulgated a policy that remakes various EPA science advisory committees as corporate handmaidens, by prohibiting scientists who receive grant funding from serving on science committees at the agency. The allegation is that they have a conflict of interest.

All Pruitt needs now is an Orwellian slogan, say: Science Is Bias. And it is, in a way. Bias is the tilting of data and analysis in one particular direction. Pruitt could have stacked science committees with objective scientists, or in the alternative stacked them with corporate scientists. Either is bias. But not all bias is bad. A bias towards objective science strikes me as rather useful, in having important government decisions grounded in the real world.

It is Pruitt who has the serious conflict of interest. The various PACs for his Oklahoma election campaigns show receipt of substantial donations from gas, oil, and coal interests. So now Pruitt stacks EPA science committees with corporate interests. No surprise here.

Alas, Pruitt’s actions are merely the latest installment of a long history of politicians manipulating science at EPA. Consider J. McCarthy and R. Lattanzio’s Congressional Research Service report from August 2017, explaining how President Obama directly interfered with ozone science at EPA.

In a 2008 letter, the Clean Air Science Advisory Committee unanimously recommended a primary ozone standard of 0.060 to 0.070 parts per million. In early 2011, EPA promulgated a draft standard of 0.070 ppm. Later that year, President Obama himself, in a very public letter that could only have been intended to impact politics and the media, instructed EPA Administrator Lisa Jackson to withdraw the then pending draft ozone primary standard. Cass Sunstein of the Office of Management and Budget sent a parallel letter to Jackson. Obama and Sunstein justified their action to withdraw the draft rule by citing unnecessary “regulatory uncertainty” and they also astonishingly asserted that the draft rule failed to be “based on the best available science.”

Those two former University of Chicago law professors had somehow become very concerned about ozone science that the science committee, in a unanimous recommendation, had overlooked or not considered. Rather obviously, Obama and Sunstein were politically pandering to the Midwest, whose electoral votes Obama needed to carry to prevail in the then upcoming 2012 presidential election.

What may be surprising is that this is also a story about resource scarcity.

As resource limitation bites ever harder, there is increasing competition among various political factions as they attempt to stake a claim to the increasingly scarce remaining resources.

EPA decisions to set pollution standards most certainly allocate scarce resources. There are not enough resources for the corporations to have all the dollars they want, and for the citizens to have all the life and well-being they want. The contentiousness of EPA decisionmaking has increased, as the resources available in society have decreased.

There is a trend going back at least to the 1970s toward ever increasingly contentious environmental decisionmaking. The Clean Air Act was passed nearly unanimously. Even the 1990 amendments were enacted with bipartisan support. Pretty clearly, no material amendments could be enacted today, even though they are badly needed to address climate change. These four decades have also seen ever increasing detail and length in risk assessments, ever increasing delays in completing scientific assessments of all sorts, and increasing length and complexity of environmental regulations.

No doubt this is related to GDP growth dropping from 4 percent annually in the 1970s, to under 2 percent today. And half of today’s GDP growth is growth in population size, which actually results in fewer resources per person. So there is more competition for what remains.

The year 2018 is a time of more and more people, and fewer and fewer resources, as correctly predicted by Donella Meadows and colleagues’ The Limits to Growth, published in 1972. The report from the Club of Rome explicitly shows the decade of 2010-2020 as being the halfway point between abundant resources (in 1900) and severe resource limitation (in 2100).

Pruitt is caught in a Chinese finger trap; the harder he tries to circumvent good science, the more evidence do his acts demonstrate severe competition for scarce resources, and the more do his acts endorse the Club of Rome.

Science at EPA is but a tactical pawn. Sometime the scientists provide the politicians with the “wrong” answer. And then the politicians just ignore, work around, or fire the scientists, as did Administrator Pruitt and President Obama.

By his acts, Administrator Pruitt endorses the Club of Rome report.

The Debate: Federalism During an Era of Retrenchment, Growing State Needs

Read more about The Debate: Federalism During an Era of Retrenchment, Growing State Needs

Subtitle

Cooperative Federalism in the Trump Era: Can the Sovereigns Collaborate in Gains?

Current Issue

January-February 2018

Issue

Since its establishment 47 years ago, the U.S. Environmental Protection Agency has had overarching enforcement responsibility for most of the nation’s federal environmental laws. But over the decades, states have developed the expertise and capacity for ensuring environmental protection. With the Trump administration’s proposed downsizing of EPA’s budget and staffing and renewed focus on states, decisionmakers and stakeholders have a timely opportunity to rethink the paradigm of cooperative federalism and environmental protection.

For decades, EPA has played the role of the “gorilla in the closet,” the looming threat of federal enforcement if regulated entities did not cooperate with state enforcement efforts. But if less federal enforcement is on the horizon, how can environmental compliance be assured? In considering this question, the Environmental Council of the States has proposed that a periodic audit system take the place of federal intervention in delegated states. How would an audit system of this kind work in practice, and what are the implications of this kind of change?

Meanwhile, environmental data are being generated at an exponential rate, and other actors, namely localities and international regimes, are increasingly asserting their roles in environmental governance.

At the ELI-Miriam Hamilton Keare Policy Forum, held just before the annual Award Dinner, an expert panel discussed the opportunities and challenges of a new take on cooperative federalism for environmental governance. The conversation considered trends in politics, economics, technology, and other factors influencing environmental protection.

How will information technology and interconnectivity change environmental enforcement and accountability? How can governments, advocates, and businesses evaluate this information and use it to ensure compliance? What do forces outside the federalism dichotomy mean for the future of environmental governance in a global economy and society unconstrained by state or national borders?

“Big data, the 24-hour news cycle, and hyper-transparency have the potential to disrupt the federal-state relationship, but there are also opportunities”

Stan Meiburg
Director of Graduate Studies in Sustainability
Wake Forest University
Moderator

“Environmental justice has been embedded in each and every one of the laws that EPA administers. How is that going to change as a result of this
cooperative federalism?”

