Legislative Analyst's Office Analysis of the 2003-04 Budget Bill

Environmental Protection Indicators

In the sections that follow, we evaluate the administration's Environmental Protection Indicators for California (EPIC) initiative. We conclude that legislative involvement is crucial to ensuring the ongoing usefulness and effectiveness of this effort. We recommend the enactment of legislation to guide EPIC.

Administration's Environmental Indicators Initiative

The Secretaries for Environmental Protection and Resources, with staff support mainly from the Office of Environmental Health Hazard Assessment, have been working on a new initiative—Environmental Protection Indicators for California (EPIC). The budget proposes no funding for EPIC in 2003-04, and its future appears uncertain.

The Administration Initiates the EPIC Project. The administration created the EPIC Project in 2000-01 to establish and implement a process for developing environmental indicators. Broadly speaking, an environmental indicator is a scientifically based tool to track changes that are taking place in the environment. The EPIC Project has been a joint effort of the Secretaries for Environmental Protection and Resources, with most of the staff work being conducted by the Office of Environmental Health Hazard Assessment (OEHHA). The Project released its first report, containing data for a number of indicators, in April 2002. Since 2000-01, OEHHA's expenditures for the EPIC Project have been roughly $700,000 (General Fund). The budget proposes no funding for EPIC in 2003-04.

Why Environmental Protection Indicators? According to the Secretary for Environmental Protection, the driving force behind the EPIC Project was a desire to be able to answer two questions: (1) what are we trying to accomplish in terms of environmental protection and (2) how do we know whether we are accomplishing it or not? In other words, the focus is placed on goals and results. This contrasts with the traditional reliance of the state's environmental programs on measures of workload as opposed to outcomes. For example, as noted in our Analysis of the 1999-00 Budget Bill (see page B-118), performance measures developed in past years by the State Water Resources Control Board for its core regulatory program focused on measures of activity, such as "number of self-monitoring reports reviewed." As discussed in that analysis, measures of this type do not directly address whether there have been environmental quality improvements as a result of the state's programs.

What Has the EPIC Project Accomplished to Date? In the project's first year, an advisory panel of members from the business, environmental, and academic communities was convened to identify significant environmental issues facing the state and to begin developing an initial set of indicators for these issues. The issues were grouped into broad categories, including air quality, water (quality, supply, and use), waste management, pesticides, California/Mexico border pollution, human health, and ecosystem health.

According to the project, the primary consideration for selecting an indicator was its scientific validity. Scientific validity is determined largely by the extent and quality of data available to measure a status or trend. What came to light very quickly were the significant data gaps that exist for many environmental issues. The April 2002 EPIC Project report highlights many of these data gaps. For example, the report states that little information is available to develop indicators for indoor air pollution. The report also notes that a significant portion of the state's waters has not been assessed to determine whether they support various beneficial uses, such as fishing, recreation, drinking water, and support of aquatic life. As yet another example, the report notes that information on the magnitude and scope of environmental contamination from improper management of solid and hazardous waste is very limited.

The project developed an initial set of about 90 environmental indicators, classifying the indicators as "Type I, II, or III" according to the availability of data. Type I indicators are those where adequate data are available to present a status (point-in-time environmental condition) or trend; Type II indicators require further data collection or analysis before a status or trend can be presented; and Type III indicators are conceptual indicators for which data collection does not exist. The April 2002 report lists these indicators, as well as provides data on trends for some of them. Figure 1 (see next page) shows a selection of indicators that have been developed by the project.

What Comes Next for EPIC? The future for EPIC is uncertain. As mentioned previously, the budget proposes to eliminate OEHHA's funding for EPIC in 2003-04, and no other funding is proposed elsewhere in the budget for this effort. The administration has not yet released a work plan for the EPIC Project for the budget and future years, although one is currently being developed. Given this, the administration was unable to provide an estimate of ongoing resource requirements for the project.

As discussed in the section that follows, this juncture in the course of the EPIC Project presents the Legislature with an opportunity to step in and guide the future development of the Project. We think that the Legislature's involvement is essential to ensuring that the EPIC Project adds significant value to the state's environmental protection activities.

Should Be a Legislative Role in EPIC

We think that the Environmental Protection Indicators for California Project's "results based" approach to environmental protection has merit. However, our review of similar initiatives in other states and countries finds that their effectiveness and value requires that the Legislature be very much involved in the effort.

EPIC Concept Has Merit. We think that the administration has shown considerable initiative by embarking on the EPIC Project, with a clear intent of improving the effectiveness of the state's environmental protection efforts. We think that the concept of the EPIC Project has merit, largely because of the potential to use the information derived from the project to improve environmental protection decision-making. For example, to the extent that the project identifies emerging environmental problems or helps in the evaluation of the effectiveness of state efforts to address environmental problems, and this leads to changes in environmental decision-making, then we think that the project's potential is being realized.

