Service sector: Major impact on environment

As the nation continues to evolve into a post-industrial economy, businesses and regulators should explore ways to improve the environmental practices of firms in the service sector.

provided by Resources for the Future


he service sector, which now accounts for three-quarters of the nation's employment and Gross Domestic Product, has a major influence on environmental quality in the United States, according to a new study conducted by the independent research organization Resources for the Future (RFF). As the nation continues to evolve into a post-industrial economy, businesses and regulators should explore ways to improve the environmental practices of firms in the service sector, which can influence the behavior of their suppliers "upstream" and consumers "downstream." The RFF study which includes reports on the environmental impact of the health care, food service, and tourism industries provides the most comprehensive picture yet of how the growing service sector affects the environment.

Minimizing many of the environmental impacts of the service sector will require a different regulatory approach than that applied to manufacturing, mining, or agriculture, the study shows. Rather than seek new regulations, federal and local officials should instead focus on devising incentives for service businesses to adopt environment-friendly behaviors, ranging from reducing energy use in fast-food chains to educating tourists about protecting sensitive habitats.


Reducing mercury in health care


Of the three industries studied, health care has the greatest direct impact on the environment. Unique environmental challenges facing health care facilities stem from their use of mercury, nuclear products, and other materials, the exposure to which can put workers and others at risk. For example, 10 percent of all mercury used in the United States is used in dental applications. Environmental and health concerns have prompted the use of alternatives to mercury in non-health care settings, but health officials have been slow to respond.

Industry leaders and government regulators should continue to encourage the use of substitute materials for mercury. At the same time, they should accelerate the transition away from on-site assembly of all medical products using mercury and radioactive materials in favor of central, off-site locations, where the waste that is generated can be better handled.

In recent years, the health care industry has responded to concerns about infectious diseases such as HIV by adopting new procedures which have resulted in an increased stream of medical waste. As these environmentally-damaging practices have proliferated, however, the rate of hospital-acquired infections has remained stable. Health care leaders should seek new ways to reduce infections that do not exact so large an environmental cost, the study says. Reduced waste would also help cut the demand for on-site incinerators, which now are the third largest emitters of dioxin-like compounds, according to the EPA.


Opportunities for the food industry upstream


The prime environmental challenges facing the food service and food retail industries involve the generation of significant amounts of solid waste, assurance of food safety, high energy-intensity levels, and use of chlorofluorocarbons in refrigeration. Generally, however, these impacts are not particularly significant in magnitude, nor are they unique to the food service and food retail industries, the RFF study says.

These industries are in a position to leverage the behavior of suppliers and consumers. They can encourage producers, wholesalers and distributors to reduce packaging, use recycled materials, or reduce pesticide use, for example. And firms can offer more environment-friendly choices to consumers, thus helping raise consumer awareness. Already, collaborations between industry and environmental organizations - such as the ten-year alliance between McDonalds and Environmental Defense (formerly EDF) have resulted in reduced packaging and greater use of recycled materials. The food industries also should work with government agencies and food marketing companies to improve food handling and bolster food safety systems.


Balancing effects of tourism

Although tourism was once thought of as a "smokeless" industry, there has been an increasing recognition of its potential for adverse environmental impacts. It has been blamed for damaging sensitive habitats and ecosystems, increasing traffic near tourist destinations, generating air and visual pollution in host communities, and spurring changes in land use that have changed the local character of an area. At the same time, tourism has brought environmental benefits to some communities by providing an impetus for protecting sensitive ecosystems or historically significant structures.

As with most of the service sector, the scattered nature of the tourism industry makes it resistant to integrated, holistic regulatory approaches. Currently, environmental regulation of tourism cuts across a wide swath of federal, state, and local authorities.

Businesses and regulators are most likely to reduce the harmful environmental effects of tourism by launching educational efforts that are tailored for specific audiences and designed to compliment existing regulations, the study says. For example, officials could combine a prohibition against anchoring a boat in a sensitive marine ecosystem with an explanation of the potential damage a boat can do to that ecosystem. Hotels can offer guests the choice of having their linens cleaned less frequently, and use this as an opportunity to explain the environmental benefits of such a program. Educational approaches also could be targeted at the industry by emphasizing the cost savings and marketing benefits of "green" tourism, the report says.

All three reports - Environmental Implications of the Tourism Industry, Environmental Implications of the Health Care Service Sector, and Environmental Implications of the Foodservice and Food Retail Industries can be downloaded at The study was funded by the US Environmental Protection Agency.

Resources for the Future is a nonprofit and nonpartisan think tank located in Washington, DC, that conducts independent research - rooted primarily in economics and other social sciences on environmental and natural resource issues. Contacts: Dan Quinn, (202) 328-5019; Terry Davies (202) 328-5080