Barry E. Hill
Visiting Scholar
Environmental Law Institute

“We at GE believe climate change is real. Pollutants don’t respect boundaries. Which raises the issue of state-federal relations and international relations as well”

Neal Kemkar
Director of Environmental Policy
General Electric

“Some view EPA as a helicopter parent to the states. Sometimes it’s a matter of letting our children grow up and understanding that programs have matured”

Becky Keogh
Director
Arkansas Department of Environmental Quality

“Cooperative federalism is really about the how, not the what. As to the what, people will agree we should breathe clean air and should have access to clean water”

Bob Martineau
Commissioner
Tennessee Department of Environment and Conservation

“We’ve got to reach out to the public and commit to the highest levels of transparency and really inclusive dialogue. We’ve got to be thinking about adaptive federalism”

Vickie Patton
General Counsel
Environmental Defense Fund

Stan Meiburg: Here is a reading from Federalist #51.

“In the compound republic of America, the power surrendered by the people is first divided between two distinct governments, and then the portion allotted to each is subdivided among distinct and separate departments. Hence a double security arises to the rights of the people. The different governments will control each other, at the same time that each will be controlled by itself.”

This tension between two sovereigns can be destructive, as it was in the Civil War, but it can also be creative, with states serving as laboratories for democracy. The field of environmental protection is no exception to this tension and this opportunity.

Our first speaker on our federalism and environmental protection is Barry Hill. Barry is a visiting scholar at the Environmental Law Institute. He worked at EPA for many years as senior counsel for environmental governance in the Office of International Affairs, and as the director of the Office of Environmental Justice.

Barry Hill: There are four questions that I would like to pose. The first question is whether or not this cooperative federalism is new and what makes it so?

During the Clinton administration, I worked on EJSEAT — the Environmental Justice Strategic Enforcement Assessment Tool. Then the Bush administration came in and they said, “It’s now going to be called Environmental Justice Smart Enforcement Assessment Tool.” Same acronym, and at EPA we loved acronyms. Other than that one word, nothing really changed. So, I thought about that as it related to this thing called cooperative federalism and whether it is new.

The second question is whether a new cooperative federalism means we are going to abandon everything that has been done over the last 40 years or so in the environmental law and policy area. Will EPA no longer be the overseer?

The third question relates to environmental justice. Since the office was established 25 years ago, environmental justice has been seen as embedded in each and every one of the laws that EPA administers. How is that going to change as a result of this cooperative federalism?

The final question is whether this cooperative federalism is used as a sword or shield. In announcing the rollback of the Clean Power Plan, Administrator Pruitt said, “We can now assess whether further regulatory action is warranted; and, if so, what is the most appropriate path forward, consistent with the Clean Air Act and principles of cooperative federalism.”

Really? What does that mean?

He went on to state, “The previous rule ignored states’ concerns and eroded longstanding and important partnerships that are a necessary part of achieving positive environmental outcomes.” Was that a sword or shield?

Stan Meiburg: Neal Kemkar is the director of environmental policy at General Electric. Before joining GE, he worked for the White House Council on Environmental Quality, the secretary of the interior, and the governor of Colorado.

Neal Kemkar: At GE, we have 300,000 people operating in 180 countries. I want to boil up our experience into several megatrends.

The first is digitization. The number of connected devices will reach 50 billion by 2020. In a few years, we may all have personal air quality monitors in our pocket that tell you the levels of PM 2.5 in your exact neighborhood. How do we capture these terabytes of data?

Second is fossil fuel abundance. In the last decade, we have seen a tenfold increase in U.S. shale gas production and a 50 percent reduction in oil prices. Our collective challenge is ensuring that the resulting production and consumption are as efficient as possible. How does that interplay with that industry’s social license to operate?

The third is growing resource stress. We at GE believe climate change is real, the science is settled. Pollutants don’t respect boundaries, which raises the issue of state-federal relations and of course international relations as well.

Last is this idea of competitive clean energy. In the midst of digitization, fossil fuel abundance, and resource stress, we’ve also witnessed unprecedented innovation in the clean energy space. Costs have declined dramatically. Solar costs have come down 75 percent over the last decade. Wind power installed capacity has grown ten times.

More connected devices, fossil fuel abundance for the foreseeable future, intensifying resource stress that increasingly doesn’t respect boundaries, and competitive clean energy. These are the megatrends we face.

Stan Meiburg: Becky Keogh is vice president of the Environmental Council of the States. She has served as the director of the Arkansas Department of Environmental Quality since 2015.

Becky Keogh: One thing we need to remember is that states had environmental programs many years prior to the 1970s. Our agency has existed since the 1940s. And many issues were addressed not by a federal agency or a state but by cities.

Back then, we didn’t have the benefit of today’s technology, nor did we have the tens of thousands of trained professionals in environmental sciences and technologies that we do today. At our agency, we now have apps for many of our services, something that we never had before. That raises the question of how we channel this technology into our regulatory world, making sure that we are driving the technology in the direction we want it to go.

Some view EPA as sort of a helicopter parent to the states. Sometimes it’s a matter of letting our children grow up and understanding that these programs have matured. Many of these programs have delivered the outcomes that we originally sought. They’ve now graduated from college, many of them have jobs, they have their own children.

Looking at a case in Arkansas, we have regulations that declare that if you get a handful of water samples from a stream with a certain percentage of pollutants, then we will do something about it. Now we have monitors that take samples every 30 seconds and we’re trying to apply that data against a standard that used to be based on a set of eight samples over two seasons. Are the problems we are seeing today really an indication of a natural problem or is it just an indication that we know a lot more?

Stan Meiburg: Bob Martineau has been the commissioner of the Tennessee Department of Environment and Conservation since 2011. Bob is a past president of ECOS and worked in EPA’s Office of General Counsel.

Bob Martineau: Given limited resources, we don’t want to duplicate efforts. We shouldn’t be doing the same thing twice and checking every little bit of homework. So, how do we divide and conquer our limited resources and continue to build the federal-state relationship? It is important to keep in mind that first and foremost, it’s about environmental outcomes.

