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.

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