The Greening of Industrial Ecosystems. 1994.

Pp. 108-122. Washington, DC:

National Academy Press.

International Environmental Law and Industrial Ecology

ROBERT F. HOUSMAN

If sustainable development is ever to be achieved, the course of industrial development must be charted to serve not only concerns for economic competitiveness, but also concerns for an ecologically sustainable future. If industrial ecology is to provide a common ground between the industrial and environmental agendas, it is important to consider the impact of international environmental law on industrial ecosystems and what steps might be taken to effect needed system-wide changes.

Briefly summarized, industrial ecology represents a systemwide approach to analyzing industrial processes. With this approach it is possible to evaluate how environmental concerns and costs may be integrated into industrial and economic decision making, and to maximize the beneficial use of resources while minimizing disruptions to the industrial ecosystem.

In some cases, the integration of environmental factors into business decisions has resulted in a direct cost-savings to the manufacturer, creating an economic incentive sufficient to encourage the adoption of these principles. However, in the majority of cases, such efforts will not be cost-effective either in the short term, because of start-up costs, or in the long term, because market failures may prevent true environmental costs from being included in the cost-benefit analysis. In this context, law can play a critical role, since it embodies a host of noneconomic social value judgments (e.g., saving a species is good). Laws, therefore, can be crafted to correct market failures and provide incentives for undertaking activities that are cost-effective only over the long term.

At the national level, particularly in the United States and other industrialized countries, domestic environmental laws are slowly shifting to providing incen-



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The Greening of Industrial Ecosystems The Greening of Industrial Ecosystems. 1994. Pp. 108-122. Washington, DC: National Academy Press. International Environmental Law and Industrial Ecology ROBERT F. HOUSMAN If sustainable development is ever to be achieved, the course of industrial development must be charted to serve not only concerns for economic competitiveness, but also concerns for an ecologically sustainable future. If industrial ecology is to provide a common ground between the industrial and environmental agendas, it is important to consider the impact of international environmental law on industrial ecosystems and what steps might be taken to effect needed system-wide changes. Briefly summarized, industrial ecology represents a systemwide approach to analyzing industrial processes. With this approach it is possible to evaluate how environmental concerns and costs may be integrated into industrial and economic decision making, and to maximize the beneficial use of resources while minimizing disruptions to the industrial ecosystem. In some cases, the integration of environmental factors into business decisions has resulted in a direct cost-savings to the manufacturer, creating an economic incentive sufficient to encourage the adoption of these principles. However, in the majority of cases, such efforts will not be cost-effective either in the short term, because of start-up costs, or in the long term, because market failures may prevent true environmental costs from being included in the cost-benefit analysis. In this context, law can play a critical role, since it embodies a host of noneconomic social value judgments (e.g., saving a species is good). Laws, therefore, can be crafted to correct market failures and provide incentives for undertaking activities that are cost-effective only over the long term. At the national level, particularly in the United States and other industrialized countries, domestic environmental laws are slowly shifting to providing incen-

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The Greening of Industrial Ecosystems tives to protect the environment. For example, the United States in 1990 adopted the Pollution Prevention Act (42 U.S.C. °13101 (a)(3)), which explicitly recognizes that There are significant opportunities for industry to reduce or prevent pollution at the source through cost-effective changes in production, operation, and raw materials use. Such changes offer industry substantial savings in reduced raw material, pollution control, and liability costs as well as help protect the environment and reduce risks to worker health and safety. The act also recognizes that current environmental laws often impede cleaner production and consumption practices. To remedy this, the act declares a national policy to eliminate these disincentives and, to the greatest extent feasible, provide incentives for the wider acceptance of pollution prevention techniques for environmental protection. Similarly, the new German auto initiative sets standards for reuse and recycling of used automobiles. Domestic laws such as these seek to internalize environmental costs in decision making and to encourage consideration of the environmental impacts of resource use. INDUSTRIAL ECOLOGY AND INTERNATIONAL ENVIRONMENTAL LAW The vast majority of international environmental law focuses on pollution abatement, remediation, and compensation for the harms stemming from environmentally hazardous activities. In essence, the international system of environmental law has adopted the traditional command-and-control approach to environmental regulation entrenched in the domestic environmental laws of most nations. Because the international legal system traditionally lags behind developments in the domestic laws of the respective nations, the movement toward preventing environmental harm remains on the distant horizon of international law. Of course, the relative rate at which pollution prevention and cleaner production concepts are incorporated into international law will largely depend on both the rate at which these concepts receive wider incorporation into the domestic laws of nation-states and the wealth of exogenous factors that shape international affairs and law generally. This lack of attention to elements of improving the environmental characteristics of industrial ecosystems—encouraging pollution prevention, reuse of resources, and the systems aspects of cleaner production—in current international environmental law is troubling in at least two respects. First, with the increasing globalization of economic development at the regional and multilateral level—with the increasing emphasis on free trade and free trade agreements—there is increasing demand for international environmental agreements. As the field of international environmental law continues to grow, it will play a major role in determining how environmental protection priorities are developed. It is therefore important to ensure that developments in international environmental law shift to providing incentives for systemwide reduction of pol-

