Environmental sustainability is an important and growing field in the United States and globally, as stakeholders across private industries embrace sustainability efforts. Production processes based on renewable resources and consumption practices that reclaim waste products are vital elements of a sustainable global economy. The global economy is on a positive trajectory; we are investing globally in clean energy, displacing fossil fuel energy sources from the marketplace, and expanding efficiency like never before. A growing number of organizations value sustainability for its impact on the cost of production and the public is increasingly adjusting its habits in effort to become more sustainable.

Much of the work to advance sustainability will occur in the private sector; however, governments at all levels have immense influence on promoting sustainability across the private and within the public sectors. Government can support sustainability efforts in the same way the public sector has helped build other sectors of the economy such as agriculture, energy and housing. Through a mix of policy tools including tax credits, taxes, grant funding, and expedited permitting, and regulations such as zoning laws, building codes, and renewable portfolio standards, all levels of government are influencing the growth of sustainability. This chapter presents a brief survey of policies that have the ability to augment positive trends in the sustainable economy. While many of these policies focus on energy—a critical component of a sustainable economy—we look at policies that touch on all aspects of sustainability including energy, water, waste, ecosystem services, air, and so on. In subsequent chapters, we will analyze these policies in greater detail, examining them and presenting examples that demonstrate their actual or potential impact.

We begin by discussing why renewable energy is the key to a sustainable economy, and the critical importance and role of the public sector in making the transition to sustainability; we also consider why the private sector cannot achieve this transition without government assistance. We then turn to a discussion of the specific role we believe that government should play in the transition to a sustainable economy.

There are five government functions that are necessary to support the development of sustainable management practices in both the public and private sectors.

1. Funding of basic scientific research: The development of new technology is essential to this transition and most corporations cannot afford to engage in the level of research required to advance sustainability initiatives. Even in applied work, unless the payoff is rapid, private companies cannot justify the use of resources for this work.
   
2. Funding of sustainable infrastructure: Mass transit, water treatment, waste management, smart grids, and even research facilities are key here. These community resources have long been a responsibility of government and even in this era of U.S. anti-government sentiment, it is a critical role that only government can play.
   
3. Use of the tax structure to provide incentives to direct private capital toward sustainability investments: The goal here is to provide a positive environment to reinforce corporate sustainability.
   
4. Use of regulatory rules and enforcement to prevent unsustainable economic activities: Companies cannot be permitted to obtain short-term private profit at the expense of long-term public clean-up costs.
   
5. Development and maintenance of a system of generally accepted sustainability measures: We cannot manage what we cannot measure. Sustainability is measured in many different ways. Government must work with private parties to develop acceptable common metrics.

Energy is at the core of the sustainability challenge. Most of the production, transportation, and everyday processes that we depend on daily are energy intensive. We not only need to make these processes more energy efficient, but also need to power them with renewable sources if we are to develop a long-term sustainable economy. Enhanced energy efficiency can help us reduce demand as we reach peak production capacity. Energy efficiency saves money for consumers and lessens the pressure on utilities to increase their energy-production capacities. However, economic and population growth increase energy demand and, therefore, increasing energy efficiency will not be enough. We also need to develop renewable energy technologies to meet the growing global demand for energy.

With government investment in research and development, renewable energy technology can advance enough to become a low-cost alternative to fossil fuel use. This transition to lower-cost renewable energy is in progress, but we still have a long way to go. In the meantime, efforts to extract more fossil fuels using methods such as hydraulic fracturing (also called fracking or hydrofracking) and mountaintop removal for coal risk long-term damage to the environment. We need more government regulation of these practices in order to ensure the safety and health of our environment. The goal of government policy is not to raise the price of fossil fuels through regulation, but to lower the cost of renewable energy through research and development.

For decades we have been releasing greenhouse gases into our atmosphere, and the result of our actions is becoming obvious. Human-induced climate change is a scientific fact. We must consider carefully how we deal with the impact of climate change. To prevent further global warming, we are going to have to develop the technological, institutional, and financial capacity to put the carbon genie back in the bottle.

