ELIMINATING "environmental racism" has become one of the premier civil rights and ecological issues of the 1990s. Over the past 15 years, what began as a modest grassroots social movement has expanded to become a national issue, combining environmentalism's sense of urgency with the ethical concerns of the civil rights movement. According to "environmental justice" advocates, discrimination in the siting and permitting of industrial and waste facilities has forced minorities and the poor disproportionately to bear the ill effects of pollution, compared to more affluent whites. What is more, they contend, the discriminatory application of environmental regulations and remediation procedures essentially has let polluters in minority communities off the hook.
To remedy this perceived imbalance, policymakers in Washington have mounted a full-court press. On Feb. 11, 1994, Pres. Clinton issued an executive order on environmental justice, requiring Federal agencies to demonstrate that their programs and policies do not inflict environmental harm unfairly on the poor and minorities. The order also creates an interagency task force to inform the President of all Federal environmental justice policies and to work closely with the Environmental Protection Agency's Office of Environmental Equity as well as other government agencies to ensure that those policies are implemented promptly. In addition to the President's executive order, Congress is debating several bills designed to guarantee environmental equity. These proposals would affect the location of industrial facilities.
With charges of racism, discrimination, and social negligence being bantered about, discussions of the environmental justice issue often are passionate and, occasionally, inflammatory. Behind the emotion, however, two critical questions arise: Does the existing evidence justify such a high-level commitment of resources to addressing environmental justice claims, and what reasonable steps should society take to ensure that environmental policies are enacted and implemented fairly?
Contrary to conventional wisdom, the answers to these questions are not simple or readily apparent. While it certainly seems noncontroversial to assert that environmental officials ought to enforce existing laws equally, the question of siting and permitting reforms is not so clear-cut. Before approving additional regulations on facility siting and permitting, policymakers would be well-advised to assess candidly the quality of the existing environmental racism research as well as the likely costs and benefits of proposed solutions. Only with such a critical eye can legislators be certain that the measures ultimately enacted are cost-effective and successful in addressing the equity concerns of minority and low-income communities.
The call for environmental justice first surfaced during the late 1970s with the work of grassroots organizations such as the Mothers of East Los Angeles and Chicago's People for Community Recovery. While ostensibly formed to combat specific local environmental problems, each of these groups seemingly shared one unifying belief: that the poor and minorities are systematically discriminated against in the siting, regulation, and remediation of industrial and waste facilities. Through social and political protest, these neighborhood organizations aggressively challenged local developments they considered undesirable, becoming an effective voice for the concerns of inner-city residents. In the absence of detailed research, however, the evidence for their claims of discrimination remained largely anecdotal. As a result, their influence on policy was limited. Not until several studies appeared to substantiate their assertions did the movement gain national attention.
The first major attempt to provide empirical support for environmental justice claims was conducted by Robert D. Bullard, a sociologist at the University of California, Riverside, in the late 1970s. Examining population data for communities hosting landfills and incinerators in Houston, Tex., he found that, while African-Americans made up 28% of the city's population, six of its eight incinerators and 15 of its 17 landfills were located in predominantly black neighborhoods. The presence of these facilities, Bullard suggests, not only makes black Houston the "dumping grounds for the city's household garbage," but compounds the myriad of social ills (e.g., crime, poverty, drugs, unemployment, etc.) that already plague poor, inner-city communities. While limited in scope, Bullard's research has helped shape the policy debate surrounding environmental justice. His Houston study played a central role in one of the first, though unsuccessful, legal cases involving environmental discrimination, Bean v. Southwestern Waste Management Corp., and forms the basis for two often-cited books, Invisible Houston and Dumping in Dixie.
The second widely discussed study examining community demographics near commercial waste treatment, storage, and disposal facilities (TSDFs) was conducted by the U.S. General Accounting Office (GAO) in 1983. The purpose was to "determine the correlation between the location of hazardous waste landfills and the racial and economic status of surrounding communities." Examining data from four facilities in EPA Region IV (Southeast region), government researchers found that the populations in three of the four surrounding areas primarily were black. African-Americans comprised 52, 66, and 90% of the population, respectively, in those three communities. In contrast, blacks made up no more than 30% of the general population of the states involved. In addition, the study found that the communities hosting waste facilities were disproportionately poor, when local poverty levels were compared to state averages.