What we’re talking about in cooperative federalism is really that relationship of how, not necessarily the what. As to the what, as a general principle, people will agree we should breathe clean air and should have access to clean water. We may debate whether the standard ought to be so many parts per billion or that many parts per billion, but at the end of the day, the public wants to know if their air is clean, if their water is safe to drink, if the land around their house and their local school is safe to play on. How do we continue to prosper economically while ensuring that we have those?

A lot of people used to bristle at the term “co-regulator.” The common understanding is that states are not just another external stakeholder in the environmental regulatory enterprise; they are partners. We can’t develop a set of regulatory principles without looking at how they are going to be implemented in the field. The states, which are doing 90 percent or so of that implementation, need to think about the environmental outcomes we seek.

If we look at how cooperative federalism relates we have to differentiate between the regulatory side and the program implementation side and the enforcement side. States need flexibility to achieve their goals. At the same time, there are local, state, cross-state, and even international impacts to what happens in a particular state.

As we set air quality standards, such as new source performance standards, or water quality standards, we need to ensure that we have a race to the top, recognizing there is huge political pressure and economic pressure on given states to site that new plant.

So, as we frame that debate and add in private environmental governance, we can see that many people are making these decisions independent of any regulatory construct. Their shareholders are demanding it. Their customers are demanding it. Companies like Walmart have said, “We want X percentage of our energy to be renewable by a date certain.” Leadership in companies are driving marketplace decisionmaking regardless of what the regulatory requirements are.

Stan Meiburg: Vickie Patton is the general counsel of the Environmental Defense Fund and manages the organization’s national and regional clean air programs. Before coming to EDF, she worked as an attorney for EPA.

Vickie Patton: In my experience, there is no cookie-cutter approach to cooperative federalism. In fact, those people who have done this work for a long time find different ways to engage in problem-solving. As a result, we have made tremendous progress.

I’d like to make a few points. First, the “what” matters. What are we trying to achieve? It’s hard to have a debate about the “how” if we don’t have a shared understanding of the what. My view is the what ought to be delivering ambitious public health and environmental outcomes, while making continuous progress. We need to commit ourselves to what the American people expect, so that all communities benefit, especially those that have for far too long suffered a heavy burden of public health and environmental harms.

We can’t shy away from the most important challenge of our time, climate change. Support for climate action is at a zenith. In my own home state of Colorado we’re delivering cleaner energy, saving customers money, putting wind turbines in parts of rural Colorado that are keeping families on their farms. We’re manufacturing those turbines in rural parts of Colorado like Windsor and Pueblo that are gaining shared prosperity from this vibrant clean energy economy. Let’s roll up our sleeves and make sure that climate change is a critical part of this dialogue.

We’ve got to win the public trust. Whenever these discussions start, people are skeptical about where it is all headed, what the objectives really are. We’ve got to reach out to the public and commit to the highest levels of transparency and really inclusive dialogue. We’ve got to be thinking about adaptive federalism.

Finally, how do we create, collectively and individually, the platforms that recognize the environmental and public health outcomes that we need? How do we reward innovation that actually achieves more protective results? How do we create the platforms that reward inclusive dialogues and partnerships so that all across all the different levels of government and policymaking, public and private, we’re sending all of those right signals? There are a lot of people who are working together finding ways to deliver these kinds of results. It is good news, and America needs a little bit of good news.

Stan Meiburg: Several of you talked about how the nature of the relationship may have changed between federal and state environmental authorities. That poses a related question. Is the division of authority in the environmental space a zero-sum game? Does one have to go down for the other to go up?

Becky Keogh: We don’t want to have 50 states doing 50 different things. It makes sense to act collectively — we see that in regional groups and in national groups. It is best not deciding that one entity is better than the other to take on a certain responsibility but to instead discern which has the “most value-added methodology,” as my governor would say, to get the outcome that we need in our communities. One of the times I rely on EPA is the type of emergency where I need scientific capabilities that go beyond my state laboratory.

Bob Martineau: It isn’t a zero-sum game. The challenge has been avoiding duplication of effort and to decide what sovereign can act most efficiently. And then there are a whole bunch of things we haven’t been able to tackle because we haven’t shifted some of those resources to take on those new challenges. The debate today is the most efficient allocation of resources — how do we efficiently do the basic blocking and tackling, and then what resources can either the state provide or the federal government to take on new challenges.

Stan Meiburg: There are calls for statutory change to fully realize the potential for stronger state-federal relationships. Do any of you think that we need new law for this purpose?

Neal Kemkar: I’ll start with a short answer here — I hope not, because this issue is way too important to rely on Congress, a broken institution. What we have already is years of delegated authority to the federal executive branch from Congresses past. We have a lot of collective expertise. And when you add in our friends in the NGO community as well as in the regulated community, a lot of folks have been thinking about these issues for a long time. It goes back to resource allocation and using the existing authorities in smarter ways.

Barry Hill: You know, a lot depends upon where you sit as it relates to this whole area of environmental law and policy. I’m thinking in terms of communities where they are asking, Is the air clean? Is the water safe to drink? What about communities where the answer is “no” to everything? So, what would you prefer? Would you prefer the federal government, the strong arm of the federal government, or would you prefer that states do it — states are 50 laboratories of democracy but how do you define democracy? How do you ensure environmental justice for all not as a theory but as a practical matter? It’s not just the ederal government, it’s not just the state government, it’s not just corporations. It’s communities. How are they being impacted? That is the central question in the federal-state relationship.

Vickie Patton: There is ample room within existing law for people to improve upon achieving public health and environmental outcomes, while thinking about what sort of partnerships will help and how to most effectively achieve society’s goals. There are many people who have a lot of experience within the framework of existing law, finding all sorts of innovative ways to move forward.

Becky Keogh: And I would just add perhaps not statutory change at the federal level. Some of the state statutes, a lot of us are looking at opening up old statutes where they haven’t been refreshed. That’s something we’re doing in Arkansas. Other states have done the same. We haven’t just invested in the regulation or the statute for their own sake. We are spending a lot of time as we look at our programs through the lens of lean processes to make sure we don’t lose the core value of what we do as we speed up and we become more efficient and hopefully spend less money in delivering those outcomes.

