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"Post Hearing Brief of API, NPRA and Individual Companies." Kirkland, Ellis & Rowe, Washington, D.C., September 22, 1977. "What It's Costing Industry to Comply with OSHA," Occupational Hazards, fall, 1974. Zeckhauser, R. "Procedures for Valuing Lives," Public Policy, 23 (1975), 419– INDIVIDUALS INTERVIEWED FOR THIS REPORT Morton Corn, Assistant Secretary of Labor for OSH, Washington, D.C. Aldona DiPietro, economist, Office of the Assistant Secretary for Policy, Evaluation, and Research, Department of Labor, Washington, D.C. Frank Frodyma, Acting Chief, Division of Programing and Systems Analysis, OSHA, Washington, D.C. Harlan Holdefer, member, Field Performance Evaluation Team, OSHA, Washington, D.C. Dan Jacoby, Counsel for the Office of Standards, OSHA, Washington, D.C. Jack Katalinas, Director, Office of Management Data Systems, OSHA, Washington, D.C. Anson Keller, Special Assistant for Regulatory Affairs, OSHA, Washington, D.C. Joe Kirk, Director, Policy Analysis and Integration, OSHA, Washington, D.C. Joe Nolan, member, Field Performance Evaluation Team, OSHA, Washington, D.C. Gilbert Saulter, regional administrator for OSHA, Boston, Mass. Grover Wrenn, Chief, Division of Health Standards Development, OSHA, Washington, D.C. INTRODUCTION AND SUMMARY This paper deals with a limited but important aspect of environmental policy, namely, that part which seeks to manage the quality of society's air and water resources by controlling "pollution." The current and emerging legislation dealing with this part of environmental policy-the Clean Air Act, the Federal Water Pollution Control Act, the Toxic Substances Control Act-all emphasize a regulatory approach, as do most proposals for revision and extension of this legislation. In a sense, then, this paper deals with environmental regulation, even though its principal theme is that environmental policy should rely less on regulation and more on other resource management tools, particularly those which use economic forces to help allocate valuable social resources. The paper identifies an important distinction between environmental problems and the kind of economic problems with which regulation typically deals: environmental regulation is not merely a matter of helping an existing market work somewhat better, but is a matter of using administrative mechanisms to allocate a valuable resource in the complete absence of cooperating market forces. Because of this, it is not possible to argue logically that environmental problems could be "left to the market," as one might choose to leave transportation or communications problems to the market. But this distinction also suggests that relying on pure regulatory methods will be unusually difficult, because there is no market which can be corrected or guided-regulation must try to perform all the economic functions which are usually, and for good reason, left to market forces. Thus, wise policy should consider ways in which market or incentive systems could be created to help manage these complex and valuable resources. The two basic forms environmental markets could take, and some of the many possible combinations and variations, are described. Systems of discharge prices would impose monetary prices on discharges, perhaps varying the price level with time and location when there are clear environmental reasons for doing so, but not making distinctions among discharges on the basis of individual internal technical or economic factors. Systems of marketable discharge rights would define an acceptable total level of discharges in a region, allocate this total among dischargers in some way-perhaps by an auction-and then let the defined discharge rights be traded in a regulated market under certain specified conditions. Implementing some combination of these market devices to help in a particular environmental management situation would encounter many of the same difficulties encountered by regulatory systems-the need to estimate discharges, the need to make judgments about how fast and to what extent environmental improvement should be pursued, the need to decide whether some discharges should be treated as though they are more harmful than others. But by reducing the need for pub |