The third, and the most often cited, study, published in 1987 by the Commission for Racial Justice (CRJ) of the United Church of Christ, had two important components: an analytical survey of commercial waste TSDFs and a descriptive analysis of uncontrolled toxic waste sites. Both statistical studies were designed to determine the extent to which African-Americans and other minority groups are exposed to hazardous wastes in their communities. By using population data (based on five-digit ZIP codes) as well as information gathered from the U.S. Environmental Protection Agency (EPA) and other sources, CRJ researchers isolated three variables: the percentage of minority population, mean household income, and mean value of owner-occupied housing.
The study revealed a correlation between the number of commercial waste facilities in a given community and the percentage of minority residents in that community. Specifically, it found that the percentage of nonwhites within ZIP codes with one waste plant was approximately twice that of ZIP codes without such a facility. For areas with more than one waste plant, the percentage of minority residents on average was three times greater than that of communities with no facilities. The CRJ found that race was statistically more significant than either mean household income or mean value of owner-occupied housing. This suggested that race was more likely determinant of where noxious facilities were located than socioeconomic factors.
A final study deserving mention was published by the National Law Journal in September, 1992. Unlike the research above, which focused on the location of industrial and waste facilities, it examined racial disparities in EPA enforcement and remediation procedures. The findings indicate that significant differences exist in the fines levied against polluters in white communities and those in minority areas. The study also found that EPA took longer to clean up waste sites in poor and minority communities than in more affluent neighborhoods.
While these studies have been cited widely by environmental justice advocates, all suffer from serious methodological difficulties. Defining minority communities as those areas where the percentage of nonwhite residents exceeds that of the entire population means that a community may be considered "minority" even if the vast majority of its residents are white. For example, Staten Island, N.Y.--home of the nation's largest landfill--is considered a minority community even though more than 80% of its residents are white.
A second, but related, issue is that these studies ignore population densities. Merely citing the proportion of minority or low-income residents in a given community does not provide information about how many people actually are exposed to environmental harms. For instance, given that blacks presently comprise approximately 16% of the nation's population, a host community of 1,000 residents, 20% of whom are black, would be considered minority, while one of 6,000 residents, 15% of whom are black, would not. By overlooking population density, the studies fail to point out that more blacks (900 vs. 200) would be exposed to the pollution in the second, "non-minority," community than in the first.
In addition to the problems associated with proportionality and population density, environmental justice studies often define the affected area in geographic terms that are too broad. Much of the prior research is based on Zip-code areas--frequently large units--established by the U.S. Postal Service. As a result, the data likely suffer from what statisticians call "aggregation errors"--i.e., the studies reach conclusions from the Zip-code data that would not be valid if a smaller, more consistent geographic unit were examined.
A third flaw is that they imply, rather than explicitly state, the actual risk presented by commercial TSDFs. While the research attempts to disclose the prevalence of commercial waste plants in poor and minority communities, there is no corresponding information about the dangers associated with living near such facilities. The regulatory requirements regarding the building and operation of industrial and waste facilities in the U.S. are among the most stringent of any industrialized country in the world. These requirements, along with the voluntary efforts of industry, significantly reduce the noxious emissions of commercial waste plants and other facilities.
Moreover, health risks are a function of actual exposure, not simply proximity to a waste facility. Environmental justice advocates' claims of negative health effects are not substantiated by scientific studies. In fact, many of the legislative proposals to combat environmental inequities may result in greater harm to minority and poor residents than the emissions from noxious facilities themselves. By reducing the incentives for businesses to locate in poor and minority areas, these measures may exacerbate local conditions of poverty and unemployment--conditions far more unhealthy than the minute risks associated with waste disposal facilities and industrial plants.
Finally, and most critically, existing research on environmental justice fails to establish that discriminatory siting and permitting practices caused present environmental disparities. While the studies match the location of industrial and waste facilities with the current socioeconomic and racial characteristics of the surrounding neighborhoods, they do not consider community conditions when the facilities were sited. They also fail to explore alternate or additional explanations for higher concentrations of minority and low-income citizens near undesirable facilities. Thus, none prove that the siting process actually caused the disproportionate burden poor and minority communities purportedly now bear. These gaps leave open the possibility that other factors, such as the dynamics of the housing market, may lead minorities and the poor to move into areas of high industrial activity.
