Tag: environmental economics

Government Protects Human Health and the Environment, in West Michigan and Nationwide

From left to right, panelists Alan Steinman, George Heartwell, Skip Pruss and Dave Dempsey. Photo by Liz Kirkwood

FLOW held a community engagement session at the Grand Rapids Public Library on Thursday, December 5, to make the economic case for government’s role in protecting human health and the environment—both nationally and locally.

The event followed a similar listening session in November in Traverse City. It punctuated the publication of a series of “Resetting Expectations” policy briefs by Skip Pruss, former FLOW board chair and former director of the Michigan Department of Energy, Labor and Economic Growth. Read those policy briefs here.

The Grand Rapids event featured presentations by Pruss, as well as Alan Steinman, who directs Grand Valley State University’s Annis Water Resources Institute, former Grand Rapids mayor George Heartwell, and FLOW senior policy adviser Dave Dempsey. FLOW executive director Liz Kirkwood opened the engagement session with introductory remarks and closed it with a panel discussion.

Pruss spoke about his early career in government and highlighted the then-prevailing spirit of public service, and public support for and confidence in government’s high aspirations for implementing change. Examples of that change include building the interstate highway system, reaching the moon, launching the war on poverty, and fostering a nationwide public education system which was at one time the envy of the world. Landmark environmental laws passed approximately 50 years ago demonstrated the value of well-conceived governmental interventions. Since its enactment in 1970. economic health benefits related to the Clean Air Act are estimated at $22 trillion.

Watch a recorded video of Pruss’ presentation.

Paradoxically, despite significant achievements, public confidence in government has declined in recent decades, said Pruss, who argued in his “Resetting Expectations” briefs that government should support the renewable energies of tomorrow rather than the dirty fossil fuels of yesterday.

Without government subsidies, the oil and coal industries are going bankrupt: they no longer make good business sense. Meanwhile, a report by the White House Office of Management and Budget demonstrates that environmental regulations have the best cost-benefit ratio of any federal rules. Those regulations also help to level the playing field, and eliminate free riders who don’t abide by the rules.

Across the political spectrum, economists agree that positive externalities—activities that result in additional benefits for society—should be promoted, and negative externalities, which indicate market failure, should be avoided. Negative externalities impose “spillover” costs on society that are not included in the cost of production.

To emphasize his point, Pruss quoted Sir Nicholas Stern, who said that “Climate change is a result of the greatest market failure that the world has ever seen.”

“It’s not just the release of hazardous substances and soil and groundwater contamination and the impact to health and wildlife, it’s also the irreparable loss of these functions of this landscape,” said Pruss while sharing a searing image of the destruction of the Tar Sands region in Alberta, Canada. “The benefits of this landscape that are now gone for future generations. We can’t afford to do that.”

Government environmental protection and investments pay off at the local level, too, added Dr. Alan Steinman and former Grand Rapids mayor George Heartwell.

Steinman opened his presentation with an image of a West Michigan sunset over Lake Michigan, which he said shows how economic development and environmental protection go hand in hand. Steinman then contrasted images of Muskegon Lake as an industrial hub and now, as a favorite recreation spot.

Steinman worked 10 years ago on a project to stabilize Muskegon Lake’s shoreline—a project whose funding didn’t originally intend to highlight economic impacts, but whose cascading benefits included “when the insects came back, the fish came back, and when the fish came back, the people came back.”

Ecosystem restoration is generally considered a 3-to-1 return on investment, but the Muskegon Lake restoration yielded a 6-to-1 return.

Watch Steinman’s presentation here.

Former Grand Rapids mayor George Heartwell started his presentation on an upbeat note: “Let me start with a modest proposition—mayors will save the world!” he boomed. “The work that’s done by cities, by progressive mayors, by visionary and innovative mayors will turn down the thermostat on global temperatures.”

While these superheroes are saving the world, they must also address extreme rain events, flooded sewers and common issues facing cities like Grand Rapids.

Heartwell narrated a Grand Rapids story that evolved from spilling billions of gallons of combined storm water and sewage overflow into the Grand River to separating storm and sanitary sewers and creating storm water treatment systems in neighborhood green spaces that also serve as amenities.

Heartwell shared a litany of steps that Grand Rapids has taken to improve the urban environment and mitigate against the effects of climate change.

“I know it sounds like a very small step toward saving the human species but green infrastructure in every city will at least save us from storm water and flooding damage and buy us the time we need to do other climate change mitigation.”

“If every city did what Grand Rapids is doing, life on our planet would survive, and the seventh generation would look back at us with gratitude.”

Watch Heartwell’s presentation here.

