The Hudson River had always been the cultural icon of New York, an essential feature of the city’s natural landscape, and a distinguishing element of its history. Unfortunately, the Industrial Revolution and the subsequent advancement of the local and national economy have turned the River into an object of environmental pollution.
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Since the 17th century, the Hudson River had served as a transportation route for the European settlers who came to America in their search for a better life (Simon, 2012). Today, it is severely polluted with polychlorinated biphenyls and other chemicals, having horrific impacts on the quality of environmental functioning. From the economic perspective, the Hudson River is an important public good, whereas pollution itself is a negative externality.
The absence of market incentives makes organizations less motivated to improve the situation. Numerous attempts have been made to solve the problem of Hudson River pollution, including criminal charges and command-and-control mechanisms, but market-based incentives and civil action remain the most promising ways to deal with the issue.
The history of Hudson River pollution dates back into decades. Since the beginning of the 20th century, polychlorinated biphenyls had been actively used in industrial manufacturing. They are well-known for their cancer-causing capacity and are often linked to developmental and reproductive health problems (Natural Resources Defense Council, 2013).
Between 1947 and 1977, General Electric, one of the leaders in the American energy market, dumped more than 1.3 million pounds of polychlorinated biphenyls into the Hudson River (NRDC, 2013). In 1977, the use of polychlorinated biphenyls in industrial processes was legally banned (NRDC, 2013). However, even today, these dangerous substances keep leaking into the Hudson River, making its water dangerous for consumption and living.
Certainly, General Electric cannot be solely responsible for the immense pollution of the Hudson River and its far-reaching consequences for the local population. In 1987, Elizabeth Kolbert of the New York Times published a brief article stating that runoff from roads and farms could greatly contribute to the Hudson River contamination.
While General Electric assumes responsibility for point source pollution, non-point source pollution remains a serious issue with the Hudson River. However, the real origins of pollution in the Hudson River are the presence of regulatory gaps, which make such pollution possible and easy (Kolbert, 1987).
Non-point source pollution is a matter of serious concern. It is diffuse to the extent that makes the task of implementing effective government regulations virtually unachievable. In economic terms, the costs of cleanup for the Hudson River are likely to reach $500 million, of which almost $400 million will fall on taxpayers (NRDC, 2013). Still, the local and federal community does have a chance to improve the situation.
According to Goodstein (2011), Hudson River pollution is a negative externality, since its costs are borne not by the producer but mostly by the consumer of the finished product. Simply stated, the dangerous pollutants dumped by GE into the Hudson River damage the health and wellbeing of those, who use its waters rather than those who are responsible for pollution.
In the market systems that keep natural inputs in goods and services underpriced, pollution is the most probable result of industrial production (Goodstein, 2011). Like many other environmental resources, the Hudson River is a public good, which is not owned by anyone (Goodstein, 2011).
In the absence of effective governmental mechanisms, industrial manufacturers are willing to use its waters, as well as other environmental resources, without any regard to the external costs of such use (Goodstein, 2011). For years, General Electric failed to compensate New York residents for Hudson River pollution.
In economic terms, the company failed to internalize the water pollution externality (Goodstein, 2011). Not surprisingly, the Hudson River was underpriced, and the company found it more economical and feasible to use its waters as a waste machine.
Again, from an economic standpoint, federal and state governments can use a variety of market-based incentives, to stop pollution. It is because of the absence of such incentives that the pollution of the Hudson River became possible.
Pollution-related charges, fees, and taxes top the list of the most effective environmental incentives, making organizations pay for the pollution they cause as a result of their primary activities (National Center for Environmental Economics, 2001).
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The primary benefits of such incentives are in the number of revenues they can potentially generate, although the rates set by government agencies are often too low to have any tangible impacts on the environment (NCEE, 2001). Here, deposit-refund systems could also be used to alleviate the problem of environmental pollution.
These incentives are much more motivating for consumers rather than manufacturers, as they are used to control the disposal of dangerous elements and substances in the private sector (NCEE, 2001). By contrast, marketable permits represent an essential element of the economic struggle against environmental pollution. This type of economic incentives entails the issue of paid allowances on emissions (NCEE, 2001).