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The Greening of Industrial Ecosystems lution and efficient use of resources. Absent such measures, there is the increased risk that these newly emerging laws may hinder the more efficient use and reuse of resources at the global level. Second, as the globalization of economic development continues to expand, international environmental laws not only must avoid disincentives to improving the environmental characteristics of entire industrial ecosystems, but must provide an impetus for the adoption of these systems-based approaches. The external factors that hinder the broader adoption of pollution prevention, frugal resource use, and a systems approach to environmental issues at the national level are even more numerous and insidious at the international level. Therefore, law must serve a larger role in encouraging those environmentally preferable practices. MOVING BEYOND "COMMAND-AND-CONTROL" IN INTERNATIONAL ENVIRONMENTAL LAW International environmental law, like many national domestic environmental laws, is directed primarily to controlling pollution at the end of processes. A more comprehensive approach is needed to encourage systemwide changes in complex production and consumption practices. A wide range of regulatory approaches and devices could be incorporated to encourage systems approaches to addressing environmental concerns in international environmental law. A number of these approaches are discussed below; however, the list laid out here is in no way exhaustive. Moreover, the following approaches are not necessarily mutually exclusive, and the best regulatory approach may consist of a combination of these, as well as other potential approaches. Preference for Market Structure and Market-Based Approaches There are four general approaches to environmental law and regulation: (i) liability schemes; (ii) command-and-control; (iii) market structure strategies (strategies for developing or defining a market, such as take-back legislation); and (iv) market-based strategies. At the international level, states are liable for harm from transboundary pollution under the doctrine of state responsibility. However, the system is cumbersome and little used. Moreover, it does not appear to be the leading contender for further international development to address global environmental issues. The second, and most widely used, approach to environmental law and regulation at both the national and the international level is the command-and-control approach. The principal benefit of such strategies is apparent certainty (although they often bring with them many unintended and uncertain consequences). Because of the potential certainty inherent in command-and-control strategies, they remain critical for addressing environmental problems with irreversibilities, such as acute toxic pollution and loss of species. This certainty has made this approach to environmental regulation the strategy of choice for many, if

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The Greening of Industrial Ecosystems not most, nongovernmental environmental organizations, who remain suspicious of industry's commitment to environmental protection. Increasingly, however, it is recognized that we have reached the limits of command-and-control regulations and must move toward more market-oriented strategies (i.e., market structure and market-based strategies) for efficiently capturing the next needed increment of environmental protection. The economic argument for market-oriented strategies, such as taxes and tradable emission permits, is that they can achieve the same level of environmental protection provided by command-and-control regulatory approaches but at less expense. This is because market-based strategies in particular provide the flexibility for firms to select the lowest-cost method of achieving the selected level of environmental protection. Moreover, the flexibility provided by such strategies also encourages technological innovation. There is, however, a view to the contrary among some environmentalists, namely, that market-oriented approaches to environmental protection are a furtive way to roll back environmental standards. Attacking command-and-control strategies, or liability schemes (as tempting as that surely is for many), therefore, may not be the best approach to shifting the regulatory focus to market-oriented approaches. Rather, such a regulatory shift may be most easily achieved through cooperation between regulators and environmentalists to demonstrate the benefits of market-oriented strategies and to develop appropriate confidence-building mechanisms as a prelude to a shift from command-and-control strategies. Negotiation and Other Confidence-Building Efforts Negotiation and other confidence-building mechanisms can take place either within the context of the regulatory process among government, industry, and environmentalists (such as the Environmental Protection Agency's [EPA's] ''regneg," or negotiated regulation, approach to the regulations under the 1990 Clean Air Act Amendments), or outside the regulatory process (such as the Environmental Defense Fund's efforts to assist the McDonalds fast-food chain with its waste reduction program).1 Because of the relative lack of international environmental regulations, negotiation and confidence-building efforts are particularly important at the international level to fill the void left by law. Moreover, because such efforts provide for a degree of innovation, flexibility, and less politicized decision making not usually found in the context of international agreements or national laws, they can be an important impetus for furthering environmental protection efforts. Regardless of one's opinion of their results, past efforts at confidence building provide some guidance about what elements are necessary for such efforts to be successful. The process must be open to all parties that make the effort to participate. The process must also be transparent—that is, all the materials used in, and stemming from, the process must be available publicly. To avoid even the