Stan Meiburg: What do you see from your particular vantage point as the greatest challenge to implementing collaborative federalism?

Bob Martineau: The perception is that cooperative federalism means weakening environmental standards. That’s not what it is. But it’s caught up in the anti-regulatory mindset that we don’t want to over-regulate — it’s hindering business, it’s killing jobs. We’ve got to get agreement on the goals and maybe if we’re not there on that, about what the outcomes are. We need to have that debate first because then the question is how. There’s maybe less consensus on some of the goals now than we’ve had historically.

Back to the last question of reopening the statutes: what’s happened sometimes with the various amendments to the statutes over the years is that they have become more prescriptive. The idea was to set the goal, a maximum, for example, and let the states figure out how to achieve that max. Instead, each time the Clean Air Act was amended, it became much more prescriptive as to what had to be in that State Implementation Plan. So, those statutory provisions can be used as swords or shields as well.

The challenge of federalism is to agree on the basic goals, and then we need the trust to be less prescriptive on the day-to-day review of what the other entity is doing.

Vickie Patton: If there’s not a shared vision that we are seeking better public health outcomes and greater justice for the communities that have borne the burden of harmful impacts for far too long and meanwhile combating climate change — those are core central underpinning considerations — then I think there will be enormous public distrust.

There is another disruptor coming to the architecture of environmental law and policy and that is that every person is going to have a monitor in their pocket. The technology is already here. In the aftermath of Hurricane Harvey, EPA’s and Texas’s monitors were idled but Environmental Defense Fund deployed a lab-quality mobile monitor, communicating what we were finding to policymakers and the public. Think about a world where the parents in Flint had the easy ability to detect the lead in their water. Technology is going to be a game changer in holding all of us accountable.

Neal Kemkar: Vickie, that’s a great point. To me, the radical transparency that’s coming because of increased digitization and more people having more information, that’s the biggest challenge and opportunity to this Cooperative Federalism 2.0. I think back to my time working for the secretary of the interior during the oil spill, every night during the nightly news you had radical transparency of the oil flow real time. That changes the dynamic of the regulation. It makes the feds tend to be be more prescriptive, for example, “Well, no. Thou shalt have 2.15 blind shear rams on your blowout preventer,” or whatever.

With all this transparency, the challenge is going to be getting the balance right. So, one can imagine a world where people on an airplane are saying, “I want to know exactly the carbon output of this flight” so they can offset it. Or a corporate official saying, “I want to know the carbon footprint of my entire supply chain and I want to know it now.” And so, as we wrestle between the state and the federal control, we may be overtaken by events.

Bob Martineau: And it’s not only the transparency but it’s the 24-hour news cycle, it’s the instant information. Twenty years ago, you took a water sample and the results came back a month later. Today, you’ve got to have that answer two hours from now. People want to know, Can I drink the water? Can I walk outside if there’s an air incident? Do I need to evacuate? You can’t say, “We’re going to look at it and get back to you after we send this off to a lab on the other side of the country and we’ll write a report that’ll get edited by 38 people and you’ll see it in three months.” That’s not acceptable.

Becky Keogh: I recall working with city leaders in Little Rock on ozone. We were right below the standard, and some people believed things needed to be proactively addressed. And someone said, “Is it safe to breathe the air?” And to be frank, I don’t think our regulatory framework is set up to be instantaneous in response.

Barry Hill: Millennials and many corporations are very much concerned about climate change, and they are making decisions based on their concern. Why isn’t the federal leadership listening to the voices of all of these entities? And will it be better at the state level? And how does this administration talk to a state like California that’s very progressive as it relates to the issue of climate change? The biggest impediment is listening to the voices of all of the stakeholders, whoever they may be.

Audience question: The one thing I didn’t hear from the panel is where does the conversation restart. Because the conversation that we used to have very constructively since I grew up has broken down. We look at our two major parties and they not only aren’t really effectively talking to each other but the Republicans aren’t even talking effectively to themselves, and it’s not certain that the Democrats are doing that either.

One of the advantages of a federal system, if one is going to make one work, is that it has 50 laboratories with their sub-laboratories where experimentation in dealing with these questions can be going on, and if we had a system for articulating that up to the national level, that could be part of the solution.

However, our federalism has never really worked all that well from the get-go and it started with the fact that the Founders, for all the wonderful things they did, did not really grapple effectively with the question of states’ rights. And it’s understandable they didn’t because it all started with the states, they had the power, they had to be convinced even to allow a federal structure to emerge. And that’s plagued us all along.

My final lament is that when you look to the states at present, I don’t know where to look for a model. You can take on the one hand California, which became dysfunctional in its governance before the country did, and they’ve now become a lot more functional but they’ve done it mainly because the Republicans have taken themselves out of the conversation and the Democrats are bound and determined to keep them there if they can. Or you can look at Kansas, which has been working with a terrible model for eight years now, it’s been proven not to work, and a few people in the state are beginning to wake up to that but the people keep re-electing their government.

Vickie Patton: My only comment is that you’ve got a conversation happening right here. It’s up to all of us to have these conversations wherever we work. It’s a real challenge in this polarized world not to let ourselves just fall into a trap. We have to focus on what compels us to do this work, why we care about it, and find a way to have conversations that are uncomfortable with people that may not share our ideas and try to find common ground.

Stan Meiburg: Several of you talked about the potential of big data to be disruptive. I’d like to ask how — in your individual states or your companies or NGOs — are you looking at this challenge.

Vickie Patton: It’s a terrific opportunity. We have seen the impact of big data and advanced monitoring techniques in a bunch of different contexts. When you think about the recognition that there’s significant venting and leaking from oil and gas facilities, big data and monitoring have had a huge public health and environmental impact by revealing this serious pollution problem — making it far more salient. And advances in monitoring that have helped reveal this oil- and gasrelated pollution to the public and to policymakers have also catalyzed the deployment of solutions and policies that are sprinting to catch up.