However, unless a clear and comprehensive plan is established to guide the project's activities and the use of its work products, we think that the effectiveness and usefulness of the EPIC Project will be limited. We conclude this after having reviewed similar initiatives to EPIC in other states and countries, discussed below.

Several Other States and Countries Have EPIC-Like Initiatives. We find that several other states and countries have had, or currently have, initiatives somewhat similar to the EPIC Project. For example, at least 16 states, including Florida, Oregon, Massachusetts, Texas, and New Jersey, have indicator initiatives. Other countries with such initiatives include Canada. We have reviewed surveys of legislators and executive staff in several other states conducted by others regarding these initiatives. The common theme among the initiatives is that they involve a formalized process to measure and report on the status and trends in environmental conditions. In some states, the indicators measure conditions beyond environmental ones. For example, the Oregon project has 90 "quality of life" indicators relating to the economy, education, civic engagement, social support, public safety, and community development, in addition to the environment.

Based on our review of other states' and countries' experience regarding their experiences with indicators and ways to improve them, we draw a number of lessons that can be used for further development of indicators in California.

Need for Legislative Buy-In. Based on our review of other states' experiences, we conclude that environmental indicators are more meaningful, and the process to develop them is more credible and sustainable, when a Legislature has bought into the concept and established it in law. But perhaps a greater benefit from legislative buy-in is that it can result in the indicator effort being structured so that it provides information that is relevant to legislators. Clearly, if information is not relevant to legislators, it will not be used by them.

Legislatures in other states appear to have benefited most from indicators when they have been involved in selecting indicators that are most relevant to them. For example, in Florida, legislative policy committees review indicators proposed by the administration. In addition, legislative involvement in selecting indicators responds to a concern that indicators solely developed by the administration may be perceived as being self-serving. The concern is that departments might choose only those indicators that make them look the most effective.

We think that in upcoming years, the Legislature will have a good context in which to become involved in selecting indicators that are relevant to it. This is because two pieces of legislation enacted last year—Chapter 1016, Statutes of 2002 (AB 857, Wiggins) and Chapter 424, Statutes of 2002 (SB 1808, McPherson)—both revived a long dormant requirement that the Governor's Office of Planning and Research prepare every four years a State Environmental Goals and Policy Report that is to be subject to legislative review and approval by the Governor. The last time this report was submitted was in 1978.

This report is to contain an overview, looking 20 to 30 years ahead, of state growth and development and a statement of approved state environmental goals and objectives. Among other purposes, the report is to serve as the basis for the allocation of state resources for environmental purposes through the budget and appropriation process. In the process of reviewing this report, the Legislature will be evaluating the state's environmental goals and priorities. This will provide the Legislature with the opportunity to consider which environmental indicators would be appropriate to measure progress towards meeting legislative goals and priorities.

Need for Clear Statement of Intent and Purpose Upfront. Another lesson learned from the experience of other jurisdictions is that there should be upfront a clear statement of the intent and purpose of the indicator project. Lacking this, there is the risk of program delays as parties with varying understandings of the project's purpose challenge the direction and operation of the project. By placing its vision for the project in legislation, the Legislature can ensure that the project is conducted consistently with its objectives and priorities.

Indicators Should Be "User Friendly" and Limited in Number. Other states, including Oregon, have found it necessary to pare down the number of indicators initially developed in their indicator programs to a more manageable number. When states have had too many indicators, the quality of the indicators has been questioned and Legislatures have tended to shy away from using them.

In addition, if indicators are to be used by decision-makers, including the Legislature, and if they are to serve a role in educating the public, experience has shown that they must be easy to understand. 

Need for Systematic Feedback Into Budget Development Processes. Finally, we find that environmental indicators have been a particularly useful tool for legislators in states where there is an institutional framework in place to link the indicators to the budget development process. Sometimes the linkage is very direct. For example, in New Jersey, departmental budget requests submitted to the Finance agency are required to describe how the request affects the indicators.

When asked, the California Environmental Protection Agency (Cal-EPA) was unable to provide a tangible example of how the work of the EPIC Project influenced the development of a 2003-04 budget proposal in any department under Cal-EPA. In fairness to the agency, we appreciate that the EPIC Project is in its early stages of development, and it may be premature to expect a significant interplay between EPIC and the budget development process. We think that the tie between indicators and budget development has merit.

Recommend Enactment of Legislation to Guide EPIC

We recommend the enactment of legislation to set goals for the Environmental Protection Indicators for California Project, establish a process for carrying it out, and ensure that the project is integrated with budget development.

In order to establish legislative buy-in of the EPIC concept, and to make the EPIC project a valuable decision-making tool for both the Legislature and the administration, we recommend the enactment of legislation that: