Kentucky Outlook 2000: A Strategy for Kentucky's Third Century was a cooperative project between the Kentucky Natural Resources and Environmental Protection Cabinet and the Kentucky Long-Term Policy Research Center involving the general public in the formulation of environmental policy. The intent of this project was to identify, analyze, and rank environmental problems in the state. Management plans will then be created to address each of the priority problems. Concurrently, different possible futures for the state will be explored. The process of combining futures planning with environmental priority setting is the first of its kind in the United States.
by:
Peter B. Meyer, PhD
Thomas S. Lyons, PhD
Vincent Mani, MBA
from the Kentucky Institute for the Environment and Sustainable Development at the
University of Louisville
Kentucky's economy and its environment are inextricably linked. The economic development policies we adopt and the actions taken to implement those policies can, and do, affect the quality of the air, water, land, and other environmental assets of the Commonwealth. By the same token, it is becoming increasingly apparent that the quality of the environment can affect Kentucky's ability to develop its economy as well. Forward-looking legislation and policy are dependent upon information about the effects of different mixes of pursuit of economic development and promotion of environmental protection in Kentucky. The Forecasting Kentucky's Environmental Futures (FKEF) project was designed to provide some preliminary looks at a number of those effects.
This project was undertaken by the Center for Environmental Management (CEM), a component of the Kentucky Institute for the Environment and Sustainable Development at the University of Louisville (KIESD) for the Kentucky Long-Term Policy Research Center (LTPRC). It builds on the Kentucky Outlook 2000 Comparative Risk project now being completed by the Cabinet for Natural Resources and Environmental Protection (CNREP). The objective of Forecasting Kentucky's Environmental Futures (FKEF) is not the conduct of a forecast or the assessment of the effects of changing economic or ecological conditions on the forecast, but, very explicitly, the examination of policy alternatives and the identification of directions for policy change that hold the promise of sustainable development that enhances both the socio economic well being and the quality of the physical environment of the people of Kentucky.
Policy alternatives and potential changes abound. The legislature examined a number of them in education and health care policy in the 1996 session. The choices facing economic development and environmental policymakers include issues such as:
Emphasizing reliance on natural gas for automobiles or promotion of mass transit where possible;
Investment of state resources in educating the public on environmental issues in order to promote more sustainable household behaviors or spending those resources on helping firms to adopt—and market—the most advanced environment-protecting technologies, showing them how to profit by doing so;
Provision of subsidies to attract new firms wherever they locate in the Commonwealth or targeting support to direct development to particular regions; and,
Alternative means of stimulating forest products use and secondary wood processing in the Commonwealth that may have indistinguishable economic effects but different environmental consequences.
None of these choices are easy. All involve the pursuit of financial gain for the citizens of Kentucky, but all also reflect the reality of environmental impacts—and decisionmakers are rarely provided with adequate information on those outcomes of the choices they must make.
The project combined detailed consultations and focus group meetings with knowledgeable parties from government, industry, the academy and environmental organizations with computer-based projection techniques to identify and test alternative environmental futures. Four group meetings provided the focus for the statistical and computational elements of the project.
The first meeting addressed the general question, "What are the most significant environmental issues facing Kentucky policymakers in the next 25 years?"—and arrived at a preliminary list of 98 items, preliminarily reduced to 21 by voting.
The second meeting first reviewed the efforts at the initial session, then examined trend data from existing LTPRC and other state documents, and finally addressed the question, "Given the Trends distilled from Kentucky cabinet, agency and LTPRC planning and forecasting products, which of the 98 items recorded in the May issues identification meeting still belong on a list of priorities for this project?", and arrived at a list of Context Changes, in rank order:
Produce Environmental Literacy—This priority stressed assuring people's improved understanding of the environmental consequences of their actions and decisions, an understanding that needed to be enhanced for adults as well as schoolchildren.
Sustainable Development—This category reflected (a) resource depletion and its consequences for economic activity, and (b) economic stability more generally, however it may be affected by environmental factors.
Need for Leadership—This issue reflected a concern for public policy problems associated with the failure to examine and pursue alternatives. The "leadership" problem identified appeared from group discussions to be due in large part to the absence of real policy choices, derived from the types of analysis exemplified by the work of this project, as well as to an electorate that is aware of the possibilities associated with different choices.
Public Works—There was a high level of concern for the adequacy and quality of the infrastructure for transportation, water and waste treatment facilities, and electronic data communications facilities in the Commonwealth.
