Under a common conception of free-market capitalism, firms should do whatever they can – legally – to maximize value for shareholders, which often means maximizing profits. As long as firms do not bear the costs of the externalities they create – like air pollution – they will continue to create them. That’s all taken as a given.
What is a little more sinister, yet still completely legal, is where they will create them. Even in the absence of cash costs per ton of pollution, the effective costs to polluters will vary from place to place; those costs show up in the political difficulty of getting permits to build and operate facilities, the degree of environmental regulation, the likelihood of local muckraking journalists writing unpleasant exposes, the ability of the local populace to bring political pressure to bear, and so on. The net effect is that the low-cost places to put pollution tend to be communities with relatively less political power – in this country, communities of minorities and the poor.
A team of researchers from the University of Massachusetts-Amherst and USC recently released a new report, “Justice in the Air,” that quantifies the disparate environmental impact of toxic air pollution on minorities and the poor, by firm and by facility. Michael Ash and Jim Boyce also have a working paper that describes the data sources and the methodology.
For the study, they merged three data sets: the EPA’s RSEI-GM database, which measures toxic emissions by all industrial facilities, tracks them to 1-square-kilometer cells, and weights them by their impact on human health; census data showing the proportion of minorities and the poor by census block (mapped into the RSEI-GM’s individual cells); and a U-Mass database that tracks the corporate owner of each facility included in the RSEI. From there, for each firm, they calculated the proportion of its toxicity-weighted pollution that affected minorities or the poor.
The results are not surprising. For example, 18.1% of the health impact of air pollution falls on African-Americans, while they make up only 11.8% of the population; 15.3% of impact falls on the poor, who make up 12.9% of the population. (An alternative, discussed in the paper, would be to compare the disparate impact figures not against national population percentages, but against the minority percentages in the local metropolitan area, or in the firm’s workforce.) At the extremes, the disparities can be large; for example, for ExxonMobil – the 9th-biggest polluter in the U.S. – 55.1% of its pollution impact is borne by African-Americans, largely because of two Baton Rouge facilities that together generate 60% of its total pollution.
One of the goals of the Justice in the Air project is to raise awareness of these environmental impact disparities to encourage corporations – via socially-conscious investors, or pesky grass-roots organizers – to improve their ways. Another potential avenue is litigation, although in most spheres it is difficult to make a claim based on the equal protection clause (of the Fourteenth Amendment) without evidence of conscious racial discrimination. The report’s authors also recommend new regulations, for example to limit pollution emissions based on the cumulative impact of all facilities on a given community, not simply on a facility-by-facility basis. Ultimately, though, the question comes down to how much our society wants to round off the harsh edges of the free market, which otherwise would shift even more of its negative externalities onto politically less-powerful groups.