Clearly, there are reasons to question the validity of much of the research surrounding environmental justice. Nevertheless, there well may be room for policymakers to reform environmental laws in a manner that would prevent future environmental inequities without discouraging the siting and operation of any socially beneficial projects. Crafting such policies requires understanding pollution from an economic perspective. Such an awareness gets at the very heart of the environmental justice issue and provides a theoretical framework for dealing with the perceived problem.
Economists refer to pollution as an "external cost" or a "negative externality." Pollution is negative because it is undesirable, and it is an externality because it affects those who are outside of (i.e., who have no control over) the process that creates it. Air and water pollution are examples of costs involuntarily borne by individuals outside the production process. Similarly, industrial and hazardous waste facilities may impose external costs on the host communities in the form of unpleasant noise, foul odors, increased traffic, or greater health risk.
The crux of environmental justice concerns is that particular communities (chiefly those composed of minorities and the poor) have been forced to bear disproportionately the external costs of industrial processes. It follows, then, that one way of achieving environmental equity is to ensure that these costs are borne proportionately by all who reap the benefits of these processes. Society essentially has three options for accomplishing this: eliminate all external costs of industrial processes; allocate the external costs evenly through the political system; or fairly compensate the individuals who bear these costs.
The "BANANA" principle
Many environmental justice advocates appear to desire above all else the complete elimination of pollution, so that no community has to bear the external costs of industrial processes. This goes beyond the familiar NIMBY ("not in my backyard"). They instead are crying BANANA ("build absolutely nothing anywhere near anything") or, as one activist insisted, NOPE ("not on planet Earth"). Eliminating pollution, of course, would eradicate the problem of disproportionately distributed pollution, an issue at the heart of environmental justice. However, a moment of reflection on the BANANA principle, or a policy of complete waste elimination, reveals that such a course ultimately is not feasible. Manufacturers simply can not reduce pollution indefinitely without eliminating many valuable goods and processes Americans take for granted. In most cases, phasing out particular products is much more costly to society than accepting and treating the pollution required to create them.
Consider, for instance, pesticide utilization. In Congressional testimony on environmental justice in 1993, activist Pat Bryant demanded action "at all levels" to stop the use of pesticides. He was correct in asserting that high dosages may be harmful, but, when properly used, chemical pesticides produce net social benefits in the form of higher per-acre crop yields and lower food prices. Eliminating these chemicals would impose costs on society far greater than those the substances themselves do. Thus, total pollution elimination is not an optimal solution.
Pollution reduction likewise has obvious limits. As pollution is cut further and further, the incremental cost of scaling back each unit of pollution tends to rise and the incremental benefit associated with each unit of reduction falls. The optimal level of pollution reduction occurs at the point at which the incremental cost of abating an additional unit of pollution equals the incremental benefit of such abatement. Eliminating units of pollution beyond this point imposes costs on society greater than those incurred by the pollution.
Because some pollution is inevitable in modem society, policymakers may decide that the best way to ensure environmental justice is to have the government determine which communities must host undesirable facilities. Thus, a purely political solution whereby those in power simply decide where polluting and waste facilities should be located probably is not in the best interest of minorities and the economically disadvantaged, as these groups typically are underrepresented in the government. Most of those who advocate a political solution to environmental inequity argue instead for the establishment of nebulous legal and regulatory mechanisms that would force those in power to allocate pollution "fairly."
It is difficult to pinpoint exactly what those legal and regulatory mechanisms are, though. For the most part, environmental justice advocates have refrained from proposing concrete political remedies for ecological inequities. While activists often suggest creating various offices, councils, and task forces, they rarely detail how these entities should influence the pollution allocation process. While they advocate increased community involvement in siting decisions, they have yet to propose specific policies delineating how public participation is to be improved.
The few legal and regulatory mechanisms that have been suggested to remedy disparity in the allocation of pollution essentially boil down to two devices: regulations that directly would limit or prohibit future industrial siting in minority and disadvantaged communities; and penalties against presently active polluting and waste facilities that disproportionately impact minorities. The threat of such penalties, of course, would motivate facility owners to relocate or site future developments in non-minority neighborhoods.