Energy Use Changes—The concerns expressed here related to changes in energy consumption patterns external to the Commonwealth, and their implications for the market for coal and levels of mining activity in Kentucky.
Participants then identified the key sectors for project analysis. The Critical Sectors, and the current policy approaches identified as requiring review for more possible alternatives that may produce equivalent economic benefits but be more environmentally-benign, were, in alphabetical order:
Energy (Coal)—Policies oriented toward stimulating demand, both in state and out of state. Specific priorities include: (a) managing the resource to "maximize long term availability;" (b) helping coal companies meet environmental standards; (c) marketing coal in various ways, including through pursuit of new technologies and stimulating exports; and, (d) improving "communications between local communities and mining companies" to better respond to mine closings.
Manufacturing Promotion and Succession—"Smoke stack chasing" has a long tradition in economic development efforts, and remains a major priority in Kentucky as in other states; the Commonwealth's emphases have shifted to a two-pronged approach: (a) aggressively recruiting new business from out of state, emphasizing the advantages of rural Kentucky as a manufacturing location; and (b) encouraging the development of manufacturing networks as a means of assisting existing firms to better compete in global markets.
Production Agriculture (Tobacco)—Tobacco farming support is rooted in part in the enduring appeal of cultivating the crop as a part time activity, augmenting incomes from other sources. Support for the crop has increasingly shifted from assistance with improving the crop and the technologies that improve yields to defending the industry and its markets from political attacks.
Tourism—Preservation of Kentucky's "enduring rural character," is an objective that recognizes that the quality of small town and rural life may be enhanced by tourism development that increases local incomes: (a) developing Kentucky's historical and cultural assets; (b) subsidizing tourism projects with "significant economic impact;" and (c) integrating tourism into the economic development plan for the Commonwealth.
Value Added Wood Processing—The benefits of increasing the value added to the massive stands of timber in the Commonwealth through secondary wood processing are well recognized. Approaches combine (a) education and technical assistance to woodlot and forest owners on how to better manage their natural resources for longer term profitability and sustainability with (b) incentives and efforts to attract secondary wood processing industries to Kentucky, adding in ancillary efforts to (c) find uses for the timber waste from harvesting, and (d) providing industry related worker training.
The third and fourth meetings considered the relationship between these two lists of study priorities. The participants discussed the possible effects on the Commonwealth of various potential Context Changes (the first list) such as changes in Kentuckians' understanding of environmental processes or a drop in demand for coal as the result of new energy policies driven by acceptance of the global warming arguments. The group then assessed the development strategies for the Priority Sectors (the second list), including the coal and tobacco sectors in light of possible unexpected context changes.
Based on these discussions, the group then assisted the FKEF project team in devising two lists of possible changes in the relationship between the environment and levels of economic activity. These constituted the Technical Changes (engineering advances) that could affect environmental impacts and Policy and Practices (behavioral) Changes that could shape new approaches to the Priority Sectors. The general outlines of these two sets of changes are reflected in the Alternative Scenarios depicted in Table 1. (The project also tested a "combined change" scenario, blending the two types of changes.)
Finally, the group engaged in speculation about possible changes in the Kentucky economy, considering possible changes in the levels of economic activity in the five key sectors selected for examination. FKEF project staff did follow-up on those discussions with different expert informants to derive the outlines of the "Restructured economy" for which projections were undertaken.
In order to provide some sense of the longer term effects of the interactions between economic activity shifts and environmental policy, practice and behavior changes, some systematic projections are needed. The project thus pursued mathematical forecasts of the combination of economic and environmental conditions in the Commonwealth around the year 2025. The thirty-year horizon provides a crude reflection of the effects of current policies and trends on the world of the next generation of Kentuckians. FKEF relied on two computer programs for this purpose:
The REMI econometric forecasting model for Kentucky operated by the Legislative Research Commission for economic forecasters for the Commonwealth; and,
POLESTAR, a decision-support tool that links annual releases of pollutants to the air, water, and soils of a geographic area, rates of natural resource consumption and changes in land use patterns to levels of population and gross domestic product by major sector (that is, to the REMI forecasts).
