In their backyard: environmental hazards and inequitable market outcomes in disadvantaged communities

Wednesday, May 6, 2020 - 3:33pm

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Illustration by Maggie Wiebe

Many people are unfamiliar with the term ‘environmental justice.’ As a discipline that addresses the inequitable burden low-income and minority communities face regarding environmental issues, environmental justice encapsulates, but is not limited to, the disproportionate siting of disadvantaged communities near heavy industry, water affordability and energy access. As environmental issues like climate change become more prominent, it is important that the public, particularly policymakers, is familiar with this ongoing crisis.

The Detroit Incinerator

Since its construction in 1986, Detroit’s solid waste incinerator has loomed in its skyline cradled between the arms of I-94 and I-75. Prior to its closure, around 1 million tons of solid waste entered the incinerator each year, where it was then burnt to produce steam and generate electricity. Late Detroit mayor Coleman Young championed it as a way to reduce the waste sent to landfills, as well as produce an alternative fuel source in response to a global energy crisis.

However, the incinerator consistently ran into problems releasing foul odor and local air pollution into surrounding communities. Situated in Midtown Detroit, the incinerator towers over Forest Park, a neighborhood that is ninety-five percent black and has a median annual household income of $13,900. The playground of Golightly Elementary, the local primary school, sits in the incinerator’s shadows. During recess, students were perpetually exposed to the stench and pollution that emanated from the incinerator’s tower.

Between 2013 and 2018, the Michigan Department of Environmental Quality (MDEQ) cited Detroit Renewable Energy, the incinerator’s owner, over 700 times for breaching air pollution standards. When it combusted waste, the incinerator released massive volumes of co-pollutants like carbon monoxide, sulfur dioxide, and particulate matter—hazardous compounds known to produce severe airway damage, including asthma and respiratory infections. In addition, the incinerator produced dioxins and furans, toxic substances that impair the function of immune, nervous and reproductive systems.

For the people of Forest Park and its surrounding communities, the presence of the incinerator in their backyard left them at great risk for health complications. In addition to receiving solid waste from city neighborhoods, the incinerator also imported waste from surrounding white, affluent suburban neighborhoods in Oakland County and Grosse Pointe. Left to deal with pollution that stemmed from rich outside communities, Forest Park became a hotspot for environmental injustice.

The incinerator congested Forest Park with odor and pollution for decades. But in 2017, frustrated by government inaction, the public opposition reached its breaking point when the East Michigan Environmental Action Council (EMEAC) began its Breathe Free Detroit campaign to advocate for the incinerator’s closure. After gathering a petition with nearly 15,000 signatures, EMEAC and other grassroots activist groups went to current Detroit mayor Mike Duggan’s office. With pressure growing, Detroit Renewable soon gave in. In March of 2019, their CEO, Todd Grezch, announced the incinerator’s shutdown, effective immediately.

The Detroit Renewable incinerator’s closure marked a substantial victory for Forest Park and its residents. But the disproportionate siting of hazardous facilities in disadvantaged communities continues to persist throughout Detroit and the entire United States. 

The Next Town Over

River Rouge, Michigan is a suburb south of downtown Detroit that has a median annual household income of $27,000 and is 56 percent black or some other minority status. River Rouge also contains fifty-two heavy industry sites within a three-mile radius, including two coal-fired power plants, a Marathon Oil refinery, steel and cement plants, and a wastewater treatment plant. With a constant cloak of smog, sparking gas flares and a skyline peppered with smoke stacks, it is rare to see blue skies on a sunny day in Detroit communities like River Rouge. Additionally, the heavy industry’s negative impact on the health of their residents is extremely evident. The town’s sites are constantly out of compliance with environmental regulations. Twenty-two of the sites are members of the Environmental Protection Agency (EPA)’s Toxic Release Inventory, a public list of areas hosting carcinogenic and hazardous chemicals. The sites are monitored to guide regulatory and corporate responses for remediation.

More than fifteen percent of Detroit residents are afflicted with some degree of asthma, a rate twenty-nine percent higher than the rest of Michigan. And the crisis is even more severe for black Detroit residents than their white counterparts. The rate of black Detroit resident hospitalization for asthma-related health issues is 150 percent higher than white residents. With an average annual household income of $24,000, black Detroit residents also face significant economic hurdles in receiving the proper healthcare and prescriptions to treat their asthma. On a national level, over seventy percent of black Americans live in regions where air pollution levels exceed air quality standards set by the EPA, 30 percent higher than the national average.