We have a need to be really responsible with the information, but it does provide a tremendous opportunity to empower policymakers, private companies, and the public to improve public health and environmental outcomes. It’s a critical part of the next wave of environmental protections.

Becky Keogh: Our challenge will not be the data anymore. It will be the wisdom to know what data to actually base decisions on. Smart systems are not valuable if you’re not wise in how you use them. We have to make sure that we build credibility in those datasets so we can have frank and honest discussions about whether action is necessary or not.

Bob Martineau: I think big data has two aspects we need to consider. Consumers start asking how many kilowatts of electricity do you use to make your product, do you recycle, how much clean energy do you use in your process, because people will weigh that in their consumer purchasing decisions and who they invest in.

On the other side, there is the pressure of the 24-hour news cycle. Let’s say there is a pipe rupture or a discharge incident. As the media cover it, it’s really going to be incumbent on the public to educate themselves on how to manage that data, and sometimes an initial piece of information may be a valid indicator but it may not be. Suddenly there’s a huge public health crisis that turns out to be a lab sampling error.

Transparency is good. You want to be able to respond if there is a public health emergency. You don’t want to wait 30 days to find out you need to do something.

Becky Keogh: And I’ll add to that. The benefit of big data and technology is in a political world, as an engineer, and I speak to politicians all the time in our legislature, data generally will compel an answer. And so, you can depoliticize the conversation with data if you use it appropriately. You can remove the politics when you actually have facts, right? It also provides a bit of equality or perhaps addresses inequality in systems because now you have the information to show where those inequities exist and you can actually act on them.

Neal Kemkar: The good news for all of us is that there is a fierce competition going on in America’s boardrooms in the space of big data and advanced analytics, and the power of American innovation has been unleashed on this particular issue. We have what we call our new digital wind farms, which through both hardware and software — through improved asset performance — you’re able to operate 20 percent more efficiently, save about $100 million per farm.

And to take a different context, from the oil and gas space, the way we used to inspect pipelines, hydrostatic testing, you pressurized the pipe to see if it blew. Now we can use MRI technology on a “smart pig” that we run through the pipe to take a scan instead. You can imagine the environmental implications of that, when the regulations catch up. Similarly, for the outside of the pipe we can use drones to inspect 10 times faster at one tenth of the cost.

So when we’re talking about environmental regulation, let’s not just think of the statutes that we all grew up with and took in our environmental law survey classes but let’s think of brand new greenfield spaces, like how do we set the right framework for unmanned air systems so that when the commercial and technological ability to inspect a 400-mile pipeline via drone is there, that the regulations are in place to allow it.

Audience question: Josh Heltzer, First Environment. I’m just curious as to what the relationship is between the Environmental Council of the States, the National Governors Association, and, say, U.S. EPA or the federal government? Is there an interface among those organizations, either in an informal or formal manner?

Becky Keogh: ECOS evolved from the National Governors Association, and we continue to work with NGA on a number of initiatives. We also are working very closely with EPA. That was the intent of the Cooperative Federalism 2.0 paper, to provide information we thought would be helpful to define a road forward with the idea that we weren’t going to dictate the path nor would the federal government dictate it.

To your question, all that dialogue is important, and obviously one of the bases of ECOS is that as much as states are alike we are different. So our goal as an organization is to find our common issues and be able to advance those appropriately, allowing the governors and EPA to work with states to respect their needs — even if they don’t necessarily agree with my state or my governor’s perspective.

Stan Meiburg: And I would just note, to put on my old hat for just a minute, that this is not a partisan question because that kind of collaboration has been going on for a long time. When I was at EPA, Commissioner Thomas Burack of the New Hampshire Department of Environmental Services and I advanced collaborative federalism through E-Enterprise. That dialogue is going on pretty robustly.

Becky Keogh: I think states understand that to have the authority or trust or independence, there’s also accountability. We are working with our governors and with the federal EPA about how do we communicate our accountability to achieve agreedon outcomes.

Audience question: Just following on Neal’s point, I think it’s really interesting that this is the Environmental Law Institute, and lawyers base everything on precedent. The question came up earlier about whether you see any need for statutory change. I’ll just note most of our great environmental statutes were born out of crises. The crisis in Bhopal, India, helped lead to the Toxics Release Inventory and the Superfund Amendments and Reauthorization Act. You had Love Canal that led to CERCLA.

But we don’t tend to pass new laws anymore to address big problems. We might look to the states as being labs and yet the way cooperative federalism is set up, the state statutes tend to mirror the federal environmental statutes, and if a state gets out in front, then they’re put at a business disadvantage.

Stan Meiburg: Historically the worry about states was that somehow that if the federal oversight were not there, that the state would lag behind. It is going to be very interesting about what the response is now in the case where a state may move ahead — and I am thinking about California — and how the response to that is going to fit into the federalism framework.

At this time, let me not just summarize this panel but just make a couple of points.

One is that you’ve heard a lot of very innovative and thoughtful discussion about the potential effects of big data and technology and the 24-hour news cycle and what you might call hyper-transparency, and that these have both the potential to be quite disruptive in the way in which the federal-state relationship has worked, but there are opportunities involved as well, and that’s going to be a challenge in the years ahead.

I also wanted to make an observation pointing back to the comments about federal laws. They were very prescriptive and written that way for a couple of reasons, one of which was in the era in which they were created, there was a great deal of distrust between the legislative and the executive branch, and the legislative branch felt that if they did not make the laws very prescriptive that the executive branch would not implement and enforce them. So, that the issue of trust is there.

There was also a great deal of concern in public policy theory that without very prescriptive laws, that the agencies in charge with implementing them, and specifically EPA and the states’ agencies, would be captured by the entities that they regulated.

The idea of capture may seem like an antiquated notion these days, but the distrust became embedded in the very specificity of the statute, rightly and wrongly, and the problem with that of course is that if you have a very rigid statute and you don’t change it very much, like anything else, it can get a little long in the tooth.