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The Greening of Industrial Ecosystems appearance of collusion, all parties must be able to participate in such exercises on an equal footing with industry and government. Thus, at times financial and technical support will have to be provided to the environmental organizations. Further, to develop long-term credibility, monitoring mechanisms must be built into negotiated agreements. Credibility is perhaps the most important ingredient in the confidence-building process. If governments or industries are perceived as being disingenuous, confidence-building mechanisms will prove futile. Similarly, if environmentalists are perceived as being incapable of dealing in good faith, industry will refuse to work with them. Credibility involves many elements, on all sides of the negotiating table, with regard to the presentation of commitments, positions, rhetoric, and "facts." To a great extent, the credibility of the parties will be determined by the results of their joint efforts. For example, if a market-based strategy is used in an inappropriate situation and environmental harm results, credibility will be lost even if the strategy was a product of negotiated decision making. If, however, a negotiated approach results in both environmental and economic gain—a "win-win" situation—then credibility levels will increase accordingly. Thus, if industry wants to develop trust among environmentalists, it must ensure that joint efforts result in real environmental benefits. Finally, industry and environmentalists must be pragmatic about what they think they can achieve through negotiation. Industry must realize that the international environmental community is not of one mind—there will always be a watchdog Watching the watchdog—and dissension to almost any settlement is likely from some segment of the environmental community. Industry must also realize that the confidence it seeks from such exercises does not derive from the unanimous adoption of the result but from the insulation provided by the open process itself. Similarly, environmentalists must recognize that negotiation is a process of compromise, which requires them to develop their goals and set priorities among them. Moreover, both must recognize that, even if a compromise does not result from a particular negotiation effort, if all parties have participated openly and honestly, confidence levels will increase and assist in future endeavors. Finally, industry and environmentalists must realize that confidence-building negotiation exercises are not a replacement for participatory governmental and intergovernmental processes. They are, however, a vital component of forward-thinking environmental protection strategies. Internalizing Environmental Costs Ideally it would be desirable to have all external environmental costs be fully internalized into markets through proper pricing of environmental values, which are now largely free or otherwise underpriced. This ideal cannot, of course, be achieved in practice, but the need for cost internalization is generally recognized. In the broader context of sustainable development, the need for cost internaliza-