They have become particularly popular in the United States, although their transaction costs have always been high (NCEE, 2001). Allowances are likely to impede organizations’ technological progress for the sake of better efficiency and less environmental pollution. Subsidies, liabilities, and even information disclosure are intended to work for the benefit of society and meet its economic interests (NCEE, 2001).
Numerous economic and legal attempts have been made to solve the problem of Hudson River pollution. Much progress has been achieved in the society’s striving to clean up its waters, but it is obvious that the government is still at the very beginning of its way to an ideal environment.
One of the first elements in the economic strategy against the Hudson River pollution was the passage of the Clean Water Act in 1972. According to Andreen (2004), “the Act utilized command-and-control regulatory techniques to implement a completely new, uniform system of technology-based effluent limitations” (p. 537).
All limitations adopted through the Clean Water Act were enforced as part of the federal permit program, coupled with the technology-based limits set on water pollution (Andreen, 2004). In many senses, the Clean Water Act was an innovative approach to water pollution, comprising the elements of environmental quality standards and technology-based limits (Andreen, 2004).
The document was severely criticized for its reliance on the command-and-control approaches to regulating polluting discharges – approaches that are often regarded as too expensive, too old-fashioned, and too ineffective (Andreen, 2004). It was also criticized for the unlimited discretion granted to the federal government in the matters related to water pollution (Andreen, 2004).
The positive effects the Clean Water Act had on the quality of water in the Hudson River can hardly be ignored. Through more than 40 years after passing the Clean Water Act, the Hudson River has turned into a relatively clean waterway suitable for recreation (Siart, 2012).
The uniqueness of the command-and-control mechanism set by the Clean Water Act is in that it allows citizens to enforce the standards for drinkable and fishable water, in case the government failed to accomplish its mission. Consequently, the public has become a watchdog monitoring the pace and progress of water quality improvements in the Hudson River (Siart, 2012).
The principles of command-and-control and clean technology approaches came together in the directive issued to General Electric in 2002. The purpose of the directive was to remove polychlorinated biphenyls from the Hudson River. Simon (2002) writes that two hundred miles of the river were granted the Superfund status in 1984.
Since then, any pollution damaging water resources within the borders of the Superfund site would have a “polluter pays” status (Simon, 2002). It is not until 2002 that a directive to make GE remove polychlorinated biphenyls from the Hudson River was issued and signed (Simon, 2012).
Between 2002 and 2009, GE managed to remove 283,000 cubic yards of the dangerous substances and polluted sediments from the Upper Hudson River (Simon, 2012). In 2011, the second phase of the project began, and it would enable GE to remove the rest of the contaminated sediments from the Hudson River, NY.
For years, market incentives had been a dream rather than a reality in struggling against water pollution in the Hudson River. Even today, any information on market-based incentives provided to alleviate the burden of water pollution in the Hudson River is absent. Simultaneously, civil action remains a viable tool of environmental protection in the Hudson River area, leading to considerable improvements in the field.
Riverkeeper is one of the most popular and active players in the context of water pollution and water quality protection in New York. The civil organization plays a fundamental role in improving the quality of water resources in the Hudson River. Riverkeeper’s mission is to protect the recreational, environmental, and economic integrity of the Hudson River.
It is the main law enforcer in everything related to the environmental protection of the Hudson River (Riverkeeper, 2013). Some of the chief civil actions and activities organized by Riverkeeper include but are not limited to the protection of habitat and wetlands, the creation of the Clean Water National Trust Fund, the provision of green funding, as well as providing information and resources needed to ensure smart energy use in New York.
It should be noted that in the absence of market-based incentives for environmental protection of the Hudson River, law enforcement and litigation becomes a matter of economic concern. Law enforcement remains the primary instrument of achieving a better quality of water resources in the Hudson River.
These attempts are closely related to civil action mechanisms, as civil organizations assume primary responsibility for monitoring individual and organizational compliance with the provisions of environmental protection laws (Riverkeeper, 2013).