Dave Dempsey stressed the economic value of groundwater to Michigan and the huge costs of failing to protect it from contamination. About 45% of Michigan’s population gets its drinking water from groundwater sources and industry and agriculture also use considerable groundwater for manufacturing and irrigation. Yet a legacy of contamination has cost Michigan taxpayers over $1 billion in cleanup costs, and there are 6,000 more orphan sites—where no private source is available—that may require taxpayer money to clean up. 

Dempsey said Michigan needs stronger groundwater protection policies to support Michigan job creation and reduce health risks from chemically contaminated water supplies.

Watch Dempsey’s presentation here.

Following the presentations, an engaged audience asked the panelists how cities and communities can be empowered to better use their master plans to prevent environmental harms.

Watch the panel discussion here.

Accounting for Environmental, Health, and Climate Impacts in the Energy Sector

Report author Skip Pruss

By Skip Pruss

This article is excerpted from the final of four policy briefs by former FLOW board chair, and former director of the Michigan Department of Energy, Labor, and Economic Growth, Skip Pruss, that make the economic case for government’s role in protecting the environment. The fourth policy brief, “Resetting Expectations: Accounting for Environmental, Health, and Climate Impacts in the Energy Sector” is available here to read or download.

Pruss’ first policy brief in the series, “Resetting Expectations: Government’s Role in Protecting Human Health and the Environment,” is available here in executive summary and in full.

The second policy brief, “Resetting Expectations: The Value of Natural Systems and Government’s Role in Protecting Water,” is available here to read or download as an executive summary or full report.

The third brief, “Resetting Expectations: The Multifaceted Benefits of Regulation for the Economy and Environment,” is available here in executive summary and in full.

FLOW will convene an environmental economics public listening session on Dec. 5 in Grand Rapids. We convened our first listening session on Nov. 13 in Traverse City (click this link to watch a live video feed of the event; blog coverage also available here).


Natural systems provide trillions of dollars of economic value annually but are largely unacknowledged as essential to our economic well-being. Government plays a critical role in protecting natural systems that provide wide-ranging economic benefits to industry, commerce, agriculture, recreation, and tourism, for present and future generations.

At the same time, perverse incentives remain in law and policy that are profoundly disruptive to the environment, the economy, social welfare, and a stable climate. Government subsidies for the development and use of fossil fuels undermine and negate the very protections and safeguards sound environmental regulations aim to preserve. These subsidies, some of which date back a full century, are harmful anachronisms that are contrary to the public interest and sound economic policy.

Environmental standards can also be a strong force for innovation within business and industry by reducing waste and production inefficiencies, inducing technological improvements, lowering costs, and mitigating environmental vulnerabilities. Environmental regulations can level the playing field within business sectors by setting industry-wide standards for protection and safeguards and by fostering competition for improvements among competitors.

This fourth brief—”Resetting Expectations: Toward a Full Accounting of Environmental, Health and Climate Impacts in the Energy Sector”—is the last in a series of policy briefs that examines the economic costs associated with government policies that do the opposite—imposing unnecessary and unaccounted for burdens on the environment, public health and the economy. Obsolete and inefficient government policies and programs impose additional costs on society and taxpayers by directly supporting activities that result in environmental degradation and diminishment of the ecological services provided by healthy and robust natural systems.

Fossil fuel subsidies persist in policy despite being demonstrably inefficient and more costly than clean energy alternatives because they serve powerful, deeply embedded, and influential special interests in global energy markets. The adverse environmental and climate consequences and associated economic costs from the production and use of fossil fuels are “negative externalities” unaccounted for in the price of goods and services. In economic theory, negative externalities are indicators of “market failure.”

An optimal regulatory framework would, consistent with established tenets of economics, assess the full range of costs and impacts of competing energy technologies. A rational regulatory framework would quantify and monetize the environmental, public health and economic costs and impacts from the production and combustion of oil, natural gas, and coal, and compare them against clean energy alternatives.

Full accounting of the direct and indirect economic effects of energy subsidies would enable government to make more rational, evidence-based decisions regarding the impacts of energy policy on the environment, the economy, public health, and the climate. It would also align with the fundamental purposes of the Public Trust Doctrine in advancing the most environmentally beneficial, healthful, and economically efficient policies to safeguard present and future generations.

Environmental protections and safeguards, implemented through government regulations, provide overwhelming economic and health-related benefits for society at large. Maintaining the functionality, vitality, and resilience of natural systems provides cascading economic benefits to industry, commerce, agriculture, recreation, and tourism, helping to assure these benefits for future generations. The environmental protections afforded by government regulations are substantial but are marginalized and, at times, negated by competing policies that cause environmental and economic harm.

