Purpose
- Investigates the causes of economic imbalances.
- Investigates causes tending to destroy or impair the free-market system.
- Explores and develops market-based solutions.
Summary
Our overall goal and expected result continues to be the implementation of globally successful market incentive mechanisms such as green taxes and common asset payments to achieve environmental sustainability, economic efficiency, and equity in Vermont. Our primary fourth year goal is to publish and present our finding in conferences, legislative testimony and other forums. We plan to continue research on quantifying common asset and green tax revenue available in Vermont, utilizing a cadre of 10-15 UVM students working on the project.
Description
In 2007 and 2008 we were able to significantly increase our effectiveness by networking with other organizations, Robert Costanza of the Gund Institute, Onthecommons.org, and by hiring graduate assistant Amos Baehr. We have a dynamic working relationship with legislators who chair committees and with legislative council Al Boright, who drafts many bills. We increased outreach to organizations such as Smart Growth Vermont, Town of Essex Junction, Agency of Natural Resources, the Public Service Department and Board, AgRefresh, Vermont Businesses for Social Responsibility (VBSR), etc. We are sought out to present our research and insights ever more frequently.
Issues
Inequality and Privatization of the Commons
Economic inequality continues to expand, as people don’t realize valuable common assets that are diverted to private gain. In Sept. 2007 we hosted a lunch seminar with David Bollier, author of Silent Theft; the private plunder of our common wealth. Attendees included George Crombie, Director of the Agency of Natural Resources, Will Patten, Director of VBSR, Senator Diane Snelling, Senator Hinda Miller, Representative John Anderson, and entrepreneur Jeffrey Frost, of AgRefresh. We discussed S.44, which we helped draft. The Senate bill outlines how collecting rent on common assets could finance government and pay dividends. Members of the legislature asked for asset specific details. David Bollier later led a public discussion at UVM about the internet and its value as an information commons.
In response to legislators we developed a graduate research class to assess the value of common assets for public revenue in Vermont. The class website is at: http://www.uvm.edu/~gflomenh/PA395-CMN-ASSTS/ 20 student research papers were written for compilation into a summary final report in process. Two papers dealt with the legislative effort to extend the Regional Greenhouse Gas Initiative (RGGI) to heating and transportation. Others covered the topics of minerals, forests, ground and surface water, broadcast spectrum, fish and wildlife, land, internet, and wind power.
Gary Flomenhoft and graduate student Amos Baehr gave a presentation at the Basic Income Group conference in Boston March 8, 2008. They described how Senate bill S.44 could create an Alaska style permanent fund paying dividends and increasing equity among Vermonters.
In fall of 2008 faculty member Josh Farley obtained a Hatch grant to hire graduate students and recruited 8-10 undergraduates from an economics of sustainability class to work on the project. This significantly leveraged the resources available for the project. They worked on water and air resources, and began quantifying sustainable scales of depletion, potential revenue from cap and auction systems, and studying how to include these assets in a common asset trust fund. Joshua Wolff was hired as a work-study administrative assistant, and has been a big asset.
Bills Proposed 2007 legislative session:
S.44-ESTABLISHING A VERMONT COMMON ASSETS TRUST
Robert Costanza convinced Senator Hinda Miller to sponsor a bill creating a Vermont Common Assets Trust Fund. Legislative Council Al Boright drafted S.44 using Peter Barnes’s book, Capitalism 3.0 as a template. Emails and several conference calls produced a bill very much in accord with principles we emphasized. Robert Costanza described the bill in the popular press, while Gary Flomenhoft and Peter Barnes published an article in Vermont Commons. Costanza, Barnes, and Elinor Ostrom published a paper promoting an “Earth Atmospheric Trust” on these principles. The spring research course studied the implications of pending ground water, fish and wildlife, forestry and carbon legislation.
Climate Change
S.350 was passed, moving Vermont a small but important step closer to reducing the state’s global warming pollution and generating clean, independent renewable energy supplies. In early versions, Al Boright included a natural resource trust fund similar to S.44, but these portions were removed. An energy efficiency bill, S.209, directs RGGI funds to pay for weatherization. So in Vermont the carbon market mechanism will directly finance efficiency and reduced consumption of fossil fuels
Project manager Gary Flomenhoft took part in two panel discussions during the Focus The Nation week at UVM. On. Feb. 6 he sat on a panel about carbon markets and carbon offsets, and explained all the market-based instruments used in Europe. On Feb. 8 he was part of a policy session discussing local, state, national, and international efforts to address climate change. Gary emphasized market-based instruments used in Germany (tax and rebate, cap and trade, and feed-in tariffs for renewable energy).
Other testimony by Gary Flomenhoft
• Legislative hearing testimony to three committees on Peak Oil and market based incentives to mitigate it
• Appearance on Vermont Public Television on Peak oil
• Quoted in Washington Post May 17, 2008 on energy efficiency and use of price to affect behavior
• 2 presentations at a social responsible investment forum in Montpelier
Groundwater
Drinking water is vital to life, but until recently it has been taken for granted that Vermont has enough clean and pure drinking water. Increasing withdrawals put the supply of water in jeopardy. Senate bill S.304 passed with provisions declaring it a public trust. Amos Baehr testified in support of these provisions because they are consistent with our common assets concept for natural resources. The bill establishes withdrawal limits, reporting and groundwater mapping. The next step would be to determine royalty payments to a common assets trust.