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The Greening of Industrial Ecosystems tion is recognized and encouraged through the "polluter pays" principle. The United States and other countries in the Organization for Economic Cooperation and Development (OECD) already accept this principle, in theory at least, although implementation through. law and regulation at national and international levels is sporadic, weak, and generally inefficient.2 Thus, environmental improvements in industrial ecosystems could be facilitated globally through wider acceptance, and improved implementation, of the polluter-pays principle at the international level. One method for internalizing environmental costs that is now being considered in the context of efforts to halt global warming is to sell limited numbers of marketable pollution rights, or permits, on open markets. This method is particularly appealing internationally with regard to resources generally thought of as part of the global commons (e.g., the oceans and the atmosphere). While pollution rights raise interesting questions of environmental ethics and equity, such rights do force companies to include at least some artificial measure of their environmental costs as real costs, and thus provide an incentive for companies to reduce them. An alternative method of encouraging international internalization of environmental costs is to allow national governments to place countervailing duties on imported products equal to the production subsidy the goods receive in the country of origin as a result of less stringent environmental regulations.3 There are, however, a number of practical difficulties with implementing such a system. Precautionary Principle The precautionary principle requires that if a particular action can be shown to pose a threshold risk of harm, then the proponents of the action must prevent or terminate that activity unless they can prove by a preponderance of the evidence that the activity will not degrade the environment.4 The precautionary principle is particularly effective at guiding decision making where little or no evidence exists as to the potential environmental risks of an action. The precautionary principle is closely related to the principle of pollution prevention; each seeks to avoid environmental harms before they occur. The precautionary principle is also closely related to the principle of sustainable development; each maintains that humankind will confine its actions to those activities that do not cause irreparable damage to the environment. Thus, the precautionary principle provides important common ground between international environmental law and efforts to prevent environmental damage and is a natural starting point for the wider incorporation of such preventive measures into international environmental law. It is therefore encouraging that the precautionary principle is increasingly being developed as a central tenet of international environmental law, as in Principle 15 of the Rio Declaration, recently adopted at the United Nations Conference

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The Greening of Industrial Ecosystems on Environment and Development.5 Similarly, the precautionary principle has been included in a wide number of international environmental declarations and treaties, including the 1982 World Charter for Nature, 6 the Convention for the Prevention of Marine Pollution from Land-Based Sources,7 the Barcelona Convention,8 the London Declaration of the Second North Sea Conference,9 and the Draft Ministerial Declaration for the Second World Climate Conference.10 Moreover, the precautionary principle has also been adopted in the context of a number of international economic treaties and declarations, including the negotiating text of the Treaty on European Union (Maastricht Treaty),11 the 1991 OECD Ministers of the Environment Declaration,12 the 1990 Economic Summit of Industrialized Nations,13 and the 1989 Summit of the Arch. 14 Pollution Prevention Although international environmental law remains largely media-specific, it has shown a proclivity for pollution prevention as an environmental protection strategy. For example, the Montreal Protocol15 ultimately contemplates a ban on chlorofluorocarbons, requiring companies to redesign their production systems and products to eliminate ozone-depleting gases. A similar-approach is likely to be followed with respect to reducing global warming emissions in protocols negotiated to control the emissions. These and other efforts at the international level provide substantial support for pollution prevention or designing pollutants, to the greatest extent possible, out of the production process. Future international agreements should recognize the success of these pollution prevention schemes and should adopt, where appropriate, similar formats. Perhaps, however, these future efforts should focus greater attention on providing incentives for pollution prevention than on the command-and-control efforts discussed above. Recycling and Reuse Requirements While pollution prevention can assist companies to minimize their wastes, it does not address the ultimate disposition of any unavoidable wastes from the product cycle. International environmental law can play a vital role in encouraging reuse and recycling by helping to create a market for "waste." International environmental law can encourage companies to design for the environment by placing reuse and recycling requirements on products sold domestically and traded internationally. Such recycling and reuse requirements can be brought about both through international laws (e.g., agreements), and through domestic laws that apply to the product as it enters a given country's market. Reuse and recycling requirements can be achieved through a variety of legal mechanisms. For instance, law could be used to create incentives, such as lower tariff schedules for products with higher percentages of recycled content. If incentives prove unfeasible, law could place regulatory burdens, such as embargoes or higher tariffs, on