Incentives are deeply embedded in economic policies in the form of subsidies provided to business and industry that degrade and diminish natural systems, resulting in substantial and permanent economic loss. Long established, yet function- ally obsolete, energy subsidies produce wide-ranging insidious and harmful effects on the environment, public welfare, and the economy. Despite this, demonstrably inefficient and detrimental subsidies for fossil fuels are pervasive both domestically and globally, and supported by long-standing powerful economic interests that are firmly integrated into our politics and our economy.

Resetting Expectations in Traverse City and Grand Rapids

FLOW hosts community engagement sessions on government’s role in protecting human health and the environment

Photo by Rick Kane

By Diane Dupuis

Do environmental regulations hinder or help the economy?

That question framed FLOW’s community engagement session on November 13 in Traverse City examining the role of government in protecting human health and the environment. Presenters included Cherry Republic founder and environmental steward Bob Sutherland and former FLOW board chair Skip Pruss, who has authored three “Resetting Expectations” reports for FLOW that make the case for government regulations to protect the environment.

Surgical pathologist and climate activist Lisa Del Buono, FLOW Executive Director Liz Kirkwood, and Senior Policy Advisor Dave Dempsey also presented on the importance of governmental protections. (Click here to see slides from the presenters and here to watch a recording of the event).

FLOW will hold a second Resetting Expectations community engagement session on December 5 in Grand Rapids. Click here to RSVP; the event is free, but seating is limited.

Community members who attended the Traverse City session were able to interact throughout the series of presentations by responding via text or web app to questions projected intermittently. Residents of Northwest Michigan are well versed in matters affecting the Great Lakes Basin, yet the session presented familiar concepts in new ways, as well as altogether new perspectives.

Kicking off the presentations, Cherry Republic’s Bob Sutherland noted that in December his cherry-themed retail-and-catalog operation will give away $250,000 in profits, mostly to environmental organizations. “My giving comes from my trust in society, in people’s ability to make the world better,” Sutherland said.

“I trust in my neighbor,” he continued, but “it’s just a trickle in the bucket. We need to get the trust back in our government to establish better rules and regulations. As a businessman, I wish that my competitors were operating with the same principles that drive me to continuous improvement in how we treat the environment.”

“Wouldn’t it be great,” Sutherland mused, “if every company was working on clean water and protecting our land? That’s where government regulations come in. We have a future in building trust here. Let’s start a movement in getting a fair and continuously improving level playing field for business.”

Skip Pruss, former director of the Michigan Department of Energy, Labor, and Economic Growth, cited a United Nations study that estimated the value of nature-based services at $60 trillion globally and $18 trillion in North America. As an example, wetlands are among the most biologically productive areas on Earth, Pruss noted, yet Michigan has lost more than 4 million acres of wetlands to development and drainage, worth billions of dollars in lost functions such as water filtration, flood and erosion control, wildlife habitat, human recreation, and food supply.

In terms of cost-benefit analysis, the Clean Air Act generated economic benefits valued at $2 trillion, while the compliance costs to business were $65 billion; benefits exceeded costs by a factor of 43-to-1, Pruss explained.

Of all the water on Earth, only 3% is fresh water. Of that 3%, only 0.30% is surface water. So only .09% of the entire world’s water is fresh surface water. The Great Lakes contain more than 1/5 of this extremely scarce resource.

Dave Dempsey, senior policy advisor at FLOW, focused his presentation on Michigan’s groundwater, depended upon for drinking water by 45% of Michigan residents. Dempsey identified multiple threats to Michigan’s groundwater, including failing septic systems, nitrates from agricultural practices, and contamination from both closed and ongoing sites. Over the last 24 years, Dempsey revealed, Michigan’s taxpayers have been burdened with more than $1 billion in costs to remedy “orphan” contamination sites (sites where the polluter is not picking up the bill).

Regarding the contaminant PFAS, Dempsey noted that Michigan’s Department of Environment, Great Lakes, and Energy (EGLE) has proposed one of the most health-protective PFAS drinking water standards in the country. However, a new state committee controlled by business interests may delay the proposed state drinking water standard for PFAS. Meanwhile this group of chemicals, called “forever chemicals” because they can remain in the human body for years, is linked to a raft of adverse effects on human health, Dempsey said.

Presenting next, Lisa Del Buono, MD, discussed public health and the environment. Del Buono revealed that, according to the American Lung Association, the Clean Air Act has saved $22 trillion by avoiding hospital admissions, emergency room visits, premature deaths, and other adverse effects of air pollution. In 2012 alone, Del Buono noted, 10 climate-sensitive events analyzed by GeoHealth caused an estimated $10 billion in health-related costs. With most economists agreeing that carbon-pricing is the quickest way to reduce the costs and health risks of carbon pollution, Del Buono concluded, a bipartisan climate solution has been introduced as legislation in Congress as the Energy Innovation and Carbon Dividend Act, HR763.

