The Political Economics of California's Proposition 65

Proposition 65 is an attempt to reform toxic chemical risk management in California and perhaps the US as well. The privatization of decisions about use of listed chemicals and decentralization of enforcement constitute major innovations. Whether or not these innovations will also improve the efficiency of toxic chemical risk management, Proposition 65 is a bold experiment in political economy with California as the laboratory. When the authors look at the particular policy instruments chosen by Proposition 65 - the warning requirement and the discharge prohibition - they become less enthusiastic. Labeling coupled with regulation of toxins may be an effective combination for reducing the risks facing society. However, the warning label requirement of Proposition 65 is probably too strong given the generally low levels of risk covered by the act, and it fails to give consumers information about actual or relative risks. It also fails to improve regulation of the major source of water pollution that is currently unregulated: pollution from nonpoint sources. Proposition 65 will likely increase the state's share of the responsibility for management of toxins in the environment. This added responsibility will probably be in areas where state regulation does not result in an undue burden onmore » interstate commerce or the production and distribution strategies of national firms. Such regulation, however, does impose costs that must be weighed against health and welfare benefits at the state and national levels. Other state claims of responsibility, particularly in the area of consumer product labeling, may ultimately be repudiated by a reassertion of federal power in Congress or the courts. The political and economic challenge is to balance states' desires to manage toxins in a way that reflects residents' preferences with the benefits of a uniform national market for manufacturing and distribution.« less