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The Greening of Industrial Ecosystems products that fall to meet a minimum requirement for reused and recycled content. Law can also assist in ensuring that a sufficient supply of reusable and recyclable wastes is available to support a market for waste through mechanisms such as the deposit system in Sweden for aluminum cans. Recycling and reuse requirements are now attracting increased international attention since the enactment of a Danish law imposing glass reuse requirements on the foreign and domestic companies selling certain products in bottles in Denmark. Unlike deposit schemes familiar in the United States as a way to encourage recycling, the Danish system is a reuse (i.e., collect, clean, refill) requirement. In the aftermath of the "Danish Bottles Bill," Germany adopted laws requiring the recycling and reuse of product packaging materials and automobile components. In response to the German legislation, the European Community is now considering similar laws requiring reuse and recycling in packaging. Similarly Ontario's environmental levy on nonreuseable bottles also provides a market incentive for reuse. Incentives Although much of environmental law at both the national and the international level focuses on imposing penalties against rogue actors, the traditional "penalty-oriented" approach in international environmental law has to be augmented with environmental laws that provide incentives for cleaner production and consumption practices. For example, while much of the Montreal Protocol focuses on penalties to discourage free riders and to encourage nations to join the Protocol, many of the Protocol's most powerful provisions provide incentives, including financing for the transfer of environmentally sound technologies, to encourage states both to join the Protocol and to abide by its goals. A similar approach, whereby the international community provides incentives to countries, and companies, that prevent pollution, use resources efficiently, and recycle or reuse their products might accelerate the adoption of such practices faster than penalty-oriented international legal frameworks. Technology Transfer The requirement to provide technology transfer to developing countries, in the context of international environmental agreements, is emerging as a new norm of international environmental law. The Montreal Protocol, which provides mechanisms for increasing developing countries' access to technologies that reduce emissions of ozone-depleting chemicals, is a primary example of this trend in international environmental law. Similarly, all agreements coming out of the 1992 United Nations Conference on the Environment and Development contain some provision for increased access to environmentally sound technologies.16 Technology transfer has the potential to become one of the most important

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The Greening of Industrial Ecosystems incentives for further improving the environmental performance of industrial systems. Opportunities to transfer technology can provide incentives for industries to look at their production processes at the design stage, thereby encouraging pollution prevention. In turn, markets for environmentally sound technologies can encourage innovation of new technologies as well. As industrial ecology provides insights into technology innovation, technology transfer can play a vital role in broadening the application of these emerging technology innovations. Ecosystem Approach Another method for encouraging the wider use of practices that address systems aspects of environmental problems is for environmental treaties to adopt an ecosystem approach to environmental management. While there has been little international regulation of the manufacturing and disposal practices of market actors, where such international regulation exists it generally does not look at the environmental effects of the manufacturing cycle as it relates to the environment as a whole. Thus, for example, the MARPOL Convention,17 which requires, among other things, that wastes generated on ships while at sea must be disposed of at port, does not control the ultimate disposal of these same wastes; once off-loaded, such wastes can be dumped by harbor barges into territorial waters without regulation (unless the nation is a signatory to the London Dumping Convention,18 a separate international agreement). The failure of environmental agreements to regulate on an ecosystem basis allows environmental harm simply to be shifted rather than addressed comprehensively. A comprehensive ecosystem approach to international environmental law would encourage producers, intermediate users, and final users and disposers to eliminate environmental costs at the design and consumption stages. Although an ecosystem approach has been slow to develop, international environmental law is, after all, borne out of an understanding that environmental threats do not respect national boundaries. It is, thus, sympathetic to the protection of ecosystems as units, even if it continues to do so in a media-specific manner. Moreover, recent developments bode well for the broader adoption of an ecosystem approach to international environmental law. Through the use of the Global Environmental Monitoring System, and the increased use of data provided by satellite, nations are increasingly looking at cooperative efforts to address threats to ecosystems at the regional level. Eco-Labeling Closely related to the principle of environmental cost internalization is the concept of eco-labeling. Eco-labeling requires manufacturers to disclose the relative environmental costs attendant to the manufacturing, use, and disposal of products, whether those costs are internalized or externalized. Eco-labeling thus al-

