Environment & Ecology

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Nov 8, 2013 (3 years and 5 months ago)

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003 Environmental Economics & Economic Policy

Environment & Ecology


Economics is concerned with
allocation of scarce resources

including environmental


Most environmental and
economic problems are linked.


What is Environmental
Economics?

The environment and
economy are linked


Economies receive inputs
from the environment.


Process them for use


Discharge the wastes back
into the environment


Traditional economists
ignore the environment.


Environmental economists
accept that human
economies exist within, and
depend on, the environment.

Natural Resources the
Environment Provides


Renewable resources
:


Perpetually available: sunlight, wind, wave
energy


Renew themselves over short periods of
time


These can be destroyed


Non
-
renewable resources
: can be
depleted

Renewable

Natural Resources the
Environment Provides

Nonrenewable

Minerals

Fossil Fuels

Forest

Water

Fruit/Nuts

Fish



Waste are cleaned up


Protect against flooding and hurricane
damage


Medicine


Providing space for recreation, scenery,
wildlife and aesthetic enjoyment

Natural Resources the
Environment Provides

Environmental systems interact


Natural systems are divided into
categories


Lithosphere
: rock and sediment


Atmosphere
: the air surrounding the planet


Hydrosphere
: all water on earth


Biosphere
: the planet’s living organisms


Categorizing systems allows humans to
understand earth’s complexity.


Most systems overlap


Hydrosphere


Lithosphere


Hydrosphere

Environmental Segments


Biosphere


Atmosphere


Lithosphere

Biosphere

Atmosphere

Hydrosphere


Economic growth and environmental
Balance


Conservation recourses


Pollution control and environment

Scope of Environmental
Economics

Ozone depletion

Atmospheric Pollution

Acid Rain

Global warming


What is the fundamental nature of the
environmental problem?


Should the government “intervene” at
all?


How clean should the environment be?


How can we achieve the desired
environmental quality?

Policy Questions
-
EE



“Free” markets will generate excessive
pollution and overuse environmental
services, hence, collective or public
intervention is necessary


How clean the environment should be? Till
MB=MC


Design of policy instruments to achieve
environmental goals


Valuation of non
-
market goods

Economic Perspective on
Environmental Management

U.S. Environmental Policy

Early U.S. environmental
policy addressed land
management
.(1
st

wave)


To promote settlement,
and the extraction and
use of the West’s
abundant natural
resources.


The Western lands
were considered
practically infinite, and
inexhaustible in natural
resources.



Second wave of U.S.
environmental policy
addressed impacts of the first.



During this time the government
created national parks, wildlife
refuges, and the forest system.


Grand Canyon of the Yellowstone, 1872 by Thomas Moran

John Muir & Teddy Roosevelt in Yosemite

Earth Day

April 22, 1970

20 million Americans
participated!


The public demanded that the federal
government do more to protect the
environment. Why?


The publication of Rachel Carson’s
Silent Spring
, 1962


The burning of the Cuyahoga River
on several occasions in the 1950s
and 1960s.


The Santa Barbara, California oil
spill in 1969.

The third wave responded largely to
pollution.


NEPA (National Environmental Policy Act,
1970)

was signed in 1970 and require EIS
(Environmental Impact Statement) for
federal actions and
The Environmental
Protection Agency (EPA)

is created.


Other prominent laws followed: Two major
laws were the
Federal Water Pollution
Control Acts (1965 and 1972)

and
Clean
Water Act (1977).

Approaches to Environmental Policy


1.
Command
-
and
-
control



An approach that sets strict legal limits, and
punishments
as opposed to financial
incentives.


Ex. Regulate pollutants such as SO
2

and NO
x

Auto emissions

Coal plant

Approaches to Environmental Policy


2. Subsidy


A government
giveaway of cash or
publicly owned
resources used to
promote a particular
activity.

Grains
20%

Sugar, oil,
starch,
alcohol 15%

Nuts & legumes 2%

Fruits &
vegetables <1%

Meat &
dairy 63%

The food that subsidies support

Approaches to Environmental Policy


3. Green taxes



Discourages undesirable activities by taxing
activities and products that cause undesirable
environmental impacts.


It’s a tool for policy as well as a way to fund
government.

Tire disposal tax

Electronic waste tax

Approaches to Environmental Policy


4.
Markets in permits



The government can issue permits to
individual polluters.