Several proposals to prohibit siting in particular communities have been introduced in Congress and have garnered significant support from environmental justice proponents. One, by Rep. Cardiss Collins (D.-Ill.), would allow citizens to challenge and prohibit the construction of waste facilities in "environmentally disadvantaged communities." By definition, an environmentally disadvantaged community contains a higher than average percentage of low-income or minority residents and already hosts at least one waste facility, superfund site, or facility that releases toxics. Any citizen of the state in which the facility has been proposed for siting may introduce a challenge; the challenger need not reside in the affected community.
Under the Collins bill, a challenge would be granted and the proposed facility's construction and operating permits denied unless its proponent demonstrated that there is no alternative location in the state that poses fewer risks and that the proposed facility neither will release contaminants nor increase the impact of present contaminants. Even if every resident of the potential host community desired that the facility be constructed and the sole challenger lived on the opposite end of the state, construction would be forbidden as long as the challenger demonstrated that the proposed community was, in fact, an environmentally disadvantaged community and that alternative locations were available.
Grassroots activists are joining legislators in calling for prohibitions on new industry in certain communities. In Congressional testimony in 1993, Hazet Johnson of Chicago's People for Community Recovery called upon lawmakers to "place a moratorium on landfills and incinerators in residential areas." Pat Bryant, representing the Gulf Coast Tenants Association, called on "the Congress, state legislatures, and local government[s] to legislate ... an immediate moratorium on the siting of all hazardous waste facilities ... and the placing of polluting and nuclear industries in the South."
On the regulatory front, the EPA already is making attempts to incorporate racial and socioeconomic considerations into permitting and siting programs. EPA Administrator Carol Browner has promised to "weave environmental justice concerns throughout all aspects of EPA policy and decision-making." According to Clarice Gaylord, director of the agency's Office of Environmental Equity, "EPA offices are re-evaluating how the siting and permitting process is used to determine where hazardous and solid waste facilities are placed." She insists, "Concerted efforts are being taken to work with state and local governments to incorporate socioeconomic factors into these decisions."
The legislative proposals and the suggestions of grassroots activists are clear--the government must actively take steps to prohibit the siting of locally undesirable facilities in minority and low-income neighborhoods. EPA's initiatives are a bit more ambiguous. It is not immediately obvious how the agency will "weave environmental justice concerns" throughout all aspects of its decision-making. Specifics aside, any re-evaluation of siting and permitting processes to "incorporate socioeconomic factors" likely will have the effect of prohibiting the construction or operation of polluting and waste facilities in minority and low-income communities.
The second method of politically allocating pollution does not directly prohibit or limit siting in minority and disadvantaged neighborhoods. Instead, it strongly discourages the construction of polluting and waste facilities in such areas.
At the urging of environmental justice advocates, the EPA opened investigations of environmental agencies in several states for allegedly violating Title VI of the 1964 Civil Rights Act. Under Title VI, which bans discrimination by Federally funded programs, plaintiffs may prove discrimination by demonstrating that a Federal program (e.g., a siting or permitting program) disproportionately impacts minorities. Plaintiffs need not establish that there was any intent to discriminate. These cases are on hold pending separate litigation.
While EPA's decision to open investigations under Title VI was somewhat controversial, Sen. Paul Wellstone (D.-Minn.) introduced legislation that would have cleared up any controversy surrounding the law's use. Explicitly applying Title VI to environmental agencies, the Public Health Equity Act of 1994 would have guaranteed that discrimination judgments against siting and permitting agencies could be based solely upon a demonstration of disparate impact. This bill never got out of committee.
Merely by demonstrating that differences in exposure exist, Title VI enables the government to deny companies needed building and operating permits and to withhold Federal money destined for offending states. The threat of discrimination suits discourages government officials from permitting and facility owners from operating industrial plants in communities where such suits are likely to occur. Title VI effectively encourages facility owners to build away from poor and minority neighborhoods.
The various proposed political solutions to environmental inequity increase government control over the siting and permitting of locally undesirable facilities. The idea is that, if the government has more influence in deciding where polluting and waste facilities operate, it better can assure that their negative externalities are distributed fairly.
