07/30/2012 12:03 pm ET Updated Sep 29, 2012

Save the Earth! Shrink The State!

America has some good things to show for its more than 40 years of intense environmental activism: the air and water are cleaner than they were and the overall economy has become more energy efficient. Much as it pains me -- a small government conservative -- to admit it, at least some of this progress has come as a result of government regulation. But everything has its limits.

Quite simply, relying on further expansion of government as the way to protect the environment -- what many on the political Left and in the current administration want to do -- isn't smart or realistic in a time when the government runs enormous debts, over 70 percent of Americans say they want less regulation, and the President himself has complained about regulation. It's unwise and undemocratic. In fact, a growing body of thought and advocacy is making a point: shrinking government taxes and regulation can do a lot of good for the environment.

Spending first. Here, a new report, Exhibit A in the effort to help the environment by shrinking government. The report, Green Scissors: 2012, outlines almost $700 billion in cuts to government that would improve the environment. The list of cuts, compiled by R Street -- the conservative group I head -- budget watchdogs at Taxpayers for Common Sense, and progressive environmentalists at Friends of the Earth, shows remarkable common ground. According to the Green Scissors partners, there are plenty of cuts everyone can agree on. Fossil fuel makers -- almost all of them profitable -- are in line for nearly $160 billion in subsidies. While I don't begrudge their profits, huge deficits mean that taxpayers have no business handing out subsidies that line the pockets of anyone's stockholders. Alternative, supposedly cleaner sources of energy -- solar, wind, and ethanol -- also get enormous subsidies and handouts that distort the market without doing much to improve the environment. In the end, it's probably best for the environment that the government eliminate all energy subsidies.

But energy isn't the only problem. Plenty of wasteful programs targeted by good government watchdogs from both parties also do damage to the environment. For example, the Essential Air Service Program created a short-term stop-gap following airline deregulation in the early 1980s pays hundreds of dollars in subsidies for subsidies that encourage the use of small, inefficient planes and don't even save significant time for travelers. The over $100 billion spent to subsidize insurance for agribusiness and beach-home owners also has little purpose: the private market can provide this coverage just as well.

And, just as Congress looks to cut spending in ways that help the environment, it should also aim to cut regulation. This doesn't mean, of course, that the country should go back to the bad old days of allowing factories to dump chemicals into drinking water sources and pump sulfur dioxide into the atmosphere but it does mean that new ways of looking at pollution are in order. Over the past few decades, improved monitoring technologies and models have allowed economists and scientists to place dollar values on the damage that pollution does to the environment. In many cases, pollution is surely "worth it." Still, when it comes to large scale emissions -- power plants and the like -- simply pricing pollution and encouraging entrepreneurs owners to make equitable tradeoffs is better for the economy and environment than having bureaucrats administer complex "cap and trade" schemes of their own. This shouldn't be a system of dual regulation: if new impact fees (pigovian taxes) come in, old regulations should be phased out as new taxes are phased in.

Not every environmental problem can be solved with less spending and reduced regulation. Fundamental laws protecting the environment must remain. But, all-in-all, a small government, conservative policy can do a lot of good for the environment.