Regulation!

It is the responsibility of the US government, at every level, to act in ways that decrease social injustice and ensure equal opportunity for its citizens to enjoy a healthy quality of life, both now and in future generations. As humans, we rely deeply upon the health and balance of our natural environment to maintain such a quality of life. It is therefore the responsibility of the government to regulate environmental matters that pose, or could potentially pose, a threat to this delicate ecological balance. However, the more we learn more about our relationship as humans to our natural environment, the more complex this issue of environmental regulation becomes. Exactly when and how should the government intervene in such matters most effectively?
Article 1, Section 8, Clause 3 of the US Constitution (also known as the Commerce Clause) states that “Congress shall have the Power To…regulate Commerce with foreign Nations, and among the several States.” This means that any environmental issue that has trans-boundary implications should be federally regulated, as opposed to regulation by State and local governments. It follows, then, that federal agencies should have the responsibility of overseeing issues of food safety, specifically in terms of food that is grown in one state and then exported for sale elsewhere. And in fact, this responsibility does lie mainly with two government agencies: The Food and Drug Administration (FDA) and the United States Department of Agriculture (USDA).
The USDA is responsible for regulation of meat, poultry, and egg products, while the FDA is left to oversee the remaining 80 percent of the food supply. But how efficient can this system really be when the USDA employs 7,800 employees to inspect chickens, pigs, and cows that become packaged meats, and the FDA employs only 1,307 to inspect the significantly larger amount of products under their jurisdiction? (http://www.nytimes.com/2009/04/17/business/17leafy.html?ref=agriculture_department). Even on the surface, it is clearly an inefficient and ineffective system.
Look more closely, and you become even more discouraged. With the numerous cases of salmonella outbreaks and other food-borne pathogens, and subsequent recalls of various foods (i.e., eggs, tomatoes), it is obvious that these agencies are failing to adequately fulfill their duties to see to it that the public receives access to a healthy food supply.
Some states—such as California, Arizona, and Florida—have acted independently to improve regulatory practices in order to encourage consumers to continue buying their products by appointing different state government agencies to oversee the regulation process (http://www.nytimes.com/2009/04/17/business/17leafy.html?ref=agriculture_department). Would it be better then for individual states to take over such responsibilities? The answer remains unclear, though I am inclined to answer ‘no.’ Self-regulation always seems to end in benefit solely to the institution in question. The solution, instead, seems to lie in improving federal regulation practices.

Federal regulation of environmental policy can take various forms, but market-based instruments (MBIs)—policies that offer businesses economic incentives to reduce their carbon emissions—seem to be the most viable. Encouraging voluntary action alone is simply not enough. However, voluntary action, as a supplement to federally implemented MBIs, is essential to tackling the current environmental concerns we face today.
But, alas, the solution is not so simple. There are various forms of MBIs the government can choose to implement, such as eco-taxes or tradable permits.
If the government uses eco-taxes as their regulation method of choice, it is likely that companies would simply raise prices to compensate for increased cost of production (eco-taxes), allowing them to push the economic burden to consumers. Eco-taxes also fail to encourage continued reduction in emissions, as companies would not benefit from exceeding the set regulatory standards.
Tradable permits offer a solution to this problem. Here we see real economic incentive for businesses to reduce their emissions, and continue to do so. If a company buys, or is allotted, a permit allowing them a certain amount of emissions, they stand to benefit from reducing their emissions and selling off the remaining allotment to other companies who may find it less cost-effective to reduce theirs. So although each company may not be reducing their environmental impact, the net result is the same.
Still, this is not a fail-proof system. Select groups of consumers, such as regions that still rely on traditional sources of energy (Indiana, for example) will inevitably bear the economic burden when their companies fail to benefit from a reduction of emissions. Instead these companies will purchase additional permits, which adds to the cost of production, and decreases the margin of profit. Inevitably, these consumers (typically the poorer) will face higher price increases than those who are not affected by such externalities.
Surely, there is no easy nor perfect solution. However, I favor tradable permits, because although their economic implications may be somewhat grim, the environmental implications are more desirable than those of eco-taxes. But little good will MBIs do if regulating the use of these permits is lacking. The regulatory agencies need either more money for more employees (which would mean even more tax increases), or a more efficient and transparent system.