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The Greening of Industrial Ecosystems lows the consumer to take these environmental costs into account when purchasing a product and also encourages producers to minimize the environmental costs of their products. Eco-labeling requirements that focus on the overall disclosure of environmental costs, as opposed to minimum standards to carry a seal of approval, provide an incentive for manufacturers, and users, to reduce the environmental effects of their activities to the greatest extent possible. In fact, merely by requiring, as a preliminary step, a manufacturer to inventory the environmental costs of a product, eco-labeling makes manufacturers more conscious of the environmental waste and costs associated with their operations. This increased consciousness on the part of manufacturers can, in and of itself, encourage manufacturers to change their patterns of behavior. For example, in response to a similar inventory of toxic emissions, required by the U.S. Emergency Planning and Community Right to Know Act,19 the Monsanto Company voluntarily committed itself to reducing its air toxic emissions by 90 percent over a four-year period. A great deal of international attention is now focused on the development of international eco-labeling standards. For example, at the regional level, the European Community has already adopted an eco-labeling system. International eco-labeling can also be effected through an importing nation's eco-labeling requirements that apply to both domestic products and imported products. Existing unilateral labeling requirements on internationally traded products already apply to dolphin safety and use of tropical hardwoods. An across-the-board international labeling regime would, however, be cumbersome and problematic from the standpoint of industry and the regulating and oversight body. Despite such difficulties, the International Standards Organization is hard at work in developing a voluntary program for international eco-labeling. Environmental Assessments Environmental assessments are another legal tool to encourage the proponent of an action to take the potential environmental costs of that action into account before undertaking the action, thereby encouraging the proponent to design the action to eliminate, or mitigate, these costs. By requiring that a project's planning process take into account the potential environmental effects of the project's development, environmental assessments facilitate consideration of environmental factors during design, rather than after the fact. While it is unclear whether international environmental law currently recognizes a duty to assess the environmental impact of one's actions, environmental assessment is rapidly emerging as a central principle of international environmental law, having been recognized by the vast majority of countries in their domestic laws, internationally in a number of different contexts,20 and by most international organizations. 21 Additionally, under contemporary international law, and U.S. domestic law, there are few requirements that proponents of private projects prepare an environmental assessment for an action in the absence of a connection

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The Greening of Industrial Ecosystems between the action and a governmental or intergovernmental entity (usually in the form of governmental or intergovernmental funding or permitting). This may, however, be changing. Mexico, for instance, has adopted an environmental assessment law that applies to both private and public actors. Increasing the scope of international and domestic requirements for environmental assessment to apply to a greater range of private actions would make private actors more aware of the environmental costs of proposed actions. Moreover, extending the scope of international environmental assessment requirements merely recognizes that as private development initiatives continue to play a larger role in global development, unless properly designed and implemented, these initiatives can entail environmental impacts similar to those of governmental and intergovernmental development efforts. Such an extension of existing law has already been acknowledged internationally by the OECD.22 IMPEDIMENTS TO SYSTEMS APPROACHES IN INTERNATIONAL ENVIRONMENTAL LAW In contrast to the relatively nascent body of international environmental law, there exists a much older and more well defined body of international trade law that can come into conflict with efforts to take a systems approach in international environmental law. The General Agreement on Tariffs and Trade23 (GATT) is the principal international instrument whose rules govern the vast majority of international trade. A number of GATT's rules may thwart efforts to incorporate incentive-based approaches in international environmental law (including both the extraterritorial application of domestic laws and pure international law) set out above.24 For example, GATT generally prohibits trade restrictions based on the production process of a product. Unless a restriction applies directly to the product, in some way altering the product's characteristics, the restriction is likely to conflict with GATT. It is unclear under GATT's current rules what type of control (i.e., governing the physical or chemical composition of a product, as opposed to its ability to perform a given task) is needed for a regulation to pass muster under GATT. Thus, a requirement governing the recycled or reused content of imported or exported products might violate GATT. Moreover, requirements that labeling disclose production process methods and their relative environmental costs may violate GATT, as well. Similarly, GAIT currently prohibits a country from imposing countervailing duties on imported products that are manufactured under diminished environmental protection standards. While GATT does not prevent the international community or a nation from adopting international environmental law provisions that conflict with GATT's rules, GATT can be used by other parties to penalize the enacting nation or nations for their trade law transgressions. Additionally, since most countries currently are seeking increased free trade, international environmental laws that restrict trade in

