5
Environmental
Economics and
Environmental Policy
Upon completing this chapter, you will be able to:
➤ Describe principles of economic theory and summarize their implications for the environment
➤ Compare the concepts of economic growth, economic health, and sustainability
S economics and ecological economics
➤ Explain the approaches of environmental
➤ Describe the aims of environmental policy
M and assess its societal context
➤ Discuss the history of U.S. environmental policy and identify major U.S. environmental laws
I
T
handle transboundary issues
H and evaluate its effectiveness
➤ Outline the environmental policy process
➤ Discuss the role of science in the policy
, process
➤ Characterize the institutions involved with international environmental policy and describe how nations
➤ Contrast the different approaches to environmental policy
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U
A
6
8
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Contaminated beach near
Tijuana River mouth
Essential Environment: The Science Behind the Stories, Fourth Edition, by Jay Withgott and Matthew Laposata.
Published by Benjamin Cummings. Copyright © 2012 by Pearson Education, Inc.
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CENTR AL C A SE S TUDY
San Diego and Tijuana: Pollution Problems
and Policy Solutions
“Never doubt that a small group of thoughtful, committed citizens can change the world—indeed
it is the only thing that ever has.”
—Anthropologist Margaret Mead
“It is the continuing policy of the Federal Government . . . to create and maintain conditions
under which man and nature can exist in productive harmony and fulfill the social, economic,
and other requirements of present and S
future generations of Americans.”
M
I
he beaches south of San Diego boast T
some of the world’s best waves for surfing.
These days, however, most surfers avoidHthe temptation. For it is here that the heavily
polluted Tijuana River flows across the international
border from Mexico and empties
,
—National Environmental Policy Act
T
into the Pacific Ocean, disgorging millions of gallons of untreated wastewater.
J
“When it rains, I call it the
apartments, shanties, and factoCANADA
O
sewage tsunami,” says surfer and
ries, as well as leaky sewage treatS
environmentalist Serge Dedina.
ment plants and toxic dump sites.
UNITED
San
“For 40 square miles, from ImRains wash pollutants from all
H
STATES
Diego
perial Beach to Coronado, there
these sources into the Tijuana RivU
Tijuana
Atlantic
is a brown plume as far as the
er and eventually onto U.S. and
Ocean
A
eye can see.”
Mexican beaches (FIGURE 5.1B).
MEXICO
Such incidents occur when
Although pollution has
heavy rains overwhelm the abiliflowed in the Tijuana River for
6
Pacific
ty of sewage treatment plants to
decades, the problem grew
SOUTH
Ocean
AMERICA
worse in recent years as the reprocess wastewater. San Diego’s
8
gion’s population boomed, outcoastal waters receive stormwa9
stripping the capacity of sewage treatment facilities.
ter runoff when rains wash pollutants into local rivers.
0
As impacts intensified, people on both sides of the
Across the border in the Mexican city of Tijuana, the
border pressed policymakers for action. As a result,
aging, leaky sewer system becomes clogged with deB
Mexico and the United States worked together to
bris, causing raw sewage to overflow into the streets
U
and, eventually, into the Tijuana River.
construct a wastewater treatment plant to handle exWinding northwestward through the arid landcess waste from Tijuana. The South Bay International
scape of northern Baja California, Mexico, the Tijuana
Wastewater Treatment Plant (IWTP) began operatRiver crosses the U.S. border south of San Diego (FIGing just north of the border in 1997 and treats up to
URE 5.1A). A river’s watershed consists of all the land
95 million L (25 million gal) of wastewater each day.
from which water drains into the river, and the Tijuana
Unfortunately, the facility reached its capacity withRiver’s watershed covers 4,500 km2 (1,750 mi2) and is
in three years because Tijuana’s population grew
home to 2 million people of two nations. The Tijuana
so quickly, and excess wastewater began flowing
River watershed is a transboundary watershed (so
downriver.
named because it crosses a political boundary—in this
Since then, beach closures and pollution-related
case, an international border), with approximately 70%
health advisories have been commonplace. Garbage
of its area in Mexico. On the Mexican side of the borcarried by the river litters the beaches. “Every day I
der, the river and its tributaries are lined with farms,
find broken glass, balloons, or can pop-tops. I’ve
Essential Environment: The Science Behind the Stories, Fourth Edition, by Jay Withgott and Matthew Laposata.
Published by Benjamin Cummings. Copyright © 2012 by Pearson Education, Inc.
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San
Diego
International
Wastewater
Treatment Plant
U.S.
MEXICO
Tijuana
Tijuana River
Watershed
(a) Map of the Tijuana River watershed
(b) Wastewater enters the ocean near Tijuana
FIGURE 5.1 The Tijuana River winds northwestward from Mexico into California just south of San Diego, draining
4,500 km2 (1,750 mi2) of land in its watershed (colored green in map) (a). Pollution entering the river affects people on
both sides of the border and sometimes creates a visible brown plume of wastewater entering the Pacific Ocean (b).
The photo shows an aerial view from the north, with Tijuana in the background.
even found hypodermic needles. It’s really sad,” one
resident of Imperial Beach told her local newspaper.
Mexican residents of the Tijuana River watershed
suffer more pollution because most live in poverty
relative to their U.S. neighbors. Close to one-third of
Tijuana’s homes are not connected to a sewer system,
and in poor neighborhoods such as Loma Taurina, river pollution directly affects people’s day-to-day lives
by contaminating water for drinking and washing and
by promoting risks of disease, especially when flooding occurs. The rise of U.S.-owned factories, or maquiladoras, on the Mexican side of the border also has
contributed to pollution, through the direct disposal
of industrial waste and by attracting thousands of new
workers to the already crowded region. In many ways,
economic inequities spanning the border region have
aggravated its problems with water pollution.
As we explore environmental economics and environmental policy in this chapter, we will periodically
return to the Tijuana River watershed and see how
people are making progress by using science and policy to help address the region’s pollution challenges. ■
ECONOMICS: APPROACHES AND
ENVIRONMENTAL IMPLICATIONS
Many environmental problems share the mix of impacts we
see in the Tijuana River watershed—harming human health,
altering ecological systems, inflicting economic damage, and
contributing to inequities among people. In the Tijuana River
watershed, pollution affects the region’s economies—while
economic inequities, in turn, worsen pollution. Sewage-tainted water carries pathogens (organisms that cause illness), posing health risks and leading to higher medical costs. Untreated
S
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wastewater lowers concentrations of dissolved oxygen, killing
T economically valuable fish and shellfish. Pollution and beach
H closures reduce recreation and tourism both in Mexico and in
southern California, whose beaches each year host 175 million
, visitors who spend over $1.5 billion. As a result, finding ways
to reduce pollution will help the region economically.
Economics is the study of how people decide to use reJ sources to provide goods and services in the face of demand
O for them. By this definition, environmental problems are also
economic problems that vary with population and per capita
S resource consumption. Indeed, the word economics and the
H word ecology come from the same Greek root, oikos, mean“household.” Economists traditionally have studied the
U ing
household of human society, while ecologists study the broadA er household of all life.
Several types of economies exist
6
An economy is a social system that converts resources into
8 goods, material commodities manufactured for and bought
9 by individuals and businesses; and services, work done for
as a form of business. The oldest type of economy
0 others
is the subsistence economy. People in subsistence econoB mies meet their daily needs by subsisting on what they can
from nature or produce on their own, rather than
U gather
working for wages and then purchasing life’s necessities.