Surprisingly, large polluters like General Electric and Exxon Mobil faced few, if any, criminal charges about Hudson River pollution. In the meantime, other organizations, including Orange County Junk Yard, faced civil and criminal charges for polluting the Hudson River (Schneiderman, 1999).
In 1999, the Environmental Protection Agency filed a state lawsuit seeking cleanup of the contaminated groundwater and soils, to prevent further contamination of the Hudson River by Orange County Junk Yard (Schneiderman, 1999).
Also, criminal charges were made on the basis that the organization had violated state environmental laws (Schneiderman, 1999). The outcomes of the case are unknown, but it seems that most of what has been done to tackle the problem of Hudson River pollution is likely to become irrelevant and ineffective in the nearest future.
Legal pressures and command-and-control mechanisms are not the best approaches to managing and reducing the scope of water pollution in the Hudson River. Since the 1960s, both economists and environmentalists have promoted the importance of incentive-based approaches to environmental protection as compared with command-and-control regulations (Goodstein, 2011).
The regulation presents a series of dilemmas, making it difficult for the society to keep up with the pace of economic growth and raising the costs of environmental control (Goodstein, 2011). The fact that regulations are information-intensive and, for this reason, are vulnerable to political influences, should not be disregarded (Goodstein, 2011).
In this situation, it is at least surprising that no explicit system of market incentives to reduce and eliminate pollution risks in the Hudson River has been proposed so far. Also, the emphasis placed on the use of clean technologies by large enterprises in the Hudson River area will hardly help to improve the quality of water.
Goodstein (2011) suggests that clean technologies do not provide any profit advantage to the organizations that must comply with these principles. Private firms, be they large or small, have little motivation to adopt clean technologies for the sake of technologies, as they are not willing to spend their scarce financial resources on them.
At the same time, they do not wish to change their operational processes and make consumers adopt new habits and principles in using finished products (Goodstein, 2011).
Despite the considerable progress made in terms of cleaning the Hudson River from polychlorinated biphenyls, it is high time for the state authorities to reconsider its approaches to the problem and develop a comprehensive incentive-based policy that will motivate individuals and organizations to improve the quality of the environmental resources in the Hudson River.
In conclusion, Hudson River pollution remains a matter of hot public and political concerns. No less problematic are the economic aspects of the problem. On the one hand, the costs of Hudson River cleanup are likely to reach $500 million, of which at least $400 million will fall on taxpayers. On the other hand, only economic incentives can promise to motivate organizations to reduce the scope of pollutants dumped into the Hudson River.
Numerous attempts have been made to remove dangerous substances from the Hudson River and improve the quality of its waters. The Clean Water Act as a command-and-control mechanism, clean technology standards, and civil action were aimed to eliminate the problem of Hudson River pollution from the public agenda.
Despite the tangible progress made in cleaning the Hudson River from polychlorinated biphenyls, it is high time for the state authorities to adopt a system of market incentives that will motivate organizations to treat available water resources with great care and responsibility towards the local community.
Andreen, W. L. (2004). Water quality today – Has the Clean Water Act been a success? Alabama Law Review, 55, 537-593.
Goodstein, E. S. (2011). Economics and the environment. Hoboken, NJ: John Wiley & Sons.
Kolbert, E. (1987). Runoff cited in pollution of the Hudson. The New York Times. Web.
NCEE. (2001). The United States experience with economic incentives for protecting the environment. National Center for Environmental Economics. Web.
NRDC. (2013). Historic Hudson River cleanup to begin after years of delay, but will GE finish the job? Natural Resources Defense Council. Web.
Riverkeeper. (2013). Enforcement and litigation. Riverkeeper. Web.
Schneiderman, E. T. (1999). State sues Orange County Junk Yard for polluting Hudson River. Attorney General Eric T. Schneiderman. Web.
Siart, J. (2012). Hudson River shines 40 years after Clean Water Act. Rivertowns. Web.
Simon, M. (2012). Remediating the Hudson River. Earth Times. Web.