The Case Against Deregulation
The Case Against Deregulation: Balancing Economic Gains with Environmental and Health Risks
The Heritage Foundation’s Project 2025 seeks to consolidate executive power and diminish the influence of what it perceives as a “liberal” bureaucracy, with a primary goal of rolling back federal environmental regulations. Proponents argue that deregulation will stimulate economic growth and reduce government overreach.
However, a comprehensive analysis reveals that while deregulation might offer short-term economic benefits, it poses significant risks to long-term environmental sustainability, public health, and economic stability. This essay evaluates these arguments and concludes that the potential harms of environmental deregulation may outweigh its immediate economic advantages.
Since the 1970s, national environmental regulations have significantly increased in response to growing concerns about pollution, health, and climate change. This regulatory expansion was particularly pronounced in the 1970s and 1990s but has fluctuated with changes in administration. For instance, deregulation efforts in the 1980s and late 2010s reduced environmental protections, but recent years have seen a renewed focus on climate change and sustainability, prompting a re-evaluation of these regulations.
Supporters of Project 2025 contend that current environmental regulations impose excessive costs on businesses, stifling growth and leading to job losses. They claim that deregulating would create a more favorable business environment, resulting in economic benefits such as job creation and lower consumer prices. For example, the deregulation of the energy sector under the Energy Policy Act of 1992 increased competition and lowered consumer prices in several states.[1]
Critics, however, argue that the benefits of deregulation are often overstated. The 2008 financial crisis, exacerbated by financial deregulation, serves as a stark reminder of the potential risks. The repeal of key provisions of the Glass-Steagall Act allowed financial institutions to engage in risky behaviors, leading to a crisis that cost billions in bailouts and had lasting economic repercussions.
In the realm of environmental policy, deregulation can lead to significant long-term costs. For example, the 2015 "Final Regulatory Impact Analysis for the Clean Power Plan" by the EPA monetized the value of reduced particulate matter, nitrogen oxides, and sulfur dioxide pollution, estimating that the plan would provide annual social benefits between $34 billion and $54 billion by 2030. The associated compliance costs for private industry and utilities were projected at approximately $5.4 billion, meaning the overall societal benefits would be seven times greater than the costs to industry. In essence, for every dollar spent on the plan, there would be $7 worth of health and environmental benefits.
Nevertheless, guided by a deregulatory mindset and influenced by the fossil fuel industry and electric utilities, the Trump administration hastily revised these estimates. They used the revised figures to justify rolling back regulations, thus reducing compliance costs for private industry at the expense of increasing air pollution and related health risks for the broader population.
Deregulation also poses challenges in addressing climate change, a global issue requiring coordinated action. Critics argue that a fragmented, state-by-state approach may be insufficient. The U.S. withdrawal from the Paris Agreement, for instance, was criticized for weakening global climate efforts, potentially exacerbating climate impacts and increasing future costs.
Specific cases of deregulation illustrate the potential for environmental damage. Estimates suggest that rolling back regulations under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), also known as Superfund, would lower costs for firms in certain industries by reducing compliance and remediation responsibilities. This could enable companies to avoid extensive environmental assessments and cleanup obligations, leading to lower operational expenses and increased investment flexibility. Industries such as chemical manufacturing, mining, and construction could particularly benefit from these changes, potentially saving on cleanup costs and making it easier to develop previously contaminated land.
However, these private benefits would come at the expense of increased public costs associated with adverse environmental and health outcomes, including higher long-term cleanup costs and greater exposure to toxic waste and hazardous substances. Currently, there are over 1,300 sites on the Superfund list requiring cleanup, with total estimated costs ranging from $20 billion to $50 billion.
Additionally, thousands of other contaminated sites not on the list still pose risks to human health and the environment. Many contaminants, such as heavy metals and solvents, are linked to serious health risks, including cancer and chronic illnesses, impacting individuals, communities, and ecosystems. The aggregated monetary value of the health and environmental effects of these contaminants is likely to significantly outweigh short-term business gains. Furthermore, these costs do not adequately account for nonpecuniary impacts, such as irreversible damage to ecosystems, harm to biodiversity, loss of community trust in government, and diminished quality of life due to fears of contamination and reduced access to clean environments.
Federal regulations also provide necessary resources and expertise that states may lack. Programs like the Clean Air Act and Clean Water Act allow states flexibility to meet federal standards while accommodating regional differences. Market-based approaches, such as cap-and-trade systems, demonstrate that federal regulations can promote effective environmental protection while considering regional variations.
Before any significant federal deregulatory action occurs, a thorough and objective evaluation of the proposed rollbacks is essential. Such evaluations should consider several key criteria:
Long-term vs. Short-term Impact: While deregulation may offer immediate economic benefits, the long-term costs related to environmental degradation and public health must also be considered. Increased pollution can lead to higher healthcare costs and damage to natural resources, potentially offsetting short-term economic gains.
Public Health and Safety: Environmental regulations address critical issues like air and water pollution, directly affecting human health. The benefits of deregulation should be weighed against potential increases in health risks and related public costs.
Climate Change Mitigation: Effective policies must address climate change and environmental degradation. Deregulation could undermine resilience, leading to more severe extreme weather events and higher long-term costs.
Scientific Evidence: Extensive research supports the benefits of environmental regulations in improving air and water quality and protecting public health. Evaluating this evidence is critical in determining the validity of arguments for deregulation.
Equity and Justice: Deregulation may disproportionately benefit large corporations while imposing costs on marginalized communities. Assessing these outcomes is essential to understanding the fairness of deregulation policies.
In conclusion, while proponents of Project 2025 argue that rolling back federal environmental regulations will stimulate economic growth and reduce government overreach, substantial evidence indicates that the risks—such as respiratory and cardiovascular diseases, ecological degradation, loss of biodiversity, and increased vulnerability to climate change—outweigh the benefits.
This evidence is supported by research from the EPA, the National Institutes of Health (NIH), the Centers for Disease Control and Prevention (CDC), the Environmental Defense Fund (EDF), the Natural Resources Defense Council (NRDC), and various academic institutions both within the US and abroad.
Given these considerations, maintaining robust federal environmental regulations is crucial for protecting public health, ensuring economic stability, and addressing global environmental challenges. The potential long-term costs and risks of deregulation make a compelling case for preserving and strengthening environmental protections rather than rolling them back.
Bill Bowen
[1] Several colleagues and I recently documented the phenomenon of deregulation-stimulated price reduction in a peer-reviewed research report titled “Consumer price effects of deregulated electric generation markets: The case of Ohio and the midwestern United States,’ published last year in Utilities Policy.