Environmental Economics and Environmental Policy
Tijuana
River
CHAPTER 5
Pacific
Ocean
89
A second type of economy is the capitalist market economy. In this system, interactions among buyers and sellers de-
termine which goods and services are produced, how much
is produced, and how these are produced and distributed.
Capitalist economies contrast with state socialist economies,
or centrally planned economies, in which government determines how to allocate resources. In reality, today’s capitalist and socialist economies have borrowed much from one
another and are in fact hybrid systems (often termed mixed
economies).
In modern mixed economies, governments typically intervene in the market for several reasons: (1) to eliminate unfair advantages held by single buyers or sellers; (2) to provide
Essential Environment: The Science Behind the Stories, Fourth Edition, by Jay Withgott and Matthew Laposata.
Published by Benjamin Cummings. Copyright © 2012 by Pearson Education, Inc.
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social services, such as national defense, medical care, and
education; (3) to provide “safety nets” for the elderly, victims
of natural disasters, and so on; (4) to manage the commons
(p. 3–4); and (5) to reduce pollution and other threats to
health and quality of life.
Economies rely on goods and services
from the environment
90
Economies receive inputs (such as natural resources) from
the environment, process them in complex ways that enable human society to function, and then discharge outputs
(such as waste) into the environment. Although these interactions between human economies and the nonhuman
environment are readily apparent, traditional economic
schools of thought have long overlooked the importance of
these connections. Indeed, most mainstream economists
still adhere to a worldview that largely ignores the environment (FIGURE 5.2A)—and this worldview continues to
drive most policy decisions. However, modern economists
belonging to the fast-growing fields of environmental economics and ecological economics (pp. 93–94) explicitly
recognize that human economies are subsets of the environment and depend crucially upon it for natural resources
and ecosystem services (FIGURE 5.2B).
Economic activity uses natural resources (pp. 2–3), the
substances and forces we need to survive: the sun’s energy,
the fresh water we drink, the trees that provide us lumber, the
rocks that provide us metals, and the fossil fuels that power
our machines. We can think of natural resources as “goods”
produced by nature.
Environmental systems also naturally function in a manner that supports economies. Earth’s ecological systems purify
air and water, form soil, cycle nutrients, regulate climate, pollinate plants, and recycle the waste generated by our economic
activity. Such essential processes, called ecosystem services
(pp. 2, 36), support the life that makes our economic activity
possible.
While our environment enables economic activity by
providing ecosystem goods and services, economic activity
can affect the environment in return. When we deplete natural
resources and generate pollution, we often degrade the capacity of ecological systems to function. In fact, the Millennium
Ecosystem Assessment (p. 16) concluded in 2005 that 15 of 24
ecosystem services its scientists surveyed globally were being
degraded or used unsustainably. The degradation of ecosystem services can in turn disrupt economies, as we see along the
Tijuana River, where pollution depresses people’s economic
opportunities. Ecological degradation is harming poor people
more than wealthy people, according to the Millennium Ecosystem Assessment. As a result, restoring ecosystem services
stands as a prime avenue for alleviating poverty.
Adam Smith proposed
an “invisible hand”
When economics began to develop as a discipline in the 18th
century, many philosophers argued that individuals acting in their own self-interest would harm society (as in the
tragedy of the commons, p. 3–4). However, Scottish philosopher Adam Smith (1723–1790) believed that self-interested
behavior could benefit society, as long as the behavior was
constrained by the rule of law and private property rights and
operated within fairly competitive markets. Known today as
a founder of classical economics, Smith felt that when people are free to pursue their own economic self-interest in a
competitive marketplace, the marketplace will behave as if
guided by “an invisible hand” that leads their actions to benefit society as a whole. Smith’s philosophy remains a pillar of
free-market thought today.
Neoclassical economics incorporates
psychology and cost-benefit analysis
Economists subsequently adopted more quantitative approaches as they aimed to explain human behavior. NeoclassiScal economics examines the psychological factors underlying
choices, explaining market prices in terms of conMconsumer
sumer preferences for units of particular commodities. In
I neoclassical economic theory, buyers desire the lowest possiprice, whereas sellers desire the highest possible price. As
Tble
a result of this conflict, a compromise price is reached, and
Hthe “right” quantities of commodities are bought and sold.
, This balance is often phrased in terms of supply, the amount
of a product offered for sale at a given price, and demand, the
amount of a product people will buy at a given price if free to
Jdo so (FIGURE 5.3).
To evaluate an action or decision, neoclassical economists
Ooften use cost-benefit analysis. In this approach, economists
Stotal up estimated costs for a proposed action and compare
these to the sum of benefits estimated to result from the acHtion. If benefits exceed costs, the action should be pursued; if
Ucosts exceed benefits, it should not. Given a choice of alternaactions, the one with the greatest excess of benefits over
Ative
costs should be chosen.
This reasoning seems eminently logical, but problems
often arise because not all costs and benefits can be easily
6identified, defined, or quantified. For example, it may be
8easy to tally up the costs of installing equipment to reduce
9pollution, yet difficult to assess the effects of pollution on
people’s health or lifestyles. Moreover, monetary values
0can often be assigned more easily to economic benefits
B(such as jobs created by a factory) than to environmental
costs (such as long-term health impacts of the factory’s polUlution on a community), so economic benefits tend to be
overrepresented in cost-benefit analyses. As a result, environmental advocates often feel these analyses are biased in
favor of economic development and against environmental
protection.
Neoclassical economics has profound
implications for the environment
Today’s capitalist market systems operate largely in accord
with the principles of neoclassical economics. These systems
have generated unprecedented material wealth for our societies. Alas, four fundamental assumptions of neoclassical economics often contribute to environmental degradation.
Essential Environment: The Science Behind the Stories, Fourth Edition, by Jay Withgott and Matthew Laposata.
Published by Benjamin Cummings. Copyright © 2012 by Pearson Education, Inc.
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FIGURE 5.2 Standard neoclassical economics focuses on processes of production and consumption between households and
businesses (a), viewing the environment only as a “factor of
production” that helps enable the production of goods. In
contrast, environmental economics and ecological economics
each view the human economy as existing within the natural
environment (b), receiving resources from it, discharging waste
into it, and benefiting from various ecosystem services.
Agriculture, industry, business
Wages
Products
(goods and
services)
Labor
Payment
for
products
Households
(a) Conventional view of economic activity
Recycling
Natural resources
(ecosystem goods)
Households
Economy
Natural recycling: Climate regulation,
air and water purification,
nutrient cycling, etc.
(ecosystem services)
Waste acceptance
(ecosystem service)
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CHAPTER 5
Agriculture, industry, business
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Environmental Economics and Environmental Policy
S
Ecosystem services
M
(e.g., recreation, pollination of crops, etc.)
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H
,
91
(b) Economic activity as viewed by environmental and ecological economists
Are resources infinite or substitutable? One assumption is that natural resources and human resources
(such as workers) are either infinite or largely substitutable
and interchangeable. This implies that once we have used up
a resource, we should be able to find a replacement for it. Certainly it is true that many resources can be replaced. However,
some cannot. Nonrenewable resources (such as fossil fuels)
can truly be depleted, and many renewable resources (such as
forest products) can also be used up if we exploit them faster
than they are replenished.