Eliminating environmental inequity will not be quite so simple, though. Proposals to prohibit, limit, or discourage polluting facilities from locating in minority and low-income communities deny those areas the economic benefits associated with hosting industrial and waste plants. In many cases, these benefits far outweigh the costs of hosting such facilities. Affected communities should be allowed to make tradeoffs and decide for themselves whether or not to accept approved industrial activities. Policies arbitrarily prohibiting or discouraging facility owners from siting in minority and low-income neighborhoods effectively preclude residents from deciding to accept comparatively small risks and inconveniences in exchange for substantial economic benefits.
It is possible for potential host communities to work out profitable agreements with polluting and waste facilities. To the extent that current environmental standards ensure minimal exposure risks, the primary costs associated with hosting a polluting or waste facility are "inconveniences" (i.e., odors, increased traffic, unpleasant noise, etc. . Community residents might find it in their best interest to endure these nuisances and minimal health risks in exchange for substantial economic benefits. By denying the much-needed economic opportunities, such policies exacerbate the social ills plaguing many minority and low-income neighborhoods. Even if increased siting restrictions were able to achieve a more racially balanced distribution of polluting and waste facilities, such policies still would not ensure environmental justice. In essence, environmental justice rests upon two issues: that a few individuals (the residents of the community hosting a polluting or waste facility) are forced to bear the external costs of industrial processes from which the public at large receives benefits, and that a disproportionate percentage of these individuals are minority or low-income citizens. Political solutions that simply inject racial and socioeconomic considerations into siting and permitting procedures address the latter concern, but not the former. These proposals seek to guarantee that the few individuals who are affected adversely are not minority or poor residents. The measures, however, do nothing to alleviate the first concern--the very fact that a few citizens disproportionately must bear the costs of processes that benefit everyone.
A third possible solution attempts to eliminate the primary environmental injustice by "diffusing" the concentrated external costs associated with a polluting or waste facility and compensating those individuals disproportionately impacted by the facility. There primarily are two methods of accomplishing both cost diffusion and residential compensation. If the beneficiaries of a facility are somewhat well-defined (e.g., the residents of a multi-county region that shares a waste disposal facility), the government may use tax revenue from those citizens to compensate the host community. Alternatively, the undesirable facility could compensate local residents directly, reflecting the cost of doing so in the prices charged to those who utilize the facility's services. Under both schemes, the external expenses of the facility are dispersed so that all who share its benefits also bear a portion of its costs. The fundamental difference between the two scenarios is that, in the former case, beneficiaries bear these costs wearing their taxpayer hat, while in the latter, they do so as consumers.
Economists refer to the procedure embodied in the second scheme as the "internalization" of external costs. Under such an approach, facility owners view the adverse local impact of their plant as part of their operating expenses and charge prices sufficiently high to cover them, using the added revenue to compensate local residents. As a result, pollution costs no longer are borne solely by those "outside" of the production process, but are dispersed equitably among those utilizing the facility's services. Due to offsetting benefits, residents of the host communities, on balance, are no worse off than they would be without the facilities.
The specific nature of these offsetting benefits may vary and should remain in the purview of the potential host community and the prospective developer. Some possible forms of compensation include direct payments to affected landowners, "host fees" paid into a community's general revenue fund that may be used to finance a variety of public projects or lower property taxes, grants for improving local healthcare delivery and education, and providing parks and other recreational amenities.
Many may argue that it is immoral to pay individuals to expose themselves to health risks. Critics should keep in mind the regulatory environment in which compensation agreements are negotiated. Ecological standards are designed to guarantee a base level of environmental protection whereby the exposure risks associated with polluting and waste facilities are minor. For instance, the risk of developing cancer from living at the fence line of a properly constructed solid waste landfill is estimated to be one in a million.
While many environmental justice advocates recite anecdotes of health problems in communities adjacent to licensed facilities and claim that present regulations are inadequate, they can produce no scientific data tying these alleged ailments to pollution exposure. Should such a relationship ever be established, the appropriate policy response would be to raise the inadequate environmental standards, not to prevent individuals and facility owners from negotiating compensation agreements. As long as environmental regulations guarantee minimal risk, there should be no moral difficulties with compensating individuals for voluntarily accepting the nuisances associated with waste and polluting facilities.