Data required to customize POLESTAR to Kentucky included information on existing economic conditions, including the mix of current economic activity, levels of environmentally significant consumption (such as vehicle miles driven per capita, average miles per gallon for cars, buses and trucks in the Commonwealth, household energy consumption, fuel and water usage by industry, and chemicals utilization in agriculture) and mean levels of emissions of different pollutants associated with production or consumption in an array of different sectors. While substantial data, largely on air pollution, was compiled, other data proved far more difficult to obtain and complete information was never amassed. There are therefore no usable results for water pollution and ground contamination.
Two different REMI economic projections for 2025 were employed, albeit thirty-year projections by any econometric model must be considered to be highly speculative. The findings are indicative of the relative magnitudes of the environmental impacts of economic activity under different conditions. The first, the "Baseline," simply projected the current Kentucky economy forward thirty years. The second, the "Restructured" projection, combined the concerns about, and the plans for, the Commonwealth's economy: reduced tobacco acreage and falling coal extraction but increased timbering and secondary wood processing, additional manufacturing employment, and expansion of the tourism industry. This projection required extensive manipulation of the REMI model by the economics staff of the Legislative Research Commission, without whom the project would not have been completed.
The FKEF project conclusions about environmental futures may be stated simply, if not optimistically:
Elements of the Kentucky environment will deteriorate over the next thirty years under either economic projection, and even if all the changes in environmentally-sensitive technologies and in policies, practices and behaviors considered here take place.
The levels of deterioration in air quality in particular will be such that environmental factors will slow the rate of economic growth and make the projected gains by 2025 unattainable given current standards for required minimum environmental quality. Thus the problem is not one of the tradeoffs between the environment and the economy, but, rather, the development of policies and programs and private sector practices that will protect the environment in order to permit more economic development.
Considering the possible changes that might occur in the Kentucky economy and in its environmental practices over the next thirty years, the project provides additional insights:
Comparison of the Baseline to Restructured Economic Projections suggests that the transformations of the Kentucky economy may generate higher Gross State Product (income) per person, but with more negative environmental impacts than would result from current trends continuing into the future. Figure 1 illustrates this pattern for emissions of air pollutants, virtually all of which get worse in the future under both scenarios, but pose greater problems under the restructured economy.
We note from this finding that the extent to which environmental factors may affect the capacity of the Commonwealth to increase incomes appears to be growing. This suggests that Kentucky will be facing increased environment-income complementarity, rather than rising conflict, as time progresses.
This sensitivity of economic prospects to environmental considerations will be concentrated in the Eastern Region of the Commonwealth and what the REMI model labels the "Bluegrass Region," combining the Louisville, Lexington, and Northern Kentucky areas. The regional pattern of growth in air pollution emissions is depicted in Figure 2 for the Baseline economic projection. The Eastern area is exceptionally sensitive to coal and timbering issues, while the Bluegrass is currently the most environmentally stressed, especially with respect to air quality, and this issue may well constrain future growth potential. The Central region, on the other hand, may have air quality threatened by expansion in power plants, which is what the computer programs suggest will occur.
Technology changes appear to hold substantially more immediate promise for supporting the dual objectives of economic expansion and environmental protection than do attitudinal or behavioral shifts. The technology changes considered by the project, such as the systematic application of new techniques to energy and resource conservation illustrated in the second column of Table 1, are more effective over this thirty-year period than are the changes in policies and practices (Column 3 of Table 1). The weaker impact of shifts in tastes, behaviors and regulatory practices relative to technological advances envisioned is evident in Table 2. The last column reports how much greater the emissions of the items listed would be with only changes in policies and practices than with technological changes alone for both economic scenarios.
The exceptions to this finding, the results for solid waste generation and the methane it is partially responsible for generating, illustrate an important partial finding of the study. Increased recycling, which is the Policy and Practice Change that affected municipal solid waste most directly, holds more promise for an impact on total municipal solid wastes than could efforts to reduce packaging volume, the major Technological Change.
None the less, it follows that, while behavioral and policy changes may be very important over the longer term, immediate resource commitments to promotion of economic development and rising personal incomes in the Commonwealth should focus on expanding the adoption of environmentally-protective technologies, rather than on altering behaviors and attitudes.
However, it is not appropriate to consider technological change and policy and practice change to be mutually exclusive. They can be very complementary, as Figure 3 illustrates. Under the restructured economy projection, which could make environmental conditions worse than the baseline projections, net reductions in some pollutant emissions can be attained if the Commonwealth can combine promotion of technological innovations with environmental education and efforts to change wasteful behaviors.
