Friday, July 25, 2008

This Headline Caught My Attention

A new law regulating pollution from ocean-going vessels docking in California was recently passed. According to the Los Angeles Times:

The rules, which take effect in 2009, would require ships within 24 nautical miles of California to burn low-sulfur diesel instead of the tar-like sludge known as bunker fuel. About 2,000 vessels would be affected, including container ships, oil tankers and cruise ships.

That's seems like a pretty factual way of summarizing the law. Contrast that with the following headline from

California Rule Cuts Pollution from Ships

Wow, I didn't know a rule could do that! Sounds like all we have to do if we want to cut pollution is create more rules. It's as easy as that. New rule = pollution cuts.

Regardless of the merits of the "rule," rules themselves don't do anything. Rules, or laws, as they're called when the government mandates them, require people to comply with whatever the content of the rule/law is. People then adjust their behavior in order to be compliant. When the law governs business activity, compliance requires spending money. Since this money is being spent to comply with a law, it cannot be spent elsewhere.

The distinction drawn above is not trivial. All laws (especially those regulating business) cost money. You can't just legislate your way to solutions without imposing costs on the people/companies to whom the law applies. Spending more money to comply with a law may mean spending less money on personnel, or research and development, or whatever. To not address this question when a new law is proposed is irresponsible.

To be fair, the article does say that the "new regulations yesterday...will require ships," but their headline glosses over the fact that compliance is not free, and their article contains no mention of the costs of compliance, save for the following sentence:

Shipping companies oppose the rule, and may challenge it in federal court.

The Los Angeles Times article does a better job:

The air board estimates that the new shipping rules will save Californians at least $6 billion a year in health-related expenses and will cost the shipping industry between $140 million and $360 million a year.

A typical cargo ship would pay about $30,000 more in fuel costs for each visit, or about $6 per container shipped from Asia to California. That amounts to 0.1 cent per pair of sneakers, the board noted.

I wouldn't consider this a full examination, as it relies on data from only one source (the California Air Resource Board). But at least it acknowledges that the law will cost businesses. If the numbers are to be believed, the effect seems to be small, if not non-trivial. And it sounds like the environmental benefits are real. So, given my 30-second analysis, this law seems like a good thing, but of course I reserve the right to re-evaluate my opinion upon more in-depth analysis (which I probably won't do unless I either become a shipping magnate or run for office in California). But the law is not without its costs...

Image from Flickr user fusionpanda available under a Creative Commons license

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