Should we discount the future? Second, neoclassical
economics grants an event in the future less value than one
in the present. In economic terminology, future effects are
Essential Environment: The Science Behind the Stories, Fourth Edition, by Jay Withgott and Matthew Laposata.
Published by Benjamin Cummings. Copyright © 2012 by Pearson Education, Inc.
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Supply
Price
Market
equilibrium
Demand
Quantity
FIGURE 5.3 In a supply-and-demand graph, the demand
curve indicates the quantity of a given good (or service) that
consumers desire at each price, and the supply curve indicates
the quantity produced at each price. The market automatically
moves toward an equilibrium point at which supply equals
demand.
“discounted.” Short-term costs and benefits are granted more
importance than long-term costs and benefits, causing us to
ignore the long-term consequences of policy decisions. Many
environmental problems unfold gradually, and discounting
causes us to downplay the impacts on future generations of
the pollution we create and the resources we deplete today.
92
Are all costs and benefits internal? A third assumption of neoclassical economics is that all costs and benefits associated with an exchange of goods or services are
borne by individuals engaging directly in the transaction.
In other words, it is assumed that the costs and benefits
are “internal” to the transaction, experienced by the buyer
and seller alone. However, many transactions affect other
members of society. For example, pollution from a maquiladora along the Tijuana River can harm people living
downstream. In such a case, members of society not involved in producing the pollution end up paying its costs.
When market prices do not take the social, environmental,
or economic costs of pollution into account, then taxpayers bear the burden of paying them. Costs of a transaction
that affect people other than the buyer or seller are known
as external costs (FIGURE 5.4). External costs commonly
include the following:
▶ Human health problems
▶ Property damage
▶ Declines in desirable features of the environment, such as
fewer fish in a stream
▶ Aesthetic damage, such as from air pollution or
clear-cutting
▶ Stress and anxiety experienced by people downstream or
downwind from a pollution source
▶ Declining real estate values resulting from these problems
FIGURE 5.4 River pollution creates external costs. This woman
washing clothes in the Tijuana River suffers pollution from factories
upstream, and her use of detergents causes pollution for people
living downstream.
S
M
I By ignoring external costs, economies create a false imTpression of the consequences of particular choices and unjustly subject people to the impacts of transactions in which they
Hdid not participate. External costs comprise one reason gov, ernments develop environmental legislation and regulations.
Is all growth good?
A fourth assumption of the neo-
Jclassical economic approach is that economic growth is reOquired to keep employment high and maintain social order.
Economic growth, it is argued, should create opportunities
Sfor the poor to become wealthier. By making the overall ecoHnomic pie larger, everyone’s slice becomes larger, even if some
people still have much smaller slices than others. In today’s
Ueconomies, economic growth has become the quantitative
Ayardstick by which progress is measured.
To the extent that economic growth is a means to an end—
a path to greater human well-being—it is a good thing. How6ever, when growth becomes an end in itself it may no longer
the best route toward well-being. Sociologists have even
8be
coined a word for the way material goods often fail to bring
9contentment to people affluent enough to afford them: affluMoreover, critics of the growth paradigm fear that the
0enza.
endless pursuit of economic growth will eventually destroy our
Beconomic system, because resources to support growth are ulUtimately limited.
How sustainable is economic growth?
Our global economy is seven times the size it was just half a
century ago. All measures of economic activity—trade, rates
of production, amount and value of goods manufactured—are
higher than ever before. This has brought many people much
greater material wealth (although not equitably, and gaps between rich and poor are wide and growing).
The modern-day United States exemplifies the view that
“more and bigger” are always better. Spurred on by advertising and the increased availability of goods due to technological advances and expanded global trade, Americans have
embarked on a frenzy of consumption unparalleled in history.
Essential Environment: The Science Behind the Stories, Fourth Edition, by Jay Withgott and Matthew Laposata.
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More resource
extraction
Idea that all
growth is good
Advertising
Consequences
More resource
extraction
6
8
Rising per capita
9
consumption
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Globalization
and trade
Loss of
biodiversity and
ecosystem services
Habitat alteration
More fossil fuel use
Global climate
change
Environmental Economics and Environmental Policy
More agricultural
production
More
manufacturing
,
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Causes
New technologies
Can we conclude, then, that improvements in technology will allow us to overcome all our environmental
limitations and continue economic growth indefinitely?
Surely we can innovate and achieve further efficiency and
economic growth without depleting our resource base—but
ultimately, nonrenewable resources are finite, and renewable
resources can be exploited only at limited rates. If our population and consumption continue to grow and we do not
shift to full reuse and recycling, we will inevitably deplete
resources and put ever-greater demands on our capacity to
innovate.
Ecological economists argue that civilizations do not, in
the long run, overcome their environmental limitations. Ecological economists apply principles of ecology and systems
science (Chapter 2) to the analysis of economic systems, and
they view natural systems as good models for making human
economies sustainable. In nature, every population faces limS iting factors and a carrying capacity (p. 58), and systems generally operate in self-renewing cycles, not in a linear manner.
MMany ecological economists advocate economies that do not
I grow and do not shrink, but rather are stable. Such steadystate economies are intended to mirror natural systems.
T Ecological economists maintain that quality of life should
H continue to rise in a steady-state economy, as a result of technological advances and behavioral changes (such as greater
CHAPTER 5
The dramatic rise in per-person consumption has numerous
consequences (FIGURE 5.5).
Economic growth stems from two sources: (1) an increase
in inputs to the economy (e.g., greater inputs of labor and natural resources) and (2) improvements in the efficiency of production due to better technologies and approaches (i.e., ideas
and equipment that enable us to produce more goods with
fewer inputs). This second approach—whereby we produce
more with less—is often termed economic development.
As our population and consumption rise, it is becoming clearer that we cannot sustain growth forever using the
first approach. Nonrenewable resources on Earth are finite in
quantity, and there are limits on the rates that we can harvest
many renewable resources. As for the second approach, we
have used technological innovation to push back the limits
on growth time and again. More-efficient technologies for
extracting minerals, fossil fuels, and groundwater allow us to
exploit these resources more fully with less waste. Automated
farm machinery, fertilizers, and chemical pesticides enable us
to grow more food per unit area of land (p. 136). Better machinery in our factories speeds our manufacturing. We continue to make computer chips more powerful while also making them smaller and using fewer raw materials. In all these
ways, we are producing more goods and services while using
fewer resources.
93
Economic loss
Health impacts
More waste and
pollution
Social disruption
“Affluenza”
Solutions
As you progress through this chapter, try to identify as many
solutions to rising per capita consumption as you can. What could
you personally do to help address this issue? Consider how each
action or solution might affect items in the concept map above.
FIGURE 5.5 The rise in per-person consumption of goods and services stems from multiple causes (ovals on
left) and results in a diversity of environmental, social, and economic consequences (boxes on right). Arrows in
this concept map lead from causes to consequences. Note that items grouped within an outlined box do not necessarily share any special relationship; the outlined box is intended merely to streamline the figure.
Essential Environment: The Science Behind the Stories, Fourth Edition, by Jay Withgott and Matthew Laposata.
Published by Benjamin Cummings. Copyright © 2012 by Pearson Education, Inc.
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use of recycling) that enhance sustainability. They argue that
wealth and human well-being can continue to increase after
economic growth has leveled off.