They may buy, sell, and trade these
marketable emissions permits


this provides financial incentives to reduce
pollution.

Approaches to Environmental Policy


5.
Ecolabeling



tells consumers which brands use
environmentally benign processes.

Real Progress


In 1850 New Hampshire was
35% woods; today it is 80%
woods. Much of
Massachusetts, New
Hampshire, and New York
exhibit similar patterns.


Costa Rica now protects 25%
of its entire country in national
parks.

Real Progress

Clean Air Act, 1970


EPA successfully
improved ozone
(smog), carbon
monoxide, sulfur
dioxide, nitrogen
dioxide, lead, and
particulate soot in
U.S.


EPA announced in
April of 2009 that CO
2

is a pollutant and will
be regulated.

Source: AQMD.gov, 2009

Real Progress

Denmark no longer imports oil because of
widespread adoption of wind power.

Iceland no longer imports oil because of
widespread construction of geothermal
power plants.


Brazil no longer imports oil now that
it uses sugar cane to make bio
-
fuels.

QUESTION: Review

In a capitalist market economy:

a) People get their daily needs from nature

b) The government determines what is
produced

c) People do not purchase or trade goods

d) Buyers and sellers determine production
of goods

e) People believe that making a profit is bad

QUESTION: Review


Which of the following is an ecosystem
service?




a)

Water purification in wetlands

b)

Climate regulation in the atmosphere

c)

Nutrient cycling in ecosystems

d)

Waste treatment by bacteria

e)

All of the above are ecosystem services.

QUESTION: Review

While valuable, neoclassical economics has
led to environmental problems because:

a)

Resources are treated as unlimited

b)

Long
-
term effects are downplayed

c)
Costs and benefits are experienced by people
other than just the buyer and seller

d)
All of the above assumptions have resulted in
environmental problems.

QUESTION: Review

Which of the following is NOT
considered an economic externality?

a)

Human health

b)

Property damage

c)

Price a buyer pays for a product

d)

Aesthetic damage

e)

All of the above are externalities.

QUESTION: Review


Which of the following statements would
be spoken by an ecological economist?

a)

The current economic system is working
fine.

b)

The current economic system simply
needs to be fine
-
tuned.

c)

The current economic system is broken
and a new one needs to be developed.

d)

Economic systems never work.

QUESTION: Review


________ occur(s) when the market
does not reflect the negative impact on
the environment of a particular activity.

a)

A subsidy

b)

Green taxes

c)

Market failure

d)

Equity

QUESTION
: Review


_______ is defined as “policy made
by the government that consists of
laws and regulations.”


a) Tort law

b) Public policy

c) Market failure

d) Tragedy of the commons


Which of the following is a goal of
environmental policy?

a)

Resource protection

b)

Elimination of free riders

c)

Addressing external costs

d)
Promoting equity

e)
All of these are goals of
environmental policy.


QUESTION: Review


Policy is formulated to prevent
________, which tempts people to
cheat.

a)

Resource protection

b)

External costs

c)
The tragedy of the commons

d)
Free riders

d)
Overuse of a commonly held resource by
the public


QUESTION: Review


What happened to the Cuyahoga River,
which increased awareness of
environmental problems?

a)

It smelled bad.

b)

People drowned in it.

c)

It was drained.

d)
It caught on fire.

e)
It was drained because of its high
pollution levels.

QUESTION: Review

NEPA requires an Environmental Impact
Statement when
:

a)

An economically expensive project is
proposed

b)

Any state action may affect the environment

c)

Any federal action may affect the
environment

d)
Politicians decide one is needed

e)
The public demands one

QUESTION: Review

The _________ represent(s) multinational
corporations to promote free trade and
interpret(s) some environmental laws as unfair
to trade.

a)

World Trade Organization

b)

The European Union

c)

United Nations Environment Programme

d)
Non
-
governmental Organizations

e)
All of these represent multinational
corporations.

QUESTION: Review

QUESTION: Review

Which statement is FALSE when
formulating environmental policy?


a)

Identification of the problem is the first
step.

b)

Envisioning a solution to a problem
involves both science and social action.

c)

Individuals tend to be more effective than
organizations.

d)
Lobbyists try to influence politicians.

e)
The final step of policy formulation ends
up with a proposed bill or draft law.