In 1990, Congress passed the Pollution Prevention Act, which lays out a hierarchy of approaches for firms as they address pollution problems. Under the law, the optimal strategy is to prevent or reduce pollution at the source "whenever feasible." If pollution cannot be prevented, recycling is the next most desirable alternative. If these options fail, pollution treatment is next in priority. Only if all other approaches fail, disposal or other release to the environment is a last resort. The law goes on to require the U.S. Environmental Protection Agency (EPA) to promote source reduction activities and to collect data on firms' adoption of these techniques, and it provides for matching grants to states for pollution prevention programs.
This pollution prevention hierarchy represents a hierarchy of benefits based on the idea that avoiding pollution has major advantages over treating and disposing of it (Council on Environmental Quality, 1991, pp. 80-81; U.S. Environmental Protection Agency, 1991, p. 8). Not creating pollution--for instance, reducing the use of toxic chemicals in a production process--is almost certainly more environmentally benign than disposing of it. Treating pollution may not eliminate it, but may instead transfer it from one disposal medium to another (such as the sludge produced at sewage treatment plants being sent to landfills for disposal. Not creating pollution in the first place reduces this "multimedia" problem. These and other benefits reflect the technical difficulties of solving pollution problems and the desirability of avoiding them.
Pollution prevention has attracted tremendous interest from both the public and private sectors. Federal, state, and local agencies have instituted a wide number of programs aimed at promoting source reduction and recycling by private companies. Such programs include research, information collection and provision, financial incentive programs, and regulation. A number of businesses have responded by establishing pollution prevention programs, examining their production and disposal processes for ways to reduce pollutants, and substituting less hazardous substances for toxics. EPA and other agencies still are developing consistent methods for measuring progress in pollution prevention. Evidence suggests that a number of firms are taking source reduction seriously and are achieving results.
Pollution prevention clearly has a great deal to offer as a way of addressing environmental problems. Source reduction may be the only effective method of reducing damages from some substances, such as nuclear waste, that may be difficult or impossible to treat. The question remains, though, whether the pollution prevention hierarchy is the most effective way to control pollution. This paper examines the conditions under which this prioritizing makes sense as public policy and discusses when other forms of regulation may be more desirable.
Much of the literature on pollution prevention focuses on the technology, describing methods that some industries have used (e.g., Freeman et al., 1992). Many businesses, such as 3M, voluntarily have undertaken pollution prevention measures in the face of the rising costs of pollution control and waste disposal. In some cases, businesses not only have reduced pollution but also have reduced their costs of production by making their processes more efficient. From an economic perspective, Lis and Chilton (1993) argue that zero pollution is no more attainable with pollution prevention than with tailpipe controls. Additionally, they cite evidence that companies are reluctant to pursue pollution prevention if they currently are in compliance with pollution control requirements and are profitable. Changing production processes is costly, so returns on these changes must be substantially positive to provide the incentive to revise practices. Kohn (1993) examines the possibility that zero pollution is attainable if a "clean" technology can be substituted for a polluting technology at a finite cost. …