Disadvantaged communities and industrial facilities have often co-located in parts of cities with low property value as a way to minimize costs. In the mid-to-late twentieth century, many low-income groups in Detroit lived in Oakwood, an affordable neighborhood near the industrial plants that employed them.

However, socioeconomic constraints have also often prevented these communities from resisting construction efforts or leaving their homes altogether when firms build industrial facilities in their area. Wealthy, historically white communities have the financial capacity to fight legal suits or move away if a hazardous facility is being zoned near their home. On the contrary, studies have found that disadvantaged communities, who have a lower financial capacity to pay for environmental quality, are less likely to move out or resist construction. 

In some cases, their inability to leave has been the product of corrupt, racist housing policies and redlining. In 1947, of 540,000 housing units available, the Detroit Housing Commission (DHC) only permitted blacks to live in 47,000 units. And where these black communities were redlined, hazardous facilities were often co-located. A study conducted by Chad Smith, a professor of sociology at Texas State University, found that Superfund sites—heavily-polluted locations monitored by the EPA—are, “significantly more likely to be in and near” black neighborhoods isolated by redlining.

Rising awareness of such injustice in places like Detroit drove the rise of the environmental justice movement in the late twentieth century. Unfortunately, environmental inequity and racism still exists today— and it needs attention.

The Disproportionate Impact of Pollution

When Professor Stam Stolper received his bachelor’s degree in biomedical engineering from Brown in 2006, he had never heard of the term ‘environmental justice.’ He gradually became familiar with it when pursuing a Ph.D. in public policy at Harvard four years later. Even then, despite focusing his studies on environmental economics and policy, justice was not the program's curricular focus.

“The underlying distribution of environmental quality and its fairness are not at the forefront of environmental economics, unfortunately,” Stolper said. “And economics in general has this reputation, that is somewhat deserved, of not really caring enough about justice.”

Stolper is currently an assistant professor of environmental economics at the University of Michigan’s School for Environment and Sustainability (SEAS), a graduate school that has one of the top environmental justice programs in the country. Unlike before, justice plays a significant role in his everyday work at SEAS. And as a Detroit resident, Stolper has seen numerous cases of disadvantaged groups affected by environmental issues firsthand.

“(There’s) nothing like moving to Detroit, and other rust belts, less wealthy, or less white cities, to see that many environmental problems that you thought were confined to the developing world are actually in your backyard,” Stolper said.

In his undergraduate course “Environmental Economics and Policy,” Professor Stolper teaches fundamental economics concepts through the lens of environmental issues. Students learn about how popular market-based environmental policies, such as cap-and-trade and carbon offsets, work in the free market to mitigate hazards like greenhouse gas (GHG) emissions. However, Professor Stolper also tries to emphasize that although these policies appear to have an aggregate positive impact, they often fail to address concerns regarding equity and the distribution of emissions. While they do give firms the autonomy to reduce their emissions in the most cost-effective manner, they do not regulate where emissions are being reduced.

This dilemma is most evident with cap-and-trade programs, which impose a limit on the quantity of emissions by distributing emissions permits to polluting firms. A permit allows each firm to release one ton of emissions. In order to emit any more than their awarded amount, a firm must purchase a permit from another firm. On the market, the trading process is based on firms’ respective marginal abatement costs, which is the cost of reducing an additional ton of emissions. 

The logic behind trading permits based on marginal abatement costs is easiest to observe in a two-firm scenario. For example, if it is very cheap for Firm A to invest in technology that reduces its emissions, it can sell its permit to Firm B, for whom it is much more costly to invest in the same technology. In doing so, Firm A abates a greater quantity of emissions than it needs to. However, it makes money by selling its permit to Firm B. For Firm B, rather than invest in expensive abatement technology, it is more cost-effective to simply buy Firm A’s permit. Then, Firm B won’t have to actually reduce its emissions. 

