Introduction

The first generation of U.S. environmental laws and regulations enacted in the late 1960s and early 1970s were state-of-the-art public policies at that time. They cleaned up our air and water, and were rightly emulated in much of the developed world. They also gave rise to a new sector of the economy: By 1974, shortly after President Nixon signed landmark Clean Air and Clean Water laws, 50,000 jobs had been created in the construction of water treatment plants and other infrastructure necessary to meet the new environmental standards. Another 75,000 jobs were created in new industries that focused on activities such as cleaning up contaminated industrial sites and developing devices such as "scrubbers" to filter smokestack pollution. But today, those first-generation environmental laws and regulations are increasingly arcane -- and our adherence to them is making us a laggard in the growing global market for environmental technologies.

Our once-pioneering laws and policies made us an early leader in the field. But we now find ourselves being beaten on a wide range of environmental technologies, from the wind turbines and photovoltaic panels used to convert wind and sunlight into electricity, to the hybrid engines that power automobiles on a combination of gasoline and electricity. Indeed, the United States is the only developed country that has managed to reduce the average fuel efficiency of its automobile fleet for over a decade -- an incredible technological feat, but not one that deserves emulation.

We are falling behind because many other countries have enacted less prescriptive, more modern environmental policies that help drive continued technological innovation. For instance, the Netherlands, a leader in the environmental economy, has replaced prescriptive standards with broad national goals and government-industry covenants that allow firms, in consultation with regulators and the public, to develop the most effective and efficient strategies for meeting environmental protection objectives. Such policies hold the key to the future in the global environmental technology market. The Progressive Policy Institute refers to such modern policy approaches as "Second Generation" strategies, to distinguish them from the first generation of environmental laws and regulations, which tended to follow a more rigid command-and-control framework.

A bipartisan consensus has been emerging in the United States for more than a decade -- going back to the administration of President George H.W. Bush -- about the need to update our vital but increasingly antiquated environmental laws and regulations with more market-based, information-driven, and community-friendly ways to protect the environment. But the current Bush administration's regulatory rollbacks, softened enforcement strategies, and pursuit of domestic oil and coal rather than clean alternatives have caused the environmental modernization movement to lose momentum.