Also, just simply note to close out that the answer to the question I asked about whether it is a zero-sum game, I was delighted to hear that nobody said it is. For the states to be strong, it’s not like the federal government has to be weak or vice versa. What you’d really like in an environmental system is two strong partners working effectively to produce environmental results.

And to pick up on the point that Vickie made, one of the challenges we face, the big challenge, is if we do not have some way of discussing and coming to a reasonable agreement on goals, then the discussion about means becomes even more difficult.

It is worth remembering that the Founders in the framing of the Constitution were not really concerned about producing efficient government. The fear on the part of the framers was that you would have tyrannical government, and so therefore, the effort was to produce moderate government — which is why you ended up with federalism structures and the separation of powers in the first place.

In an era in which things seem to happen in a 24-hour news cycle, this can sometimes produce great frustration. But it is probably worth recognizing that there may be some wisdom in not being able to react immediately to everything that comes right down the pike. TEF

HEADNOTE ❧ Over the decades, states have developed the expertise and capacity for ensuring environmental protection. With the Trump administration’s proposed downsizing of EPA’s budget and staffing and renewed focus on states, decisionmakers and stakeholders have a timely opportunity to rethink the paradigm of cooperative federalism and environmental protection.

NYU Legal Center to Assist State AGs in Battling Trump Rollbacks

Read more about NYU Legal Center to Assist State AGs in Battling Trump Rollbacks

Author

Linda K. Breggin - Environmental Law Institute

Environmental Law Institute

Current Issue

November-December 2017

Issue

NYU legal center to assist state AGs in battling Trump rollbacks.

The Status Quo Isn't Working

Read more about The Status Quo Isn't Working

Author

Representative Mike Quigley - House of Representatives Sustainable Energy and Environment Coalition

House of Representatives Sustainable Energy and Environment Coalition

Current Issue

November-December 2017

Issue

CAPITOL IDEA ❧ The key to sustainability isn’t to restrict bad practices but to encourage good practices until they take root. We can keep reacting to problems as they emerge, or we can create a culture of responsible resource management that prevents threats from coming to pass.

A Common Table

Read more about A Common Table

Author

Brian Deese - Kennedy School of Government

Daniel Hornung - Yale Law School

Ali Zaidi - Stanford University

Kennedy School of Government

Yale Law School

Stanford University

Current Issue

November-December 2017

Issue

In 2018, Congress must reauthorize the Farm Bill. Even in a polarized Washington, the measure represents a unique opportunity to bring disparate parties together to help the sector achieve meaningful reductions in carbon emissions and boost rural economic opportunity

The new Farm Bill that will occupy Washington next year presents a unique chance to make progress on two critical issues: addressing climate change and enhancing economic opportunity for America’s farmers, foresters, and ranchers. Congress should lift its sights and consider new and aggressive ideas to reward and incentivize these businesses for taking advantage of market and technology innovations that utilize the carbon-reduction potential of the U.S. agricultural sector.

This article makes the case for why it is both economically wise and politically practicable for Congress to take this approach, by establishing a major new reverse-auction payment mechanism for agricultural enterprises that undertake cost-effective carbon reduction and storage measures on their land. If done right, this approach could help spur a new “carbon farming” industry by establishing a robust and rigorous agricultural marketplace in the United States for the chemical that combines with oxygen to form the most common greenhouse gas. At the same time, Congress should significantly scale up the federal agricultural research and development budget, to encourage greater innovation in the farm sector with a focus on improving productivity and resilience, producing more on fewer acres, increasing potential revenue to landowners, and keeping America competitive in global agriculture markets.

There are at least three reasons why the timing for progress on carbon reduction in the agricultural sector is ripe.

First, the agricultural sector provides carbon reduction opportunities that work. To understand how, take one example: soil tends to naturally contain and store organic matter. Various agricultural practices including intensive tillage that exposes soil to air can release carbon dioxide to the atmosphere.

Yet modest changes can yield a different result: through a variety of activities such as no-till or reduced-till agriculture — when seeds are drilled directly through crop residues into untouched soil — more carbon remains in the ground rather than in the atmosphere. Other farming practices with similar effect include the use of cover crops and residue management, planting field borders and other areas with perennial grasses and other native plants, and bolstering crop rotations with carbon storage in mind. There are also many additional opportunities beyond cropland that can increase carbon on working agricultural land, including for example sustainably managing grazing practices on pasture and rangeland, integrating more trees into field borders and stream banks, and restoring forests on marginal lands.

And it turns out that these types of land-sector carbon-reducing practices are not only feasible, but quite cost effective. Last year, the United States released a Mid-Century Strategy for Deep Decarbonization, which was designed “not to predict near-term policymaking [or] model the future U.S. energy and land sectors with precision . . . but rather to describe key opportunities and challenges . . . and highlight findings that are robust across scenarios.” One such finding was the continued and enhanced role of the U.S. land sector as a net carbon sink.

The MCS analysis estimated that, by 2050, land-sector and other carbon-removal technologies could sequester 30 to 50 percent of emissions across the economy, while carbon-beneficial forms of biomass could also displace fossil fuel consumption in sectors that are harder to electrify, such as aviation and heavy-duty vehicles. These reductions could take the place of reductions in the electricity sector or elsewhere that would come at a greater cost. On the other hand, in a scenario where the land sector is underutilized, the pressure to cut emissions shifts to other parts of the economy at a significantly higher cost per ton of carbon.

Second, the economic returns for farmers, foresters, and ranchers of a robust, market-based land-sector emission-reduction strategy could be significant and timely. According to the U.S. Department of Agriculture, net farm income in 2017 is down nearly 25 percent from 2015 levels. This decline reflects a growing set of structural challenges facing the U.S. farm sector. A Kansas City Federal Reserve Bank analysis found recently that American farmers are becoming “increasingly reliant on international demand and exports to support domestic prices and farm incomes,” and are challenged by “reduced farmland values,” “weaker credit conditions,” and “increased interest rates and collateral requirements.”

