Tuesday, June 1, 2010

Insurance Companies To Save The Environment?

The main complaint against environmental regulations is that they cost money. For most regulations, this is simply not true. Environmental regulations generally try to prevent one business (or individual) from shifting costs to other businesses or individuals.

Let's look, for example, at a regulation that requires toxic waste to be treated and properly disposed of, rather than dumped into a river. It is true that treatment and proper disposal will cost more for the producer of the toxic waste, but just dumping it in the river will raise costs for others.

People who eat fish from the river, or drink the water from the river, will have adverse health effects, causing them to incur increased health care costs, costing their health insurer more money, and perhaps costing their employers productivity. Water companies using the water will incur increased treatment costs. Commercial fishermen will get lower quality catches, and once the pollution problem becomes known, will have trouble selling their fish. Recreational uses of the river, such as kayaking and water skiing, will decline, harming businesses that cater to those uses.

In this scenario, the total cost of the environmental regulation is clearly less than the total cost of no regulation. It only costs the polluter more.

A related argument is that if California imposes environmental regulations, competitors in other places, such as Nevada or China, will gain an advantage, because those places allow companies to shift their environmental costs onto others.

First, there are obvious environmental and logical problems with this argument, which resembles the child's complaint, "But Andrew's mom lets him play with matches and gasoline." Second, those other places should be considered to be engaged in unfair competition. In essence, they are subsidizing polluting industries by shifting the costs onto the more general populace, like a hidden tax.

We should not tolerate such practices that not only disadvantage clean businesses, but that also degrade the environment. California should require that all products sold here, regardless of where they are made, are manufactured using process that meet the same environmental standards. This would not only protect the environment worldwide, but would also provide an incentive for businesses to locate here.

So why would insurance companies save the environment? It seems like the health insurance industry has a lot at stake here. Our failure to clean up vehicle and industrial emissions results in increased rates of asthma and lung cancer. Our extensive use of pesticides results in more cancers, plus skin, eye, and nervous system problems.

These all cost the health insurance companies money, so they should be supporting stringent environmental protection laws and regulations. Maybe their shareholders should be asking them why they are not doing more to protect the environment, our health, and their bottom line.

Or maybe we just need to protect our environment by ourselves, and for ourselves, our communities, and our children.