Environmental economists tend to agree with ecological economists that economies are unsustainable if population growth is not reduced and resources are not used more
efficiently, but they argue that, with effort, we can accomplish
these changes and attain sustainability within our current
economic systems. By modifying the principles of neoclassical economics to address environmental challenges, environmental economists maintain that we can keep our economies
growing and that technology can continue to improve efficiency. Thus, whereas ecological economists call for revolution, environmental economists call for reform. One approach
environmental economists take is to assign monetary values
to ecosystem goods and services, so as to better integrate them
into traditional cost-benefit analyses.
We can assign monetary value
to ecosystem goods and services
Ecosystem services are said to have nonmarket values, values
not usually included in the market price of a good or service
(TABLE 5.1 and FIGURE 5.6). For example, the aesthetic and
recreational pleasure we obtain from natural landscapes is
something of real value. Yet because we do not pay money for
this, its value is hard to quantify and appears in no traditional measures of economic worth. Or consider Earth’s water
cycle (p. 37), by which rain fills our reservoirs with drinking
water, rivers give us hydropower and flush away our waste,
and water evaporates, purifying itself of contaminants and
readying itself to fall again as rain. This natural cycle is vital
to our very existence, yet because we do not quantify its value, markets impose no financial penalties when we disturb it.
To resolve this dilemma, environmental and ecological economists have sought ways to assign values to ecosystem services. In one technique, economists use surveys to
determine how much people are willing to pay to protect
or restore a resource. In another approach, they measure the
money, time, or effort people expend to travel to parks for recSreation. Economists also compare housing prices for similar
homes in different environmental settings to infer the dollar
Mvalue of landscapes, views, and peace and quiet. They may also
I measure the cost required to restore natural systems that have
been damaged, to replace those systems’ functions with techTnology, or to reduce harm from pollution.
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(a) Use value
FIGURE 5.6 Accounting for nonmarket
values such as those shown here may help us
to make better environmental and economic
decisions. See Table 5.1 for details.
(b) Existence value
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(c) Option value
(d) Aesthetic value
(e) Scientific value
(f) Educational value
(g) Cultural value
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Published by Benjamin Cummings. Copyright © 2012 by Pearson Education, Inc.
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In a follow-up study in 2002, Costanza joined Andrew
Balmford and 17 other colleagues to compare the benefits and
costs of preserving natural systems versus converting wild
lands for agriculture, logging, or fish farming. After reviewing
many studies, they reported in the journal Science that a global
network of nature reserves covering 15% of Earth’s land surface and 30% of the ocean would be worth between $4.4 and
$5.2 trillion. This amount is 100 times greater than the value
of those areas were they to be converted for direct exploitative
human use—demonstrating, in their words, that “conservation in reserves represents a strikingly good bargain.”
TABLE 5.1 Values That Modern Market Economies
Generally Do Not Address
Use value
that we use directly
Existence value
simply because they exist, even though
we may never experience them directly (e.g., an endangered species in a
far-off place)
Option value
that we do not use now but might use
later
Aesthetic value
for their beauty or emotional appeal
Scientific value
that may be the subject of scientific
research
Educational value
that teach us about ourselves or the
world
Cultural value
that sustain or help define our culture
Businesses are responding
to sustainability concerns
In 1997, a research team headed by environmental
economist Robert Costanza set out to calculate the total economic value of all the services that oceans, forests, wetlands,
and other ecosystems provide across the world. Costanza’s
team combed the scientific literature and evaluated over 100
studies that used various methods to estimate dollar values
for 17 major ecosystem services such as water purification,
climate regulation, plant pollination, and pollution cleanup
(FIGURE 5.7). To improve the accuracy of estimates, the researchers reevaluated the data using multiple techniques.
They then multiplied average estimates for each ecosystem
by the global area occupied by each. Their analysis, reported
in the journal Nature, calculated that Earth’s biosphere in total provides at least $33 trillion ($46 trillion in 2011 dollars)
worth of ecosystem services each year—more than the GDP
of all nations combined!
A
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Soil formation
Genetic resources
Pollination
Habitat provision
Biological control
Type of ecosystem service
As economists rethink old assumptions and as more consumers
and investors express preferences for sustainable products and
S services, many industries, businesses, and corporations are finding that they can make money by “greening” their operations.
M Some companies have cultivated an eco-conscious image
I from the start, such as Ben & Jerry’s (ice cream), Patagonia
(outdoor apparel), Seventh Generation (household products),
T and Credo (formerly Working Assets; phone service). In recent
H years, however, corporate sustainability has gone mainstream,
some of the world’s largest corporations have joined in, in, and
cluding Ford Motor Company, Toyota, McDonald’s, Starbucks,
IKEA, Dow, Dupont, BASF, Intel, and Wal-Mart (FIGURE 5.8).
runs programs to reuse and recycle used tonJ Hewlett-Packard
er cartridges, electronics, and plastics. Nike, Inc., collects milO lions of used sneakers each year and recycles their materials to
S create surfaces for basketball courts, tennis courts, and running
tracks. The Gap, Inc., built a sustainably designed headquarH ters building, cut energy use in its stores and distribution centU ers, and promotes alternative transportation for its employees.
Today many corporations are finding ways to increase energy
Erosion control
Climate regulation
Raw materials
Environmental Economics and Environmental Policy
Is the worth we ascribe to things . . .
CHAPTER 5
Nonmarket value
95
Recreation
Water regulation
Gas regulation
Food provision
For more on ecosystem
services, see Figure 2.17
in Chapter 2.
Water supply
Disturbance regulation
Waste treatment
Cultural uses
Nutrient cycling
0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Total global value per year (trillions of dollars)
17.0
FIGURE 5.7 Environmental economists in
1997 estimated the value of the world’s ecosystem services at more than $33 trillion ($46
trillion in 2011 dollars). Shown are subtotals
for each major type of ecosystem service. The
$33 trillion figure is an underestimate because
it does not include values from ecosystems for
which adequate data were unavailable. Data
from Costanza, R., et al., 1997. The value of the world’s
ecosystem services and natural capital. Nature 387:
253–260.
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contributions to economies (such as ecosystem services) or
when they do not reflect the negative impacts of economic
activity on the environment or on people (external costs).
Traditionally, market failure has been countered by government intervention. Governments can restrain corporate behavior through laws and regulations. They can tax environmentally harmful activities. Or, they can design economic
incentives that use market mechanisms to promote fairness,
resource conservation, and economic sustainability. We will
now examine these approaches in our discussion of environmental policy.
ENVIRONMENTAL POLICY:
AN OVERVIEW
Economic analysis and scientific research can help us deter-
FIGURE 5.8 A Wal-Mart cashier bags compact fluorescent bulbs
in reusable canvas bags for a customer. Wal-Mart provides the
most celebrated recent example of corporate greening efforts. The
world’s largest retailer has launched a program to sell organic and
sustainable products, reduce packaging and use recycled materials, enhance fuel efficiency in its truck fleet, reduce energy use in
its stores, power itself with renewable energy, cut carbon dioxide
emissions, and preserve one acre of natural land for every acre
developed. It is also developing a “sustainability index” to rate its
products and inform consumers. Although many remain skeptical
of Wal-Mart’s commitment to sustainability, the corporation’s vast
reach and its ability to persuade suppliers to alter their practices in
order to retain its business mean that any change Wal-Mart enacts
could have far-reaching impacts.
96
efficiency, reduce toxic substances, increase the use of recycled
materials, and minimize greenhouse gas emissions. In doing so,
they often find that they reduce costs and increase profit.
Of course, corporations exist to make money for their
shareholders, so they cannot be expected to pursue goals
that do not turn a profit. Moreover, many corporate greening efforts are more rhetoric than reality, and corporate
greenwashing may mislead consumers into thinking a
company is acting more sustainably than it is. For instance,
the bottled water industry advertises its products with words
such as “pure” and “natural.” Images of forests and alpine
springs lead us to believe that bottled water is cleaner and
healthier for us to drink—when in reality the water is often
less safe, the plastic bottles are a major source of waste, oil
is used to manufacture and transport the bottles, and the industry depletes aquifers in local communities (pp. 268–269).
In the end, corporate actions hinge on consumer behavior. It is up to all of us in our roles as consumers to encourage trends in sustainability by rewarding those businesses that
truly promote sustainable solutions.
Markets can fail
When they do not reflect the full costs and benefits of actions, markets are said to fail. Market failure occurs when
markets do not take into account the environment’s positive
Smine when resources are being depleted, ecosystem services
being degraded, or people’s quality of life is declining.
Mare
Once a society reaches broad agreement that such a problem
I exists, it may persuade its leaders to try to resolve the probTlem through the making of policy. Policy consists of a formal
set of general plans and principles intended to address probHlems and guide decision making in specific instances. Public
, policy is policy made by governments, including those at the
local, state, federal, and international levels. Public policy
consists of laws, regulations, orders, incentives, and pracJtices intended to advance societal well-being. Environmental
policy is policy that pertains to human interactions with the
Oenvironment. It generally aims to regulate resource use or
Sreduce pollution in order to promote human welfare and/or
protect natural systems.
H Forging effective environmental policy requires input
Ufrom science, ethics, and economics. Science provides inforand analysis needed to identify and understand probAmation
lems and devise solutions. Ethics and economics offer criteria
to assess problems and to help clarify how society might like
address them. Government interacts with citizens, organi6to
zations, and the private sector in various ways to formulate
8policy (FIGURE 5.9).
9
0Environmental policy addresses issues
Bof fairness and resource use
capitalism is driven by incentives for short-term ecoUMarket
nomic gain rather than long-term social and environmental
stability. It provides little motivation for businesses or individuals to behave in ways that minimize environmental impact or that equalize costs and benefits among parties. As we
noted, such market failure has traditionally been viewed as
justification for government intervention. Environmental
policy aims to protect environmental quality and the natural
resources people use, and also to promote equity or fairness
in people’s use of resources.
The tragedy of the commons Policy to protect resources held and used in common by the public is intended
to safeguard them from depletion or degradation. As environmental scientist Garrett Hardin explained in his 1968
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Personal
actions and
consumer
choices
Citizenry
Votes, lobbying,
campaign funding,
legal action
Private sector
Lobbying,
campaign funding,
legal action
Policy
Government
Solutions
to
environmental
problems
Information
and analysis
S
Improvements
in efficiency
M
and
technology
I
T
FIGURE 5.9 Policy plays a central role in how we as a society address environmental problems. Voters, the
private sector, and lobbying groups representing various interestsH
influence government representatives.
Scientific research also informs government decisions. Governmental representatives and agencies formulate
,
policy that aims to address problems. Public policy—along with improvements in technology and efficiency
essay “The Tragedy of the Commons” (pp. 3–4), a resource
held in common that is accessible to all will eventually become overused and degraded. Therefore, he argued, it is in
our best interest to develop guidelines for the use of such
resources. In Hardin’s example of a common pasture, guidelines might limit the number of animals each individual can
graze or might require pasture users to pay to restore and
manage the shared resource. These two concepts—restriction
of use and active management—are central to environmental
policy today.
Free riders A second reason to develop policy for publicly held resources is the free rider predicament. Let’s say
a community on a river suffers from water pollution that
emanates from 10 different factories. The problem could in
theory be solved if every factory voluntarily agreed to reduce its own pollution. However, once they all begin reducing their pollution, it becomes tempting for any one of them
to stop doing so. Such a factory, by avoiding the sacrifices
others are making, would in essence get a “free ride.” If
enough factories take a free ride, the whole effort will collapse. Because of the free rider problem, private voluntary
efforts are generally less effective than efforts mandated by
public policy, which help ensure that all parties sacrifice
equitably.
External costs Environmental policy also aims to
promote fairness by eliminating external costs, ensuring
that some parties do not use resources in ways that harm
J
O
S others. For example, a factory may reap greater profits by
H discharging waste freely into a river and avoiding paying
for waste disposal or recycling. Its actions, however, imU pose external costs (water pollution, decreased fish populaA tions, aesthetic degradation, health risks) on downstream
6
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B
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users of the river. U.S.-owned maquiladoras in the Tijuana
River watershed dump waste that affects Mexican families
downstream (see Figure 5.4). Likewise, wastewater from
the growing number of people living in the watershed further pollutes the river, imposing external costs on families farther downstream and beachgoers in Mexico and
California.
CHAPTER 5
and personal actions and consumer purchasing choices—can produce lasting solutions to environmental
problems.
Environmental Economics and Environmental Policy
Science
97
Do We Really Need Environmental
Policy? Many free-market advocates contend
that environmental laws and regulations are an
undesirable government intrusion into private
affairs. Adam Smith (p. 90) argued that individuals benefit
society by pursuing their own self-interest. Do you agree?
Can you describe a situation in which an individual acting
in self-interest either (a) benefits society by addressing an
environmental problem, or (b) harms society by causing an
environmental problem? How might policy help in either
situation? What are some advantages and disadvantages
of environmental laws and regulations?
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U.S. ENVIRONMENTAL
LAW AND POLICY
98
The United States provides a good focus for understanding
environmental policy in constitutional democracies worldwide, for several reasons. First, the United States has pioneered innovative environmental policy. Second, U.S. policies have served as models—of both success and failure—for
other nations and international government bodies. Third,
the United States exerts a great deal of influence on the affairs
of other nations. Finally, understanding U.S. environmental
policy at the federal level helps us understand it at local, state,
and international levels.
The three branches of the U.S. federal government—
legislative, executive, and judicial—are each involved in aspects of environmental policy. Once legislation, or statutory
law, is passed by Congress and signed into law by the president, its implementation and enforcement is assigned to an
administrative agency within the executive branch. Administrative agencies are the source of a great deal of policy, in the
form of regulations, specific rules intended to help achieve
the objectives of the more broadly written statutory law. Besides issuing regulations, administrative agencies monitor
compliance with laws and regulations and enforce them when
they are violated. The judicial branch interprets law as needed
in response to suits in the courts.
The structure of the federal government is mirrored at
the state level with governors, legislatures, judiciaries, and
agencies. State laws cannot violate principles of the U.S.
Constitution, and if state and federal laws conflict, federal
laws take precedence. Many states with dense urban populations, such as California, New York, New Jersey, and Massachusetts, have strong environmental laws and well-funded
environmental agencies. Citizens of such states put more
emphasis on safeguarding environmental quality because
they have witnessed extensive environmental degradation in
the past.