These trends are especially problematic given the slow rebound of employment and wages in rural areas. According to USDA, while employment in metropolitan areas exceeded its pre-recession peak by nearly 5 percent by 2016, employment in nonmetropolitan areas was still nearly 3 percent below its respective peak. Adding to the economic challenges are demographics — the average American farmer is 58 years old, nearly the oldest out of all U.S. professions. New revenues, markets, and skilled jobs are needed to attract the next generation of landowners and managers.

Together, these economic factors reinforce the need for economically efficient policies that help the agricultural center modernize and improve financial returns for farmers, foresters, and ranchers.

Third, the United States is falling behind in the global race for the type of technology-enabled progress in agriculture that carbon farming and sustainable land-sector management represent. The types of R&D that increase agricultural productivity also tend to decrease agricultural carbon intensity, while freeing land to support more forests, biomass production, or high-value natural areas. For example, precision agriculture, which can depend on greater utilization of sensors, drones, big data, and automation, can seed huge carbon reductions — just as it boosts farm productivity overall.

Despite this potential, public agricultural R&D investment in the United States has fallen in real terms over the last decade and a half and has fallen considerably as a share of total public R&D spending in the United States over a longer period. While private agricultural R&D investment has grown in recent years, private R&D dollars are not a substitute for the publicly funded basic research that drives innovation advances.

In 2015, USDA’s Economic Research Service modeled scenarios with different levels of public investment and found that slowdowns in support lead to a significant innovation gap within two decades. Specifically, if the current approach to public investment persists, the growth of agricultural total factor productivity drops dramatically — by almost 40 percent. The analysis concluded that, once depressed, such productivity will be significantly harder to make up by too-little, too-late investments in R&D.

While the United States is slowing down on agricultural R&D, others are not. Over roughly the last two decades, the U.S. share of public investment by major countries in agricultural R&D “fell from 22.5 percent to 13.4 percent.” In particular, the United States has fallen behind Chinese public investment in agricultural science. According to USDA, China passed the United States in public investment in 2008 and has kept focused on the field — following what historically has been a uniquely American playbook. Between 1990 and 2013, Chinese public investment in agricultural R&D grew eight-fold. As a result, U.S. leadership on technology-enabled agriculture is faltering at a moment when the global agricultural market is poised to grow dramatically.

Fortunately, there is a way to simultaneously address these climate, economic, and innovation challenges.

Economists have long acknowledged that the most economically efficient way to reduce greenhouse emissions is to place an economy-wide price on carbon. Modeling suggests the American land sector has the potential to deliver up to 1.2 billion metric tons of carbon dioxide equivalent reductions annually in a $40-per-ton carbon-reduction scenario, similar to anticipated reductions in the energy sector. This underscores the fact that there are clear, cost-effective emissions reductions to be gained from the land sector if appropriate policy mechanisms are in place to drive them. It also reinforces that, in the current environment, where the United States has no economy-wide carbon price and there is no effective nationwide market for land-sector carbon offsets, we are under-incentivizing land-based sequestration activities.

In the absence of an economy-wide policy, the most scalable approach would be to create a new, nationwide program of direct payments and credits to producers who effectively sequester and store carbon. This approach could be implemented in two ways. In states that have established carbon markets, sequestration policies in the land sector can offset carbon emissions reduction obligations of energy-sector entities. California, for example, already allows 8 percent of carbon compliance to come from offsets, including from agriculture.

Such a pay-for-performance model could also be implemented by the federal government — kickstarting action in states that don’t have economy-wide carbon prices and increasing ambition in states that do. Specifically, the federal government could run reverse auctions to make carbon payments to carbon-sequestering projects, using mandatory funds authorized through the Farm Bill.

Such a model is not without precedent. Australia, for example, has a voluntary carbon offset program for farmers called the Carbon Farming Initiative, which after its first years of implementation was rolled into an economy-wide carbon-pricing scheme. Under the CFI, farmers can earn credits for activities like “reducing livestock emissions, increasing efficiency of fertilizer use, enhancing carbon in agricultural soil [and] storing carbon through revegetation and reforestation.” These credits can then be sold to other parties to meet their carbon obligations. While the CFI has been challenged by underfunding and a continuously evolving policy context, over 500 land-based projects have been registered to date, and hundreds more across on-farm energy-saving and fuel-reduction practices. We would need to design a system that works for American stakeholders, but we can learn from the experiences of other countries in launching these programs.

Narrower but analogous programs also exist in the United States. California has forestry, livestock, and rice methane offset protocols as part of its economy-wide cap-and-trade program, under which 173 projects have registered to date. At the federal level, USDA’s Environmental Quality Incentives Program provides hundreds of millions of dollars annually in financial and technical support to farmers engaging in conservation practices that “improve soil, water, plant, animal, air and related natural resources on agricultural land and non-industrial private forestland.” Although EQIP payments are not made on a carbon basis, they support many of the same practices that could qualify under a carbon-payment scheme.

One of the biggest pitfalls identified from Australia’s experience is that uncertainty regarding the availability of annual funding can distort an effectively functioning market. If farmers don’t have a long-term and significant price signal, it is harder for them to justify upfront investments in emissions reducing technologies and techniques. In the U.S. context, providing mandatory funding in the Farm Bill over a 10-year window would help address this concern and would also reduce the risk that farmers simply “pull forward” the lowest-hanging-fruit actions that would have taken place just a few years later — the problem of additionality. A certain and long-term funding source would promote efficient improvements as well as provide enough lead time to finance complementary investments.

A second challenge in establishing an effective market-based payment program is compensating carbon reductions on an apples-to-apples basis across different practices, land-sector types, and regions. Carbon-accounting rules that define eligible practices, ensure additional carbon is being stored or reduced, and provide guidance on how to ensure lasting carbon benefits, can be developed to ensure agricultural activities are being treated robustly and equally throughout the program. Many such protocols already exist in California and under voluntary credit registries like the Voluntary Carbon Standard and American Carbon Registry.