Sprawl
Rural sprawl – the quiet carving up of Vermont’s forests, farms, and rolling hillsides — is an issue that strikes at the core of Vermont’s identity. Our work on green taxes and the forestry round table has focused on land value tax shifting at the municipal level, and carbon taxes at the state level. After discussion with the Director of Programs at Smart Growth Vermont, we recently began work with the town of Essex Junction to assess the impact of shifting property taxes from buildings and improvements to land. We completed a tax shift analysis and gave a presentation to the city planner and City Manager of Essex Junction March 14 and May 12 respectively. We found that positive impacts could be expected on density and development. Jeff Arango, the city planner, is continuing to work with us in pursuit of enabling legislation at the state level to allow revenue neutral property tax shifting as a market mechanism to enhance development and density.
On May 19 we gave an invited presentation at Smart Growth Vermont, on the topic of land tax shifting. This tool, if used in the designated downtown and growth center districts, would spur density and avoid sprawl. Attending were the Executive Director and the Policy Director of Smart Growth Vermont, a non-profit housing developer, and a historical preservation advocate. We presented our tax shift analysis for Burlington and Essex Junction. Smart Growth Vermont shepherded legislation creating “Growth Center and Downtown” designations. They remain keenly interested in working with us to add this policy tool to other mechanisms to enhance development in growth centers.
Other Green Tax bills Proposed
S.0337-EXCLUSION OF ENERGY EFFICIENCY IMPROVEMENTS FROM GRAND LIST TAX VALUE: This bill used tax incentives to promote energy efficiency but was preempted in S.209.
S.0323-STUDYING TAX POLICY
In this bill Senator Hinda Miller closely followed principles outlined in the white paper we submitted to her economic development subcommittee. She sought economic development via “Green budgets” made from green taxes, elimination of perverse subsidies, and common asset payments.
H.0365-CREATION OF A CARBON TAX
Representative David Sharpe asked our help with a proposal to levy taxes on carbon in fossil fuels.
Graduate Assistant Amos Baehr
In 2006 through the Snelling Center for Government we found an intern named Amos Baehr. Thanks to Orchard funds we were able to hire Amos for 3 months in 2008. Amos monitored the Public Service Board hearings on RGGI. This is a cap and trade system for carbon dioxide emitted from power plants. The legislature just passed a bill related to RGGI connecting it to heating fuel. The Public Service Board is discussing the design of the board of trustees that will administer RGGI funds.
Summary
We are demonstrating more effective work in public policy debates, as our ideas are finding their way into legislation. We have a large body of research to publish in more marketable form for the 2009 legislative session. We’re looking for resources to make this and more information readily available on our website and at future organized events.
Purpose
When market prices do not reflect environmental costs, polluting or depleting products are consumed in greater quantities due to under-pricing, and therefore society must pay for these external costs through taxation, regulation, lawsuits, health impacts, and other means. If prices include the true costs of products through green taxes or common asset payments, many of these social costs can be avoided. This provides a market-based solution that can help to address the economic imbalances in consumption that result otherwise.
Under the current system of not including external costs into the price of products, we are left with the alternative of command-and-control regulations. This results in a lack of respect for the market system, since it unfairly rewards polluters and depleters of resources. If prices could more accurately reflected environmental costs by using green taxes and common asset payments, the market system would have much greater respect with regards to the environment.
Scope
There is a raging debate both nationally and internationally on the issue of climate change. Several regions of the United States including New England, have developed their own cap and trade system on CO2 emissions from power plants. The first carbon auctions yielded a carbon permit price of $3.07-3.38 per ton. In Vermont only 2% of carbon emissions come from power plants. Therefore other measures are required to address 98% of the problem.
A threat to the global free-market system is the perception of unfairness due to the wide disparity in the distribution of wealth. Establishing property rights of citizens to common assets such as oil can prevent calls for redistribution schemes on earned income. The Alaska Permanent Fund provides $1000-2000 annual dividends to Alaska residents, and has the lowest disparity in wealth of any US state. A goal of this project is to determine the value of common assets in Vermont and the revenue which they could generate if regulated through market mechanisms.
A threat to the global free-market system is the perception of unfairness due to the wide disparity in the distribution of wealth. Establishing property rights of citizens to common assets such as oil can prevent calls for redistribution schemes on earned income. The Alaska Permanent Fund provides $1000-2000 annual dividends to Alaska residents, and has the lowest disparity in wealth of any US state. A goal of this project is to determine the value of common assets in Vermont.
Information Dissemination
Presentation at conferences, consultation with municipalities, testimony to state legislature, publications.
Project Link http://www.uvm.edu/giee/?Page=research/greentax/index.html
Amount Approved$20,000.00
on 11/27/2007
(Check sent: 12/4/2007)