In fact, agreeing to host an industrial facility in exchange for compensating benefits may improve a community's public health. Often, the physical ailments that seem to plague low-income communities in industrial areas stem from inadequate nutrition and health care. In such cases, the best way to alleviate them is to provide the community with economic opportunities and a better health-care system. While compensation agreements can be negotiated to include job opportunities and funding for improved health services, political solutions that force industrial facilities out of low-income and minority areas only will increase rates of unemployment and poverty-conditions proven to impose significant health risks.
A second advantage of compensation approaches is that they are more likely to guarantee a socially optimal level of pollution. Since both extremes--complete pollution elimination and reckless polluting--are undesirable, society must attempt to determine the optimal level of abatement. Doing so requires a clear understanding of the full costs and benefits associated with a proposed facility. By negotiating compensation arrangements, the developer and the host community illuminate social costs, which otherwise would remain unaccounted for. As such, compensation arrangements better enable decision-makers to determine when and where to reduce pollution.
Consider, for example, the negotiations surrounding the siting of a hypothetical solid waste incinerator. Throughout the negotiating proceedings, the proposed host community gathers information concerning the local impact of the incinerator's operations. Using this data, it determines the minimum compensation required to host the facility. The developer then must decide whether to accept the community's compensation demands, implement additional abatement devices so as to reduce the level of pollution exposure and the consequent compensation requirement, or focus on an alternative host site. In some instances, the external costs associated with a proposed facility may be so high as to make it unprofitable in any location. A compensation approach helps weed out such ill-conceived industrial projects.
Increasingly, private developers are using negotiated compensation as a mechanism for diffusing local opposition. Nevertheless, a number of obstacles remain in the way of widespread compensation agreements. A brief examination of one case demonstrates how legislators can encourage the use of such agreements.
Wisconsin's landfill negotiation/arbitration statute was adopted in 1981 with the intent not only to make the siting of waste facilities more efficient, but to accommodate the legitimate concerns of local residents and municipalities. The principal mechanism by which the legislation accomplishes both of these goals is the requirement that any developer wishing to site a landfill first must establish negotiations with the affected municipalities. During these negotiations, any subject is open for discussion "except the need for the facility and any proposal that would make the [developer's] responsibilities less stringent than required by the Department of Natural Resources." In principle, negotiations can continue until all of the parties' concerns are resolved. If a settlement has not been reached after a "reasonable period," one or both of the parties can request that the case be turned over to binding arbitration.
Thus far, the Wisconsin program seemingly has worked very well. Since the law took effect in 1982, just three of over 150 submitted permit applications have been arbitrated. Officials with waste management organizations apparently are quite happy with the landfill arbitration/negotiation statute. According to Joe Suchechi, manager of government affairs for WMX Technologies, Inc., requiring compensation negotiations makes it "much easier" to site and expand waste facilities in Wisconsin than in other states, where developers and potential host communities often are polarized. By involving the local community and formalizing negotiation procedures, the Wisconsin law creates a "process that gets everyone to the right place."
The virtue of the Wisconsin legislation as a model is that it includes several principles necessary for compensation agreements to be successful. First, it clearly specifies "the players of the game"--who negotiates with whom. Both developers and potential host communities are required to establish negotiating committees, with the rules regarding these representatives explicitly set forth in the statute. Second, the legislation assures that these "players" not only will negotiate, but that the results of their negotiations will be legally binding. The fulcrum of the legislation is its prohibition against constructing or operating a new facility without a siting agreement, which records the conditions and compensation to be exacted by the community from the developer, any voluntary commitments of the developer, as well as the promises made by local government officials. Without such legally binding authority, the parties have fewer incentives to negotiate in good faith. Finally, the Wisconsin statute provides a way to arbitrate siting decisions should negotiations fail or should one party refuse to cooperate. Each of these criteria is crucial if negotiated compensation agreements are to be applied successfully to environmental justice issues.
The authors are, respectively, Jeanne and Arthur Ansehl Fellow and Clifford M. Hardin Fellow, Center for the Study of American Business, Washington University, St. Louis, Mo.…