To safeguard public health in locations such as San Diego’s
beaches, California’s state legislators have required state environmental health officials to set standards and test waters for
bacterial contamination. Officials issue an advisory, or warning, when bacterial concentrations in nearshore waters exceed
health limits established by California law. As we proceed
through our discussion of federal policy, keep in mind that
important environmental policy is also created at the state and
local levels.
Early U.S. environmental policy
promoted development
The laws that comprise U.S. environmental policy were created largely in three periods. Laws enacted during the first
period, from the 1780s to the late 1800s, accompanied the
westward expansion of the nation and were intended mainly
to promote settlement and the use of the continent’s abundant natural resources (FIGURE 5.10).
Among these early laws were the General Land Ordinances of 1785 and 1787, which gave the federal government
the right to manage unsettled lands and created a grid
system for surveying them and readying them for private
ownership. Between 1785 and the 1870s, the federal government promoted settlement on lands it had expropriated from Native Americans, and it doled out these lands
to its citizens. Western settlement provided these citizens
with means to achieve prosperity while relieving crowding
in Eastern cities. It expanded the geographical reach of the
United States at a time when the young nation was still jostling with European powers for control of the continent. It
also wholly displaced the millions of Native Americans who
had long inhabited these lands. U.S. environmental policy
of this era reflected the public perception that Western
lands were practically infinite and inexhaustible in natural resources. Laws encouraged settlers, entrepreneurs, and
land speculators to move west, and this hastened the closing
of the frontier.
S
MThe second wave of U.S. environmental
I policy encouraged conservation
TIn the late 1800s, as the continent became more populated
and its resources were increasingly exploited, public perHception and government policy toward natural resources
, began to shift. Laws of this period aimed to alleviate some
of the environmental impacts associated with westward
expansion.
J In 1872, Congress designated Yellowstone as the world’s
national park. In 1891, Congress passed a law authorizing
Ofirst
the president to create “forest reserves” in order to prevent
Soverharvesting and protect forested watersheds. In 1903, PresTheodore Roosevelt created the first national wildlife
Hident
refuge. These acts enabled the creation of a national park sysUtem, national forest system, and national wildlife refuge sysAtem that still stand as global models (pp. 193, 200). These developments reflected a new understanding that the continent’s
resources were exhaustible and required legal protection.
6 Land management policies continued through the 20th
century, addressing soil conservation in the Dust Bowl years
8(p. 141) and wilderness preservation through the Wilderness
9Act of 1964 (p. 200), which sought to preserve pristine lands
“untrammeled by man, where man himself is a visitor who
0does not remain.”
B
UThe third wave responded to pollution
Further social changes in the 20th century gave rise to the
third major period of U.S. environmental policy. In a more
densely populated nation driven by technology, heavy industry, and intensive resource consumption, Americans found
themselves better off economically but living with dirtier
air, dirtier water, and more waste and toxic chemicals. During the 1960s and 1970s, several events triggered increased
awareness of environmental problems and brought about a
shift in public policy.
A landmark event was the 1962 publication of Silent
Spring, a book by American scientist and writer Rachel Carson
(FIGURE 5.11). Silent Spring awakened the public to the nega-
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FIGURE 5.10 The Homestead Act
of 1862 allowed settlers (a) to claim,
for a $16 fee, 65 ha (160 acres) of
public land by living there for five
years and cultivating the land or
building a home. The General Mining
Act of 1872 legalized and promoted
mining (b) by private individuals on
public land for just $5 per acre, subject to local customs, with no government oversight. Although the Timber
Culture Act of 1873 promoted tree
planting on settled lands, elsewhere
the timber industry was allowed to
clear-cut the nation’s ancient trees
(c) with little government policy to
limit logging or encourage replanting
or conservation.
Environmental Economics and Environmental Policy
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6 (c) Loggers felling an old-growth tree, Washington
8 tive ecological and health effects of pesticides and industrial
9 chemicals (p. 210). The book’s title refers to Carson’s warning
pesticides might kill so many birds that few would be left
0 that
to sing in springtime.
B Ohio’s Cuyahoga River (FIGURE 5.12) also drew attention
pollution hazards. The Cuyahoga was so polluted with oil
U to
and industrial waste that the river actually caught fire near
(b) Nineteenth-century mining operation, Lynx Creek,
Alaska
CHAPTER 5
(a) Settlers in Custer County, Nebraska, circa 1860
99
Cleveland a number of times in the 1950s and 1960s. This
spectacle, coupled with an oil spill offshore from Santa Barbara, California, in 1969, moved the public to urge Congress
and the president to do more to protect the environment. The
first Earth Day in 1970 helped to galvanize public support for
action to address pollution problems.
Today, largely because of environmental policies enacted
since the 1960s, public health is better protected and the nation’s air and water are considerably cleaner. All of us alive
today owe a great deal to the dedicated people who designed
policy to tackle pollution problems during this period.
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report of results from studies that assess the potential environmental impacts that would likely result from development
projects undertaken or funded by the federal government.
NEPA’s effects have been far-reaching. The EIS process
forces government agencies and businesses that contract with
them to evaluate environmental impacts before proceeding
with a new dam, highway, or construction project. Although
the EIS process generally does not halt such projects, it can
serve as an incentive to minimize environmental damage.
NEPA also grants ordinary citizens input in the policy process by requiring that EISs be made publicly available and that
policymakers solicit and consider public comment on them.
Creation of the EPA marked a shift
in environmental policy
FIGURE 5.11 Scientist and writer Rachel Carson illuminated
the problem of pollution from DDT and other pesticides in
her 1962 book, Silent Spring.
NEPA gives citizens input into policy
decisions
100
Besides Earth Day, two federal actions marked 1970 as the
dawn of the modern era of environmental policy in the
United States. On January 1, 1970, President Richard Nixon
signed the National Environmental Policy Act (NEPA) into
law. NEPA created an agency called the Council on Environmental Quality and required that an environmental impact
statement (EIS) be prepared for any major federal action that
might significantly affect environmental quality. An EIS is a
FIGURE 5.12 In a spectacular display of the need for better
control over water pollution, Ohio’s Cuyahoga River caught fire
multiple times in the 1950s and 1960s. The Cuyahoga was so polluted with oil and industrial waste that the river would burn for days
at a time.
Six months after signing NEPA into law, Nixon issued an
executive order calling for a new integrated approach to enSvironmental policy. “The Government’s environmentally
Mrelated activities have grown up piecemeal over the years,”
order stated. “The time has come to organize them raI the
tionally and systematically.” Nixon’s order moved elements
Tof agencies regulating water quality, air pollution, solid
waste, and other issues into the newly created EnvironmenHtal
Protection Agency (EPA). The order charged the EPA
, with conducting and evaluating research, monitoring environmental quality, setting and enforcing standards for pollution levels, assisting the states in meeting standards and
Jgoals, and educating the public.
O
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FAQ
Q
A
: Isn’t the EPA an advocate for the
environment?
: Like all administrative agencies, the EPA is
part of the executive branch and operates
in line with the policies of the presidential
administration in power at the time. As such, the EPA
under a conservative president may function very
differently from the EPA under a liberal one. Indeed,
sometimes the agency may impede environmental
regulations! The EPA employs many career scientists
who carry out careful scientific research and make
scientifically informed policy recommendations. They
advise administrators appointed by the president,
however, and policy decisions are ultimately made by
these politically appointed administrators.
Other prominent laws followed
Ongoing public demand for a cleaner environment during
this period resulted in a number of key laws that remain fundamental to U.S. environmental policy (FIGURE 5.13). For
river pollution problems like those of the Tijuana River, a
crucial law has been the Clean Water Act of 1977. Prior to
passage of federal laws such as the Clean Water Act, pollution
problems were left largely to local and state governments or
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Clean Air Act
1964
Wilderness Act
1965
Federal Water Pollution Control
Act, Solid Waste Disposal Act
1966
1967
1968
Wild and Scenic Rivers Act
1969
National Environmental Policy Act
1970
1971
1972
Marine Mammal Protection Act,
Federal Pesticide Act
1973
Endangered Species Act
1974
Safe Drinking Water Act
1975
1976
Toxic Substances Control Act
1977
Clean Water Act, Soil and Water
Conservation Act
1978
1979
CERCLA (“Superfund”)
1980
FIGURE 5.13 Many of the most influential laws in modern U.S.
environmental policy were enacted in the 1960s and 1970s.
were addressed through lawsuits. The flaming waters of the
Cuyahoga, however, indicated to many people that tough legislation was needed. Thanks to restrictions on pollutants by
the Federal Water Pollution Control Acts of 1965 and 1972,
and then the Clean Water Act, U.S. waterways finally began
to recover. These laws regulated the discharge of wastes, especially from industry, into rivers and streams. The Clean Water Act also aimed to protect wildlife and establish a system
for granting permits for the discharge of pollutants. Today
thousands of federal, state, and local laws and regulations
help protect health and environmental quality in the United
States and abroad.
The social context for policy
evolves over time
6
FIGURE 5.14 College students and activists at the 2009 Power
8 Shift event in Washington, D.C., urge U.S. leaders to enact policies
9 to help bring the atmosphere’s carbon dioxide concentration back
down to 350 parts per million. This was one of several major events
0 in recent years that expressed grassroots support for addressing
B global climate change through the political process.
U
Environmental Economics and Environmental Policy
1963
By the 1990s, the political climate in the United States had
changed. Although public support for the goals of environmental protection remained high, many citizens and policy
experts began to feel that the legislative and regulatory means
used to achieve these goals often imposed economic burdens
on businesses or individuals. Increasingly, attempts were
made to roll back or weaken environmental laws, culminating in an array of efforts by the George W. Bush administration and the Republican-controlled Congresses in power from
1994 through 2006.
As advocates of environmental protection watched their
hard-won gains eroding, many began to propose new perspectives and strategies. In a provocative 2004 essay titled “The
Death of Environmentalism,” political consultants Michael
Shellenberger and Ted Nordhaus argued that environmental
advocates needed to stop simply offering technical policy fixes
and instead needed to appeal to people’s core values and articS ulate a positive, inspiring vision for the future. These suggestions opened a spirited discussion, and in 2008 Barack Obama
Membraced a similar approach in his presidential campaign.
As the United States’ international leadership in enviI
ronmental policy has waned in recent decades, other nations
T have enhanced their attention to environmental issues. The
H 1992 Earth Summit at Rio de Janeiro, Brazil, and the 2002
World Summit on Sustainable Development in Johannes, burg, South Africa, were the largest diplomatic conferences
ever held, unifying leaders from 200 nations around the idea
sustainable development (pp. 17, 414). Internationally, we
J of
are embarking on a new wave of environmental policy, one
O focused on sustainability and sustainable development. This
aims to safeguard natural systems while raising livS approach
ing standards for the world’s people. Moreover, the pressH ing issue of global climate change (Chapter 14) has come to
U dominate much of the world’s discussion over environmental
policy (FIGURE 5.14). As we continue to feel the social, ecoA nomic, and ecological effects of environmental degradation,
CHAPTER 5
Key Environmental Protection Laws, 1963–1980
101
Historians suggest that major advances in environmental
policy occurred in the 1960s and 1970s because (1) evidence
of environmental problems became widely and readily apparent, (2) people could visualize policies to deal with the problems, and (3) the political climate was ripe, with a supportive
public and leaders who were willing to act. In addition, photographs from the space program allowed humanity to see,
for the first time ever, images of the Earth from space (see
photos on pp. 1 and 418). It is hard for us today to comprehend the power of those images at the time, but they revolutionized many people’s worldviews by making us aware of the
finite nature of our planet.
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environmental policy and the search for sustainable solutions
will become central parts of governance and everyday life for
all of us in the years ahead.
INTERNATIONAL
ENVIRONMENTAL POLICY
Environmental systems pay no heed to political boundaries.
For instance, most of the world’s major rivers cross international borders. As a result, environmental problems like
those along the Tijuana River are frequently international in
scope. Because U.S. law has no authority in Mexico or any
other nation outside the United States, international law is vital to solving transboundary problems.
International law includes customary
law and conventional law
International law known as customary law arises from longstanding practices, or customs, held in common by most cultures. International law known as conventional law arises
from conventions, or treaties, into which nations enter. One
example is the Montreal Protocol, a 1987 accord among more
than 160 nations to reduce the emission of airborne chemicals that thin the ozone layer (pp. 290–291). Another example
is the Kyoto Protocol to reduce greenhouse gas emissions that
contribute to global climate change (pp. 318–319). TABLE 5.2
shows a selection of major environmental treaties.
The South Bay International Wastewater Treatment
Plant that treats wastewater from the Tijuana River watershed
was built as a result of a 1990 treaty between Mexico and the
United States. Many social, economic, and environmental
issues along the U.S.–Mexican border are influenced by the
1994 North American Free Trade Agreement (NAFTA) (see
THE SCIENCE BEHIND THE STORY, pp. 106–107).
102
Several organizations shape
international environmental policy
A number of international organizations act to influence the
policy and behavior of nations by providing funding, applying political or economic pressure, and/or directing media
attention.
The United Nations Founded in 1945 and including
representatives from all nations of the world, the United
Nations (U.N.) seeks “to maintain international peace and
security; to develop friendly relations among nations; to
cooperate in solving international economic, social, cultural and humanitarian problems and in promoting respect
for human rights and fundamental freedoms; and to be a
centre for harmonizing the actions of nations in attaining
these ends.”
S Headquartered in New York City, the U.N. plays an active role in international environmental policy by sponsoring
Mconferences, coordinating treaties, and publishing research.
I An agency within it, the United Nations Environment Programme (UNEP), promotes sustainability with research and
Toutreach activities that provide information to policymakers
Hand scientists throughout the world.
, The
World Bank Established in 1944 and based in
Washington, D.C., the World Bank is one of the largest sourcJes of funding for economic development. This institution
shapes environmental policy through its funding of dams,
Oirrigation infrastructure, and other major projects. In fiscal
Syear 2010, the World Bank provided $59 billion in loans and
support for projects designed to benefit the poorest people in
Hthe poorest countries.