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The Greening of Industrial Ecosystems violation of GATT place their enacting nations in a most awkward position internationally. International inertia The inability of the international system of law to evolve over time has prompted one scholar to liken international law to "post-feudal society cast in amber."25 To the extent that industrial ecology implies that there is a need to rethink how international law has traditionally viewed environmental issues, it is important to realize that these changes may be difficult to realize. Thus, forward-looking ideas, particularly those affecting, directly or indirectly, what nations perceive as their sovereign right to use "their" resources (e.g., pollution rights), may prove difficult to advance as international legal frameworks. Even where change may be possible, international consensus is not easily built. Therefore, international law may be an inappropriate mechanism for advancing systems approaches to improving the environmental performance of industrial ecosystems. This produces a terrible catch-22. Markets are increasingly global, and national governments are turning over greater authority to regulate these markets to an international community that lacks the necessary legal structures and mechanisms to do so. The Lack of an International Enforcement Mechanism At the national level, law can be looked to as a means of encouraging, through the threat of sanctions, market actors to respond to environmental imperatives. At the international level, there is little in the Way of effective enforcement of international law. Assuredly, nations can use trade sanctions to encourage foreign producers, and in turn their national governments, to adhere to environmental standards; however, these sanctions suffer from the same trade law impediments and inefficiencies discussed above. Without an effective international enforcement mechanism, there is little guarantee that foreign governments will compel their industries to, for example, internalize their full environmental costs into the costs of their products. Finite Economic Resources To the extent that changes in international environmental law to encourage systemwide alterations will require nations to divert already strained resources from existing priorities, Such proposals may· not readily come to fruition. Much of the funding necessary to provide the public financing to adopt incentive-based approaches can be obtained through tax schemes that internalize environmental costs; however, it must be remembered that tax schemes are, themselves, a form of wealth redistribution. Thus, While incentives to encourage nations and their

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The Greening of Industrial Ecosystems industries to shift to cleaner production and consumption practices may be preferable over penalties for the failure to comply with these practices, if these incentives require nations to make additional fiscal resources available at the international level, such incentive-based approaches may be more problematic than the less effective penalty-based approaches. A quick look at the mired environmental funding discussion taking place in the context of the North American Free Trade Agreement illustrates this problem well. CONCLUSION For sustainable development to move from rhetoric to reality, industrial activity must move beyond its narrow short-term economic agenda. The energy, innovation, drive, and creativity that characterize the private industrial sector must also serve an environmental agenda. Industrial ecology is critical to harmonizing the economic and environmental agendas. Society is now looking to engineers to help meet one of the greatest engineering and social challenges the world has ever faced—achieving sustainable development. As the role of engineers evolves to meet this challenge, so too must the role of law evolve in support of these efforts. International environmental law can serve as an important impetus for improving the environmental performance of industrial ecosystems. To date, however, international environmental law has paid little attention to this effort. Thus, if international environmental law is to play a role in developing cleaner industrial ecosystems, then the existing tenets of international environmental law must first be modified to include, whenever appropriate, a preference for market-based, ecosystem approaches that encourage pollution prevention schemes over command-and-control and liability schemes. Fortunately, international environmental law appears to be developing, albeit slowly, in a direction that is consistent with the approach to environmental protection advocated by industrial ecologists. ACKNOWLEDGMENT The author wishes to thank Brad Allenby, Durwood Zaelke, Barry Pershkow, Nancy Benton, and David Hunter for their assistance. Any remaining errors or omissions are the sole fault of the author. NOTES 1.   It should be noted that EDF's efforts working with McDonalds were made possible by a more adversarial effort conducted by Lois Gibbs's group, the Citizens Clearinghouse for Hazardous Wastes. 2.   OECD, The Polluter Pays Principle: Definition, Analysis and Implementation, May 26, 1972, C(72)128.

