As readers of this blog are no doubt aware, the Trump administration has proposed draconian cuts to the Environmental Protection Agency (EPA). Maine’s Department of Environmental Protection (DEP) receives a substantial portion of its operating budget from the federal EPA. Reducing that funding means possible severe cutbacks for DEP staff, who are tasked with safeguarding one of our most important economic assets – our natural environment. I say assets because, in the business world, assets are used to ensure future economic growth. Maine’s assets are its natural resources and environmental quality. Jeopardizing them does not make economic sense.
Any business person or economist worth her salt knows that drawing down wealth for short-term gain can have devastating long-term consequences for your financial future. So it is for the proposed budget cuts. It may seem as though the cuts will save money in the near term, but the risk to the country’s (and the state’s) natural capital could be a long-term disaster. I will focus on just two examples: the proposed cuts to the non-point source reduction program and to the brownfield redevelopment program. (While technically the brownfields program at the federal level is not slated to be cut – in fact, on May 31, Maine communities received $1.8 million to assist with redevelopment, the funding to the states to support their programs is proposed to be eliminated or drastically reduced.)
Let’s begin with the proposed cuts to the non-point source reduction program. Non-point source pollution (like runoff from roads or agricultural fields) can contribute to water quality issues such as algal blooms or red tide. The result can be very real economic harm to some of our most important industries. For example, in October of last year, a harmful algal bloom led to the closure of clamming and mussel harvesting up and down the Maine coast, as well as a costly shellfish recall. The economic costs associated with such a closure and recall are not just the lost income for the fishermen. It also includes the lost income for the processors, and the supermarkets that sell their product, the restaurants that serve the shellfish, the workers in those markets and restaurants, and so on, through the multiplier effect.
Even more than that, the full economic costs of that event include the lost opportunities for investment. Aquaculture, one of Maine’s burgeoning industries, depends on clean water as its most important input. The fact that algal blooms have been increasing in number and severity during the past decade leads to a climate of uncertainty – and uncertainty leads to lower investment. If we want healthy fishing, shellfishing, and aquaculture industries, we have to protect the assets that make investment in such industries possible.
Still more costs of non-point source pollution include beach closures, health costs, and decreased property values. An estimated 12 million people visited Maine’s Beaches in 2015, according to the 2015 Regional Tourism Impact Estimates. Each day that the beaches are closed due to pollution results in lost revenue, not just for the beaches, but for restaurants and local businesses as well.
Furthermore, there are the costs of health care to consider. A recent study in California used the “cost-of-illness” method to determine the economic impact of hospital visits and lost income brought about by diseases related to swimming in polluted water. The study determined that water-borne illnesses brought about by swimming in contaminated water cost the regional economy at least $21 million a year.
There are also the avoided costs of water treatment to consider. Portland Water District, for example, doesn’t need to filter its source (one of the only groundwater sources in the country in this category) because of the stellar quality of its water. Were the lake water to become contaminated though increased runoff, however, Portland Water District may have to invest millions in a new filtration plant.
Finally, non-point source contamination can lead to decreases in property values as well. A 1996 study at the University of Maine estimated that an improvement in visibility in Maine lakes (a proxy for water quality) was associated with an increase in property values.
One further example concerns brownfield redevelopment. This program enables municipalities to receive funding, technical support, and low-interest loans for the cleanup of former industrial sites. Let me be clear – the cleanup of these sites is not solely for environmental purposes (although many of these sites do contain hazardous materials that, if not disposed of properly, could imperil our rivers, stream, land and air). We need that land to be reclaimed for development and investment purposes. The Maine Department of Economic and Community Development, for example, has identified over 20 former industrial sites that have high redevelopment potential, but are still too contaminated to utilize. The recent closure of several paper mills throughout the state highlights this need. In order to attract much needed industry in the most economically challenged parts of the state, previously contaminated land must be cleaned up to where it can be used for other purposes. Yes, we have a lot of available land in Maine – but not so much that we can afford to let our existing assets depreciate.
All this is not to say that reducing pollution and cleaning up brownfields won’t cost money. Of course it will. But it’s money that’s used to safeguard and improve our assets. In my world, that’s called investment. Let’s not sacrifice future economic growth for short term political gain.