A third challenge is avoiding payments for “hot air,” or emissions reductions that would have occurred even without an offset mechanism. We know there are ways to deal with this issue. For example, in California’s rice farming protocol, farmers who voluntarily participate are required to produce emissions estimates based on historical farm area, crop yield, agricultural techniques, and other measures. They then submit records to calculate emissions reductions once they begin one or more of the three authorized management practices (dry seeding, early drainage, or alternate wetting and drying).

Over the long-term, policymakers should strive for a maximally accurate program that builds on California’s approaches by measuring actual emissions at each farm, compared against a baseline. The federal government and state governments could play an important role in providing farmers with the resources to more easily follow these measurements in real time with advanced monitoring equipment and tracking software. The next generation of carbon tracking and reporting is already under development with support from programs like USDA’s Conservation Innovation Grants.

A final concern is that applying a crediting mechanism to one sector of the economy raises the specter that you end up replacing emissions in the American agricultural sector with emissions elsewhere. This effect, known as leakage, could happen, for example, if U.S. timber prices increased because this program had the effect of decreasing U.S. timber supply and, as a result, global markets demanded more deforestation in other parts of the world, like the Amazon.

A government analysis of Australia’s CFI indicated little reason to suspect significant leakage to date in the program. However, as activities are deemed eligible or ineligible for credit under the program, potential and actual leakage should be fully analyzed and considered. If the United States enacts this program domestically, ultimately the most effective way to fully mitigate leakage risk is to bring as many countries and sectors into the fold as possible, which U.S. policymakers could work on through the existing United Nations climate change negotiations process.

While there will be some investment of time and federal resources needed to develop a reverse auction program as well as expand and strengthen the available suite of rigorous measurement protocols, these actions are critical to unlocking the full potential to reduce carbon emissions from the land sector and even sequester carbon. Within the federal government, this work should be undertaken through cooperation between the Environmental Protection Agency and USDA. Based on experiences elsewhere, however, we know that building a program that serves as a sufficient market signal, compensates emissions reductions on an apples-to-apples basis, maximizes additionality, and avoids leakage is within reach.

In addition to a new market mechanism, policymakers should use the Farm Bill to accelerate the pace of agricultural innovation by improving the techno-economics of low-carbon practices. Public investment in agricultural R&D is a key ingredient of that innovation equation — to lead globally, the United States must steadily and substantially increase USDA and other agencies’ budgets for agricultural R&D by a factor of three by 2030 and focus those efforts on advancing the technologies that will unlock new possibilities in carbon farming and sustainable land-sector management. This will allow the United States to close the public investment gap with China and reestablish itself as the go-to place for agricultural innovation.

To be sure, increasing the research budget is not sufficient. We must do so in a way that optimally promotes acceleration of innovation. The American energy R&D program provides a powerful playbook for how to build out an ecosystem for innovation. As outlined in the Mission Innovation Domestic Implementation Framework, the program is composed of four elements: “foundational mechanisms to increase breadth of knowledge within a scientific discipline”; “translational mechanisms to target incremental improvements along defined tech-roadmaps”; “disruptive mechanisms to validate high-risk, high-reward, off-roadmap ideas”; and “integrational mechanisms to facilitate collaboration across disciplines and stakeholders.” Our increased public investment in agricultural R&D needs to tend to each of these components within the agricultural ecosystem.

Fortunately, significant progress has already occurred. For example, USDA supports land-grant universities to spur foundational R&D by enlisting them in advancing “competitive peer-reviewed research, education, and extension activities through multiple programs, including the Agriculture and Food Research Initiative.” We can bolster the effectiveness of these programs by adding resources and increasing capacity at our national laboratories to focus on agriculture-oriented missions. To facilitate translational work, USDA can define and launch a new priority research effort to channel existing and new R&D resources toward ambitious productivity and resilience goals. The department should be given the green light to increase direct work with experts in other agencies who have begun to look at these important issues in recent years.

For example, ARPA-E, the Department of Energy’s advanced-research program, has already ventured into agricultural R&D where it shared a nexus with energy. We know this approach works to bring forward disruptive technology, so we should consider formally charging ARPA-E (or a similar capacity) to undertake this work on a systematic basis to advance our agriculture goals. Additional interdisciplinary teams like the ones at DOE and NASA can work with USDA to meet our goals for 21st century agriculture.

As with any innovative policy idea during this polarized era in Washington, some will question the political economy of this reverse auction and investment proposal because it is does not fit neatly into preconceived notions of coalition building in Congress and the administration. But this ignores the new coalition that it could attract if policymakers are willing to consider this proposal on its merits: legislators who are looking for policies to reduce emissions and legislators who are looking to bolster the incomes of farmers and rural Americans, all while helping America regain a global competitive advantage in a post-Paris marketplace that is looking for ways to feed a billion more people without breaking the planet.

For that new coalition to come together, Congress should take seriously the transparent stakeholder process that will need to occur for farmers, ranchers, and foresters and the rest of rural America to buy into this program and allow it to realize its climate and economic benefits. To bring and keep all relevant stakeholders to and at the table, the revenues from the auction must function as an incentive, not a mandate. This does not just make political sense, it makes economic sense as well. The social costs of carbon are already being borne by the economy. This auction is an approach to abating those costs in an effective and efficient way.

The process must engage the diversity of actors in the land sector; it must strive to develop workable solutions that all find fair (especially with regard to baselines and measurement, monitoring, and verification); and it must work with all key parties to avoid unintended consequences. We must also leverage state-level policies that support these aims and with which farmers are already familiar, harmonize with existing state-level policies like California’s cap-and-trade program, and spur a race-to-the-top to improve state-level policy. Ultimately, for this program to work, farmers, foresters, and ranchers will need to lead the way. TEF

AMERICAN NEOGOTHIC ❧ In 2018, Congress must reauthorize the Farm Bill. Even in a polarized Washington, the measure represents a unique opportunity to bring disparate parties together to help the sector achieve meaningful reductions in carbon emissions and boost rural economic opportunity.