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The Greening of Industrial Ecosystems 3.   Robert Housman and Durwood Zaelke, Trade, Environment and Sustainable Development: A Primer, 15 Hastings Int'l & Comp. L. Rev. 535, 606 (1992). 4.   Margaret Spring, The Precautionary Principle: An Update, June 18, 1992 (Center for International Environmental Law Working Paper). 5.   Rio Declaration, Principle 15, reprinted in Reuters, June 14, 1992 (final text). 6.   United Nations General Assembly, World Charter for Nature, A/37/L.4 and Add.l at pant. 11 (Oct. 28, 1992). 7.   The Convention for the Prevention of Marine Pollution from Land-Based Sources, Feb. 21, 1974, 13 I.L.M. 352 (1974). 8.   Sixth Meeting of the Contracting Parties to the Convention for the Protection of the Mediterranean Sea Against Pollution, Recommendations Approved by the Contracting Parties (Oct. 1989), reprinted in Greenpeace Paper 28 (1990). 9.   Second International Conference on the Protection of the North Sea, Ministerial Declaration, at art. XVI(1) (London, England, Nov. 1987). 10.   Second World Climate Conference, Geneva, Switzerland, Oct. 29-Nov. 7, 1990, Draft Ministerial Declaration, at preamble, art. 7. 11.   European Union Treaty, Final Act of the Conference of Member State Representatives, signed in Maastricht, Feb. 2, 1992, art. 130R(2), reprinted in European Reprint, No. 1746, Feb. 22, 1992. 12.   OECD Ministers of the Environment Declaration, OECD Environment Committee at Ministerial Level Communique para. 38 (Jan. 31, 1991). 13.   1990 Economic Summit of Industrialized Nations, Economic Declaration para. 62 (July 11, 1990). 14.   Summit of the Arch Economic Declaration art. 34 (Paris, July 16, 1989). 15.   The Montreal Protocol on Substances That Deplete the Ozone Layer, adopted and opened for signature, Sept. 16, 1987, entered into force Jan. 1, 1989, 26 I.L.M. 1541 (1987) as modified by The Montreal Protocol on Substances That Deplete the Ozone Layer, London 1990, Annexes A,B, UNEP/OzL. Pro.2/3 (1990). 16.   See Rio Declaration, Principle 9 (reprinted in Reuters, June 14, 1992 (final text)); UNCED, Convention on Biological Diversity, June 5, 1992, UNEP/Na.92-7807, art. 16; UNEP, Non-Binding Authoritative Statement of Principles for a Global Consensus on the Management, Conservation and Sustainable Development of All Types of Forests, June 13, 1992, A/CONF. 151/6/ Rev, 1, art. 11; UNCED, United Nations Framework Convention on Climate Change, A/AC.237/ 18(Pan II)/Add. 1 (Advance Copy-Final), May 15, 1992, art. 4(c); UNCED, Agenda 21, Chapter 33 (unchanged negotiating text reprinted by Econet). 17.   International Convention for the Prevention of Pollution from Ships, 1973, reprinted in 12 I.L.M. 1319 (1973) as modified by Protocol of 1978 Relating to the International Convention for the Prevention of Pollution from Ships, 1973, opened for signature June 1, 1978, I.M.C.O. Doc. TSP/CONF/11 (1978), reprinted in 17 I.L.M. 546 (1978). 18.   Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter, done at London, Dec. 29, 1972, 26 U.S.T. 2403, T.I.A.S. No. 8165, 1046 U.N.T.S. 120 (entered into force Aug. 30 1975). 19.   42 U.S.C. °° 11001-11050. 20.   See e.g. Lac Lanoux (Spain v. Fr.) 12 R. Int'l Arb. Awards 281, 315 (1956) (international arbitration decision including in dicta acknowledgment of duty to assess); Espoo (Finland) Convention on Environmental Impact Assessment in a Transboundary Context, ECE, June 21, 1991, 30 I.L.M. 802; Wellington Convention on the Regulation of Antarctic Mineral Resources Activities, June 2, 1988, AMR/SCM/88/78, 27 ILM 868, arts. 4, 37(7)(d)-(e), 39(2)(c), 54(3)(b) (duty to assess in a global multilateral treaty); Council Directive 85/337/E.E.C. of June 27, 1985, O.J.E.C. no. L 175/40 of July 7, 1985 (duty to assess in a regional multilateral context). 21.   See e.g. OECD, OECD Council Recommendation: Assessment of Projects with Significant Impact on the Environment, May 8, 1979, OECD C(79)116; World Bank, World Bank Opera

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The Greening of Industrial Ecosystems     tional Manual, O.D. 4.00, Annexes A, A1,A2, Nov. 1989; UNEP, Governing Council Decision: Goals and Principles of Environmental Impact Assessment, UNEP/GC. 14/17 Annex III, UNEP/ GC/DEC/14/25, June 17, 1987. 22.   OECD, OECD Council Recommendation: Analysis of the Environmental Consequences of Significant Public and Private Projects, Nov. 14, 1974, OECD C(74)216. 23.   General Agreement on Tariffs and Trade, opened for signature Oct. 30, 1947, 61 Stat. A3, 55 U.N.T.S. 187. 24.   See Robert F. Housman and Durwood J. Zaelke, Trade, Environment, and Sustainable Development: A Primer, 15 Hastings Int'l & Comp. L. Rev. 535; 539-41 (1992). 25.   Philip Allot, International Law and International Revolution: Reconceiving the World 10 (1989).