Before we introduce the role of government in sustainability, it is important to consider the role of government in society in general. What can and should the government do and not do? What activities and actions should it take on and what should be left to the private sector? Whom does the government serve? What role do nonprofits play in all of this? The distinctions between the sectors and their respective roles are not always easy to determine. The public and private sectors often have similar or even overlapping functions; for example, both provide services in health care and education, but there are discernible differences between them.

One way to understand these differences is what author Steven Cohen has termed “functional matching,” meaning that the private, nonprofit, and public sectors are each in a position to serve the general population in different ways (Cohen, 2001). Differences in the nature of their missions, incentive systems, organizational cultures, and the kinds of talent that they attract mean that each sector has different strengths.

The private sector is motivated by profit, and may have to answer to shareholders as well as employees and clients. Unlike in the public sector, existence in the private sector is not guaranteed. Competition is steep and organizations that do not adapt to changing times and tastes can go out of business. To compete, organizations in the private sector have great incentive to reduce costs, and therefore may have greater levels of efficiency. This focus on cost-reduction might also encourage some organizations to engage in research and development that supports more efficient—and sustainable—processes. Manufacturing and certain service-support functions are probably best performed by the private sector.

Organizations in the nonprofit sector typically get their motivation from a mission, and they excel at infusing their employees and volunteers with dedication to this cause. Unlike organizations in the private sector, some nonprofits do not have paying customers; for example, Homes for the Homeless in New York City serves the homeless by providing them with free housing. For funding, nonprofits rely on a combination of contracts from government, grants, and gifts from donors, which can be individuals or other organizations. The nonprofit sector may be most effective in industries that require a great level of compassion, such as nursing, education, and social services. Governments often rely on private and nonprofit organizations to assist in analyzing policies, delivering services, solving public problems, and filling gaps in certain capacities; in turn, governments can lend these organizations a sense of legitimacy (Schuman et al., 2002).

The public sector in the United States is led by officials who are democratically elected, or appointed by elected officials. This means the government is more sensitive to political pressure, but they are able to do things that private organizations cannot, such as incarcerate people. Government performs best in circumstances where public accountability is crucial, such as in policing and establishing and enforcing the law. Government is necessary any time rules are developed to regulate or restrict the freedoms of individuals or organizations. The government, however, is hindered by fiscal restraints, as well as rules designed to prevent fraud and may draw on a nonprofit organization’s network of volunteers as well as their greater flexibility of action (Feiock and Andrew, 2006). Both nonprofits and private companies assist the public sector with delivery of services, or planning and program development. But there are some essential functions that no one but government can fulfill, and we will see that this is especially true for sustainability.

Both the private and public sectors play important, often complementary roles in the transition toward a sustainable economy. Government regulation led the private sector to develop technologies to purify polluted water and produce cleaner air. Governments have an opportunity to ensure that whenever fossil fuels are extracted from the ground, the process results in minimal environmental damage.

Unlike in the public sector, global competition makes it difficult for private firms to finance basic research in sustainable energy technology. Therefore, government needs to allocate funding for research and development (R&D). The private sector may see no immediate benefit in investing in energy efficiency measures and infrastructure, so government must build this infrastructure and creatively balance carrots and sticks to encourage private firms to use resources efficiently and minimize negative externalities.

Each sector does certain types of things the best, and some goals are so massive, important, and difficult that they require government leadership, resources, and authority. Building a sustainable economy requires that government take the lead, fund the required basic research, regulate private firms, build infrastructure, and reward sustainable practices. The move to a sustainable economy requires that we generate far more energy tomorrow than we generate today. We do not yet know how to do that safely, but we need to learn.

If we leave issues of sustainability to the private sector alone, it will eventually come, but it will probably come too late to preserve our ecosystems. It will follow the typical boom and bust cycle we all experience at the gas pump. Only government has the capacity to take the lead. It will need to work with all of us to develop a vision of a sustainable economy and then invest and elicit the resources needed to achieve that vision.