Next, Liz Kirkwood, Executive Director of FLOW, praised the Great Lakes Restoration Initiative, a federal program that has funded 3,500 restoration projects around the basin, with an economic output of $3.35 for every dollar invested. Kirkwood then outlined a new FLOW initiative, “OUR20 Communities,” in which the relevance of water as a finite resource fundamental to life is recognized in every aspect of community decision-making. Collaborative solutions in the OUR20 model are developed by the communities themselves, and address multiple threats to water while building champions and coalitions involving stakeholders in transportation, food production, energy, recreation, housing, and more.

Kirkwood outlined the legal framework—The Public Trust Doctrine—that underpins the OUR20 Communities model, and described a sustainable “blue economy” in which the environment, the economy, resilience, and social equity are intertwined. She noted that the future is in the hands of millennials, 81% of whom view business success as tied to meaningful social impact. And more businesses, she said, are choosing to be seen as a force for good by emphasizing people and planet as well as profit.

As an example of a nature-based solution to support infrastructure, Kirkwood pointed to the Kids Creek Restoration Project in Traverse City, coordinated by the Watershed Center Grand Traverse Bay. Looking at the potential of adopting the OUR20 Community model in Traverse City, Kirkwood proposed future action plan ideas for the Grand Traverse Bay watershed, including a plastics pollution awareness campaign, septic system stewardship and local ordinances, stormwater funding options, and more.

Kirkwood explained that every community in the Great Lakes can become an OUR20 Community.  The framework, she said, puts more tools in the toolbox — tools that allow for flexible thinking as each community defines how we move forward together with solutions that keep water in the forefront of conversations and action steps. “These are opportunities to engage,” she concluded, on something we all agree about: the vital importance of water in our communities.

FLOW will hold a second community engagement and listening session on December 5 in Grand Rapids. Click here to RSVP.

Diane Dupuis is FLOW’s Development Director.

The Multifaceted Benefits of Regulation for the Economy and Environment

Report author Skip Pruss

By Skip Pruss

This article is excerpted from the third of four policy briefs by former FLOW board chair, and former director of the Michigan Department of Energy, Labor and Economic Growth, Skip Pruss, that make the economic case for government’s role in protecting the environment. The third policy brief, “Resetting Expectations: The Multifaceted Benefits of Regulation for the Economy and Environment,” is available here to read or download.

Pruss’ first policy brief in the series, “Resetting Expectations: Government’s Role in Protecting Human Health and the Environment,” is available here in executive summary and in full.

The second policy brief, “Resetting Expectations: The Value of Natural Systems and Government’s Role in Protecting Water,” is available here to read or download as an executive summary or full report. (FLOW will unveil the last brief in early December.)

FLOW convened an environmental economics public listening session on Nov. 13 in Traverse City and will hold a second one on Dec. 5 in Grand Rapids.


Common to the understanding of economic conservatives is the notion that government regulations interfere with “free markets,” serve as a brake on economic activity, and stifle innovation and competition. The term “regulation” itself suggests to many burdensome “red tape” and unnecessary interference in the market economy.

The evidence proves quite the opposite. Regulations, properly designed and implemented, can be a powerful force fostering innovation in product design, advanced materials, and manufacturing processes. Regulations can reduce manufacturing costs for industry and business, enhance competition, reduce business risks, and expand and create new markets for goods and services.

Environmental regulations, in particular, have created a huge global market for environmental technology, goods, and services. The result is not only marked improvement in the quality and vitality of ecological systems, but health benefits accruing to the public that are valued at trillions of dollars.

Environmental regulations can catalyze needed change in otherwise stagnant areas in business, agriculture, and government. The protection of the Great Lakes freshwater system is a case in point. Billions of dollars have been invested in the management of wastewater and stormwater through the creation of a network of sewers, drains, pipes. New integrated water management systems that include nature-based solutions are proving to be more protective, cost-effective, and sustainable then conventional systems.

Yet investment in superior “green infrastructure” is sorely lagging as both local government and the business community remain fixed on investing in conventional “grey infrastructure.” This paper provides a menu of possible regulatory interventions to address this problem.

Newly formed constituencies focused on policy innovation and educating community leaders on the value and benefits of enlightened water management practices are on the rise. Initiatives like “Our20 Communities,” the Great Lakes Water One Partnership, and Water First all share a vision of aligning community values around a commitment to protecting water. 

Integration of the Public Trust Doctrine into local decision-making could, over time, imbue an ethic of enlightened water stewardship, creating a proactive culture to protect and safeguard commonly held resources.