New York Needs the Environmental Bond Act

When New Yorkers go to the polls, either through early voting now underway or on election day, they will be asked to vote to authorize a new $4.2 billion environmental bond: The Clean Water, Clean Air and Green Jobs Environmental Bond Act. (Remember to turn your ballot over, it’s on the back.) This is borrowing for capital projects to protect our homes and ecosystems in an era of extreme weather and contribute to the reduction of greenhouse gases. According to Jon Campbell in Gothamist, the bond will finance:

• “Climate change mitigation: Up to $1.5 billion, including at least $400 million for green building projects, $100 million for climate adaptation and mitigation projects, $200 million for cleaning air and water pollution in disadvantaged communities, and $500 million to purchase zero-emissions school buses.
• Restoration and flood-risk reduction: At least $1.1 billion, of which at least $100 million has to go to ‘coastal rehabilitation and shoreline restoration projects, and projects that address inland flooding.’
• Open-space land conservation and recreation: Up to $650 million, of which at least $300 million is flagged for land conservation, $150 million for preserving farmland, and up to $75 million for fish hatcheries.
• Water quality improvement and resiliency infrastructure: At least $650 million, including at least $200 million for wastewater infrastructure, $250 million for municipal stormwater improvements and up to $200 million for a variety of other water-related projects such as replacing lead service lines.”

The New York State Conservative party chair, Gerard Kassar, opposes the law, citing his aversion to debt and dislike for some of the projects. Political reaction to the bond ranges from apathy to ignorance and from mild broad public support to enthusiastic cheerleading from the state’s environmental community. New Yorkers have a tradition of supporting environmental bonds. According to Michael Gormley of Newsday:

“Voters have approved 10 environmental bond acts since the early part of the 20th century, according to the Rockefeller Institute of Government. “In total, the previous bond acts have obligated nearly $5.7 billion, roughly $30 billion in adjusted 2020 dollars,” according to the institute’s study. The most recent environmental bond act was approved in 1996. The $1.75 billion in borrowing was pushed by then-Gov. George Pataki, a Republican… Only one of the state’s 11 environmental bond acts — in 1990 — has been rejected by voters, according to the Rockefeller Institute of Government. The others passed with comfortable margins.”

Environmental bonds are essentially forms of infrastructure borrowing; typically, the benefits of the borrowing far exceed the costs, so these bonds really should be seen as an investment. For example, the bond will finance the purchase of electric school buses. These buses are expensive to buy, but the cost of operating and maintaining them is far lower than current buses utilizing internal combustion engines. The funding in the bond provides nowhere near the amount needed to electrify all of the state’s school buses but will provide school districts with what amounts to pilot projects to get ready for electrification. The flood prevention measures will help prevent the massive clean-up and reconstruction costs that follow extreme weather events.

The bond authorizes funding for decarbonizing or increasing the energy efficiency of state-owned buildings, including those at SUNY and CUNY, as well as public schools throughout the state. Again, the capital costs of these modernization projects will save money on the operation and maintenance of these buildings by reducing the costs of energy and replacing old heating and cooling systems with newer ones. Most of the items being funded provide benefits that can easily be translated into monetary benefits. Some, like open space and farm preservation, cannot be justified by their short-term financial benefits or possibly any monetary benefits at all. Teddy Roosevelt’s wilderness preservation at the start of the 20th century and Nelson Rockefeller’s mid-20th century preservation of the Adirondacks set aside lands for posterity that otherwise would have been lost to development. I’m not sure that monetary values are the only ones we care about or should care about.

In a blog posted by the conservative but nonpartisan Empire Center, James E. Hanley noted that due to growing New York State debt, “fiscally conservative voters may have doubts about whether we can now afford this new borrowing.” While he questioned some of the Bond Act’s provisions, he also observed that:

“Many of the projects called for in the Clean Water, Clean Air and Green Jobs Environmental Bond act are justifiable infrastructure investments. Investments in wetlands and coastal restoration, stormwater control, flood protection and water quality are likely to pay for themselves over time in better public health and reduced property damages. Some of the climate change mitigation funding is to be wrapped up into the state’s Clean Green Schools Initiative, which is intended to improve air quality and energy use in public schools. Healthy environments for school children are also a reasonable use of taxpayer dollars that can pay off. Particularly, improvements in air quality can keep students healthier, which keeps them in school more and, for asthmatic children, out of the emergency room.”

Still, Hanley remains skeptical and notes that:

“Other elements are of less certain value. Whether New York needs to spend on preserving more open space is not a question that can be answered definitively. As for preservation of agricultural land, if the land in question has higher valued uses, preserving it will ultimately cost more than it’s worth. That’s a policy based on the romance of the family farm rather than on a clear-eyed analysis of the public interest.”

These are fair and reasonable comments, and Hanley also questions other provisions of the Bond Act that reduce its economic efficiency. I think that it is difficult to predict the economic value of land preservation, although we know that undeveloped land can provide ecological services that reduce flooding and absorb greenhouse gasses. Moreover, public policy and even public borrowing often have non-economic objectives. The Bond Act tries to direct benefits to disadvantaged communities and also mandates the use of American-made goods. These are efforts to utilize an environmental bond to provide benefits that are not environmental and might not directly benefit New York’s taxpayers. In my view, leveraging one policy instrument to fulfill multiple policy objectives may not be excellent fiscal policy, but it may well be excellent public policy. As to the size of New York’s debt service, the amount borrowed is less important than the purpose of the borrowing. Since the Reagan presidency, we have disinvested in infrastructure and delegitimized public taxation and spending. The result has been a transportation and energy system in great need of modernization and a water and waste system that only works in states like New York that are willing to spend to improve it. While the Biden administration has managed to reverse this era of federal disinvestment, it is not clear that the federal government will be able to maintain the gains of the past two years.

That means that New York will likely need to up its infrastructure spending, and this Environmental Bond Act is one element of that effort. We are in the early stages of a generation-long transition to an environmentally sustainable economy. It will take public and private sector capital investment, technological innovation, and ingenious creativity to complete this transition. We need to take a long view and exercise patience—a trait rare in our modern, superheated policy dialogue. A poorly managed multi-billion-dollar Bond Act would be a boondoggle that would help no one. The only thing worse is to starve critical projects of the capital needed to become a reality. My hope is that we will see a series of strategic and well-managed investments. The Environmental Bond Act is a necessary step, but it is far from sufficient.

Views and opinions expressed here are those of the authors, and do not necessarily reflect the official position of the Columbia Climate School, Earth Institute or Columbia University.