Streams of environmental innovation: four decades of EPA policy reform.

AuthorFiorino, Daniel J.
  1. INTRODUCTION II. THE CONCEPT OF ENVIRONMENTAL INNOVATION III. STREAMS OF ENVIRONMENTAL INNOVATION A. Emissions Trading B. Program Integration C. Risk-Based Planning D. Regulatory Flexibility E. Partnerships and Voluntary Programs IV. PATTERNS IN ENVIRONMENTAL INNOVATION I. INTRODUCTION

    The idea of innovation has become almost a mantra for all organizations, public and private. The world is changing rapidly and organizations must adapt. For the private sector, economic relationships change, customers demand new products and services, technologies become outdated, and pressure from competitors is relentless. For public agencies, demands for efficiency and quality increase, budgets become more constrained, political executives want measurable results, and citizens want greater engagement. Doing things a certain way because that was how they were done in the past is no longer acceptable. The white water conditions of modern society demand innovation.

    This innovation imperative would seem as or more relevant to organizations in the field of environmental policy. Indeed, the concept of the environment raises some of the most dynamic and rapidly changing issues faced by government. Forty years ago, air and water pollution from large industrial sources were defined as the main environmental problem. (1) Then, abandoned hazardous waste sites, residential radon, and ozone-depleting chemicals were added to the fist. (2) More recently, climate change, energy and water security, deforestation, and habitat loss have figured more prominently on policy agendas. (3) Along with a growing list of problems has come a reconceptualization of the policy field more generally. Concerns about environmental protection have largely been replaced with a greater focus on environmental sustainability, in recognition of the complex interrelationships that exist among economic, political, and social choices. (4)

    The institutional and social aspects of environmental policy also have changed. Reflecting, in part, the ideas of "new" public management, problem solving is viewed in most developed countries not just as the responsibility of government but of a range of institutions in society. (5) Leading firms have moved from a culture of resisting regulation to internalizing it and moving beyond compliance in their environmental performance. (6) Nonprofit organizations and collaborative institutions play an increasingly prominent role in finding and promoting solutions. From an initial focus on hierarchical, expert-based regulation, environmental policy in most countries increasingly incorporates economic incentives, information-based approaches, public-private partnerships, as well as other tools. (7) At the same time, the resources available to government agencies are falling as compared to the number of environmental problems they confront. (8) In sum, the innovation imperative common to all organizations is alive and well in environmental policy.

    Despite this imperative, innovation as an area of systematic study has drawn only scattered attention from environmental policy practitioners and researchers. To be sure, many studies of specific innovations exist, and several are discussed below. (9) The task of defining and categorizing policy innovation generally, however, has drawn less attention. What types of innovation have been attempted? What have been their objectives? How have they evolved? What explains their success or failure? What are their assumptions and conceptual foundations? What lessons for policy design and implementation may be drawn from them? The purpose of this Article is to begin to answer such questions by setting out a basic framework for describing and studying environmental policy innovation.

    This Article is organized around the concept of "streams" of environmental innovation. Streams refer not to specific innovations but to categories of innovation that share characteristics. Among these characteristics are the goals, design, application, and theoretical underpinnings of the innovations. Table 1 fists several identifiable streams of environmental innovation. Within each stream, one may identify specific actions or policies as innovations. Within the emissions trading stream, for example, are the bubble policy, sulfur dioxide allowance trading, and point-non-point water pollution trading. (10) Among the voluntary programs are such specific innovations as 33/50, Energy Star, and WasteWise. (11) Different goals are more or less important among the various streams. Some, such as citizen participation or alternative conflict resolution, are designed mainly to promote policy and agency legitimacy, while others--economic incentives or voluntary programs--are justified more on the basis of improved efficiency and effectiveness. (12) For each stream, it is possible to identify a deficiency or need that led to the consideration and adoption of specific innovations. In the case of risk-based planning, for example, the need was for a more rational way of setting priorities in the face of a rapidly expanding policy agenda. (13) By defining these streams of innovation, this Article aims to impose some degree of analytical order on the diverse range of activities viewed as environmental innovations and undertaken since the 1970s.

    Part II provides a definition of environmental policy innovation and an explanation for placing the innovations into streams. Part III discusses several innovation streams that may be identified since the existing mold for environmental protection was cast in the 1960s and 1970s. Part IV draws several conclusions and then discusses the implications for designing, implementing, and evaluating innovations.

  2. THE CONCEPT OF ENVIRONMENTAL INNOVATION

    The concept of innovation is often studied but not always well understood. Critical to the concept is that an innovation is seen as something new. In his work on the diffusion of innovation, Everett Rogers describes innovation as "an idea perceived as new by the individual." (15) In a more recent book on environmental innovation, Toddi Steelman defines innovation as "a new program or process for the individuals adopting it." (16) Laurence O'Toole takes a process perspective in defining innovation as "patterns of activities to achieve a new goal or improve the pursuit of an established one." (17). In these terms, an innovation is not only perceived as being new but is motivated by the intent to achieve new goals or realize existing ones more effectively. In his excellent study of policies for supporting environmental innovation by business in six countries, David Wallace defines innovation broadly as "any change in technology, production processes or organizational and managerial structure and techniques." (18) In this brief sampling, innovation is a combination of perceived newness, the "thing" that is innovative--a process, program, technique, structure, and so on--and an intent to develop something perceived as being new and improves results or performance.

    Defining innovation is far less complicated than explaining when and why it occurs and, more importantly, why some innovations persist over time while others fail. In Implementing Innovation, Toddi Steelman provides a useful typology of explanations from the social science and public policy literature on the success and durability of innovation. For innovations to succeed over time, there should be a combination of motivated individuals in a culture that supports change; structures that promote communication, provide incentives, and define a political environment that is amenable to change; and strategies to frame problems, draw upon shocks in the system that open windows for change, and use innovation to enhance legitimacy. (19) A key part of Steelman's argument is that innovation occurs in the context of larger institutional processes. It is these overarching institutional processes that determine the success and durability of innovation more than the actions of dedicated entrepreneurs, whatever catalytic significance individuals may have on change. (20) Wallace, adopting an institutional perspective as well, argues the characteristics of the larger political and regulatory system determine the likelihood that firms will seek out and adopt innovative practices and technologies. (21) In particular, much of the environmental policy literature suggests the potential for continuous and long-term innovation in the private sector depends on government policies that provide incentives, allow flexibility, build trust with accountability, and reduce uncertainty for firms. (22) Innovation in government and public policies thus may affect the potential for innovation in the private sector and throughout the broader policy system.

    Innovation is defined here as institutionalized change in government policies or practices that is designed to improve outcomes or processes, or to implement and achieve outcomes more cost effectively, or any combination of the above. This Article focuses on innovations undertaken since the 1970s, when the current model for environmental protection was established. The late 1960s and 1970s were periods of sweeping innovation and change in U.S. environmental policy, and for that matter in many affluent democracies. (23) For purposes of this Article, the model created in such laws as the National Environmental Policy Act (NEPA) (24); Clean Air Act (25); Federal Water Pollution Control Act (26); Toxic Substances Control Act (TSCA) (27) and others of that era is the foundation on which the innovations discussed here were built. (28) In terms used in the policy literature, these foundational environmental laws were a manifestation of a "punctuated equilibrium" in U.S. environmental policy, while the policy innovations discussed here were an expression of more incremental change. (29)

    There are several elements to this definition of innovation. The condition of "institutionalized"...

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