Examples Of Specific Legal Issues

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On a social level, the transition of environmental issues from overhead to strategic inevitably implies conflict with existing legal and policy structures. Such structures - including, for example, those dealing with consumer protection, government procurement, antitrust, trade or national security - have generally been created over the years without any explicit consideration of their environmental implications. In effect, the environmental externalities associated with existing legal and policy regimes have been invisible to such institutions (Luhmann [1986] 1989). This is natural enough, given the treatment of such issues as overhead until recently. On the other hand, the broadening awareness of the fundamental linkages among cultural, technological, economic and environmental systems (Allenby and Richards 1994; Ayres and Simonis 1994; Socolow et al. 1994; Graedel and Allenby 1995; GrĂ¼bler 1998; see also Chapter 39) has, at the same time, made the need to integrate environmental dimensions into existing legal systems more apparent. The environmental externalities imposed by existing legal and regulatory structures as they are currently constituted are seen as no longer acceptable. Several examples may clarify this transition, an important one for the industrial ecologist to understand.

Perhaps the example that springs first to mind is the conflict between trade and environment. Unlike many situations, here a core policy conflict is apparent. Trade policy as reflected in international agreements such as the North American Free Trade Agreement (NAFTA) and organizations such as the World Trade Organization (WTO), by and large seeks to facilitate the free transfer of goods and services among nation states. Environmental policy, on the other hand, seeks to control trade in environmentally unacceptable goods and, for some environmentalists, to impose developed-country standards restrictions on the means by which nation states produce goods and services internally. This means that, in at least some cases, real trade values actually are opposed to real environmental interests. For example, some European countries have imposed requirements that beverages be sold in returnable glass containers. The environmental purpose is to reduce the amount of waste produced by plastic or paper containers which are discarded, and to encourage the re-use of containers as opposed to the recycling of the material from which they are made (the degree to which the latter is environmentally preferable, and under what conditions, remains somewhat unclear). On the other hand, because of the weight of glass bottles, and the difficulty and expense of the reverse logistics system by which the bottles must be recovered and re-used, such a requirement clearly favors local (domestic) bottling operations and beverage producers such as brewers.

In many cases such as this one, not just regulations, statutes and treaties, but cultural models and world views are involved, and the synthesis of legal requirements is accordingly complicated by the need for the acculturation of, and mutual acceptance by, previously disparate groups. Thus, for example, a somewhat insular trade community that had heretofore dealt with environmental requirements, if it dealt with them at all, as protectionist trade barriers, is having to come to terms with environmentalists. The latter, in turn, tend to view the global economy, and thus trade, as suspect in itself, but an ideal tool to impose extraterritorial environmental requirements. Using trade in this way is, however, strongly constrained by international law, which significantly limits the ability to impose one country's environmental values on another through trade (Hartwell and Bergkamp 1994). Moreover, both groups are also beginning to understand that free trade, economic development and environmental protection are all valid policy goals, but it may not be possible to optimize all at the same time (Raul and Hagen 1993; Repetto 1995).

Several additional examples may illustrate both the dynamic of conflict leading to policy integration, and specific legal structures of interest to the industrial ecologist. Consider, for example, the structure of consumer protection law that many countries have implemented, which, in part, require that used products, or those containing used parts, be prominently labeled. The general purpose of these laws is to encourage full disclosure of the properties of the product by the vendor, and thus avoid fraud. Such a label, however, significantly reduces the price which can be charged for an article, and can hurt the trademark of the producer or vendor. On the other hand, re-use of products or parts can provide clear environmental benefits, and should thus be encouraged by public policy. Although this conflict has yet to be resolved, there are several obvious possibilities. As a stopgap measure in the short term, the principle could be established that, so long as a product, component or part meets all relevant specifications, it is immaterial whether it is used or not. In the longer term, the issue is one of consumer education: customers have been acculturated to avoid used products, or to value them less, and will need to be educated about the benefits of using used products. This process can be assisted by internalizing the positive externalities of such informed consumer choice - in short, by passing along the savings from using refurbished products and components to the consumer.

Another interesting example is government procurement regulations. This is a significant lever on producer behavior that has not been fully exploited. After all, governments have substantial buying power centralized in one organization, and thus can exercise significant control over a market (more technically, they can internalize costs that were previously externalities). To the extent that government procurement practices can be made environmentally preferable, therefore, they can exercise significant beneficial impacts on the performance of producers and vendors.

An important element of government procurement is the government standards and specifications, especially those associated with military procurement. These standards and specifications control a substantial amount of the design of many products, and the processes by which they are made, and, in many cases, predate any concern with the environment. They thus frequently embed environmentally problematic requirements within the economic system, and do so in a way that is invisible to most people. Thus, for example, the single biggest barrier to the US electronics industry's efforts to stop using CFCs, which were contributing to the breakdown of the stratospheric ozone layer, was military specifications and military standards (known as Milspec and Milstandard). Moreover, because of the tens of thousands of references to such requirements in myriads of procurement contracts and subcontracts, an enormous amount of work had to be done simply to change the welter of legal restrictions on using anything but CFCs (Morehouse 1994).

But perhaps the most interesting example is antitrust. As in the case of trade and environment, there are some fundamental issues regarding the relationship between antitrust and environmental policies. Antitrust seeks to maintain the competitiveness of markets by limiting the market power of firms, which generally means limiting their scope and scale (Nolan and Nolan-Haley 1990). Many environmental initiatives, such as postconsumer product take back, however, seek to do the exact opposite: to expand the scope and scale of the firm so that it is responsible for the environmental impact of its product from material selection through consumer use to take back, and recycling or refurbishment. The one seeks an atomistic market with no central control; the other seeks to extend the control of firms in the interest of internalizing to them the costs of negative environmental externalities (and benefits of positive externalities).

The dichotomy between antitrust and environmental policies is exacerbated by the question of technological evolution. By and large, technological evolution is most rapid in competitive markets with low barriers to the introduction of new technologies. Such market structures are likely to be fostered by traditional antitrust policies. On the other hand, if firms are to implement environmentally preferable practices across the life cycle of their product, they will generally have to develop a means of linking the technologies used at various points in the product life cycle. Thus, for example, the technologies used to disassemble the product after the consumer is through with it need to be considered in the initial design of the product (a process called by designers, reasonably enough, 'Design for Disassembly'). Linking technologies in such a way creates a more complex, coevolved, technological system and reduces the ability to evolve any part of that system rapidly.

Thus, on the one hand, industrial ecology indicates that rapid evolution of environmentally and economically more efficient technologies is critical to moving towards sustain-ability in the short term, but, on the other hand, it encourages the development of systems which reduce the potential for such evolution. The solution to this dilemma - to understand which structure is economically and environmentally better under what conditions - requires an analytical sophistication that does not yet exist. It is an indication of the legal challenges which industrial ecology both raises and must address.

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