By putting a fixed cap on emissions, cap-and-trade proposals may facially be an effective solution because they guarantee net emissions reductions. However, in terms of distributional equity and environmental justice, it raises questions. In the two-firm scenario, while emissions will go down in the region where Firm A operates, they may stagnate, or even go up, where Firm B operates — a phenomenon known as emissions leakages.

“While there are aggregate cost benefits in principle for market-based policy (like cap-and-trade), there’s maybe greater risk of distributional inequity,” Stolper explained. “It is possible for market-based policy to lead to a better distributional outcome. (But) it’s just also possible for it to lead to a worse one.”

The disproportionate impacts that can result from this solution are seen in the outcome of California’s cap-and-trade program. In 2013, the state initiated a cap-and-trade program to reduce GHG emissions, specifically carbon dioxide, methane, and nitrous oxide levels. While the program achieved net GHG emissions reductions, this was primarily due to reductions in the state’s importation of carbon-intensive electricity from nearby states. 

On a local level, the impact was the opposite: fifty-two percent of observed facilities had higher levels of GHG emissions following the program’s enactment. Additionally, at facilities where emissions increases were greatest, nearby residents were overwhelmingly labelled as “disadvantaged and [having] higher proportions of residents of color, higher rates of poverty, higher rates of low educational attainment, and higher proportions of linguistically isolated households.” One could consider California’s cap-and-trade program a success, in that it produced net emissions reductions. However, the positive flux in local air pollution amongst disadvantaged communities diminishes its positive impact.

This raises legitimate questions over cap-and-trade’s ability to produce an equitable outcome. If Michigan were to implement a cap-and-trade program similar to California’s, what would happen to emissions in places like River Rouge? Net emissions in Michigan may fall as the state imports less carbon-intensive electricity, but as evidence suggests, pollution would likely localize in these areas due to their ties to heavy industry.

The Economists’ Dilemma

So, with several cap-and-trade programs up-and-running in U.S. states and abroad in China and Europe, what can be done to address the environmental justice concerns associated with the policy?

In the Michigan State Congress, State Senator Stephanie Chang has introduced a bill that will mitigate the negative impacts of local air pollution in Michigan. MI Senate Bill 60 creates the Air Quality Enforcement and Mitigation (AQEM) fund in the Michigan Department of Treasury. The fund functions by collecting money from firms who do not comply with air quality standards and redistributes it to communities adversely affected by the firms’ pollution.

Looking at the issue on a more holistic level, economists like Stolper have explored altering the structure of cap-and-trade programs to address distributional impacts.

“There’s a lot of room for hybrid policies,” Stolper said. “When there ends up being disproportionate impacts of any type, it is important to have programs to shield people and mitigate inequity.”

Alice Kaswan, a Professor at the University of San Francisco School of Law, has introduced the concept of combining regulatory requirements with cap-and-trade programs. In order to ensure firms in all regions abate to a certain extent, Kaswan proposes that each firm must reduce its emissions to a baseline level before a cap-and-trade system is installed. While Kaswan’s plan would be particularly costly for firms with high marginal abatement costs, it ensures that all firms change their behavior—even the biggest, most stubborn polluters.

Both Kaswan and Stolper support distributing permits on a case-by-case basis, considering the firms’ behavior and the environmental and public health of the area they operate in. In order to change the behavior of firms in severely polluted areas, Kaswan and Stolper believe regulators should place more stringent caps on heavy polluters and require them to pay more to purchase permits from others.

In her work on the matter, Kaswan writes, “Holistically integrating principles of distributive and participatory justice into the design of regulatory policies will better serve an ethical commitment to equality and enhance overall social welfare.”

Justice needs to be a part of future environmental action in order to protect the well-being of all types of people. With climate change encroaching upon society, governments around the world will have to face reality and devise environmental policy to mitigate its impacts. When crafting solutions, it is important that they consider communities, like Forest Park and River Rouge, who have hosted environmental burdens in their backyard for decades.

While no easy task, the acknowledgement of distributional impacts and the realm of environmental justice is the key to creating an equitable, sustainable future.

Andrew Cox is a rising junior in the Ford School of Public Policy studying Public Policy with a focus area in energy and environmental policy. He is a Daily Sports Writer and Assistant Sports Editor and can be reached at drewcox@umich.edu