U Despite its admirable mission, the World Bank has frequently been criticized for funding projects that cause more
Aenvironmental problems than they solve, such as dams that
6
8
TABLE 5.2 Some Major International Environmental Treaties
Convention or Protocol
Year it came into force
9
Convention on International Trade in
1975
0
Endangered Species of Wild Fauna and
Flora (CITES) (p. 177)
B
Ramsar Convention on Wetlands of Inter1975
U
national Importance
Nations that have ratified it
U.S. status
175
Ratified
159
Ratified
Protocol on Substances that Deplete the
Ozone Layer (Montreal Protocol), of the
Vienna Convention for the Protection of
the Ozone Layer (pp. 290–291)
1989
196
Ratified
Basel Convention on the Control of
Transboundary Movements of Hazardous
Wastes and Their Disposal (pp. 15, 394)
1992
172
Signed but has not ratified
Convention on Biological Diversity (p. 177)
1993
168
Signed but has not ratified
Stockholm Convention on Persistent
Organic Pollutants (p. 223)
2004
152
Signed but has not ratified
Kyoto Protocol, of the U.N. Framework
Convention on Climate Change
(pp. 318–319)
2005
184
Signed but has not ratified
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waste dump in their neighborhood. Not all such courtroom
challenges succeed, but NAFTA’s Chapter 11 cases have
discouraged states and nations from passing new environmental protection laws.
flood valuable forests and farmlands in order to provide
electricity. Providing for the needs of growing populations
in poor nations while minimizing damage to the environmental systems on which people depend can be a tough
balancing act. Environmental scientists today agree that
sustainable development must be the guiding principle for
such efforts.
national in scope and exert influence over international
environmental policy. Some, such as the Nature Conservancy, focus on accomplishing conservation objectives on the
ground (in its case, purchasing and managing land and habitat for rare species) without becoming politically involved.
Other groups, such as Conservation International, the World
Wide Fund for Nature, Greenpeace, and Population Connection, attempt to shape policy through research, education,
lobbying, or protest.
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,
Trade Barriers and Environmental
Protection If Nation A has stricter laws for
Environmental Economics and Environmental Policy
The World Trade Organization Based in Geneva, Switzerland, the World Trade Organization (WTO) represents
multinational corporations and promotes free trade by reducing obstacles to international commerce and enforcing fairness among nations in trading practices. Whereas the United
Nations and the European Union have limited influence over
nations’ internal affairs, the WTO has authority to impose
financial penalties on nations that do not comply with its directives. These penalties can affect environmental policy.
Like the EU, the WTO has interpreted some national
environmental laws as unfair barriers to trade. For instance,
in 1995 the U.S. EPA issued regulations requiring cleanerburning gasoline in U.S. cities, following Congress’s amendments of the Clean Air Act. Brazil and Venezuela filed a
complaint with the WTO, saying the new rules discriminated against the petroleum they exported to the United States,
which did not burn as cleanly. The WTO agreed, ruling that
even though the South American gasoline posed a threat to
human health in the United States, the EPA rules were an
illegal trade barrier. The ruling forced the United States to
weaken its regulations. Not surprisingly, critics have frequently charged that the WTO aggravates environmental
problems.
International treaties to promote commerce allow industries and corporations to weaken environmental protection laws if they view them as barriers to trade. Chapter 11
of NAFTA allows an investor in one country to sue another
country if its laws hinder the investor’s ability to make profits. Canada’s cattle industry demanded $300 million from
U.S. taxpayers for banning Canadian beef after mad cow
disease was found in it. A Canadian producer of a chemical in MTBE, a gasoline additive that California banned
to protect public health, sued California for $1 billion in
lost profits. A U.S. company forced Mexico to pay it $16
million after local residents refused to let it reopen a toxic
A number of nongovernmental organizations (NGOs) have become inter-
environmental protection than Nation B, and if
these laws restrict the ability of Nation B to export
its goods to Nation A, then by the policy of the WTO and
the EU, Nation A’s environmental protection laws can be
overruled in the name of free trade. Do you think this is
right? What if Nation A is a wealthy industrialized country
and Nation B is a poor developing country that needs
every economic boost it can get?
J
O
S
H SCIENCE AND THE
U ENVIRONMENTAL POLICY
A PROCESS
In constitutional democracies such as the United States, every
person has a political voice and can make a difference. However,
money wields influence, and some people and organizations are
far more influential than others. We will explore some of these
dynamics as we examine the main steps of the policymaking
process and the role that science plays in policy.
6
8
9
0
B Policy results from a stepwise process
U Environmental policy involves a multiple-step process that
CHAPTER 5
The European Union The European Union (EU) seeks
to promote Europe’s unity and its economic and social
progress (including environmental protection) and to “assert Europe’s role in the world.” The EU can sign binding
treaties on behalf of its 27 member nations and can enact
regulations that have the same authority as national laws.
The EU’s European Environment Agency addresses waste
management, noise pollution, water pollution, air pollution, habitat degradation, and natural hazards. The EU also
seeks to remove trade barriers among member nations. It
has classified some nations’ environmental regulations as
barriers to trade, arguing that the stricter environmental
laws of some northern European nations limit the import
and sale of environmentally harmful products from other
member nations.
Nongovernmental organizations
103
requires initiative, dedication, and the support of many people (FIGURE 5.15).
➊
Identify a problem The first step in the policy process
is to identify an environmental problem. This requires
curiosity, observation, record keeping, and an awareness
of our relationship with the environment—so scientific
inquiry and data collection play key roles. For example,
assessing the contamination of San Diego- and Tijuanaarea beaches required detecting the contamination, recognizing the ecological and health impacts of untreated
wastewater, and understanding water flow dynamics
among the beaches, the Pacific Ocean, and the Tijuana
River watershed.
Essential Environment: The Science Behind the Stories, Fourth Edition, by Jay Withgott and Matthew Laposata.
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➋
1 Identify a problem
2 Pinpoint causes of the problem
3 Envision solution
4 Get organized
➌
S
M
I
T➍
H
,
J
O
S
H
U
A
5 Cultivate access and influence
104
6 Shepherd the solution into law
7 Implement, assess, and interpret
policy
FIGURE 5.15 Understanding the steps of the policy process is
helpful in solving environmental problems.
6
8
➎
9
0
B
U
Pinpoint causes of the problem The next step in the
policy process is to discover specific causes of the problem, and this often requires scientific research. A person
seeking causes for the Tijuana River’s pollution might notice that pollution intensified once U.S.-based companies
began opening maquiladoras on the Mexican side of the
border. Advocates of the maquiladora system argue that
these factories provide much-needed jobs while keeping
companies’ costs down by paying Mexican workers low
wages. Critics argue that the factories are waste-generating, water-guzzling polluters whose transboundary nature
makes them difficult to regulate.
Envision a solution The better one can pinpoint causes of
a problem, the more effectively one can envision solutions
to it. Science plays a vital role here too, although solutions
often rely on social or political action. In San Diego, citizen activists wanted Tijuana to enforce its own pollution
laws more effectively—something that, once visualized,
began to happen when San Diego city employees started
training and working with their Mexican counterparts to
keep hazardous waste out of the sewage treatment system.
Get organized When it comes to influencing policy, organizations are generally more effective than individuals.
Yet small coalitions and even individual citizens who are
motivated, informed, and organized can solve environmental problems. San Diego-area resident Lori Saldaña
provides an example. Concerned about the Tijuana River’s
pollution, Saldaña reviewed plans for the international
wastewater treatment plant that the U.S. government proposed to build. She concluded that it would merely shift
pollution from the river to the ocean, where sewage would
be released 5.6 km (3.5 mi) offshore. Working with her local Sierra Club chapter, Saldaña protested the plant’s design and participated in the lawsuit that forced the EPA to
conduct further studies and eventually implement design
changes. After a decade of activism and work on a commission on border issues, Saldaña ran for the California
State Assembly in 2004 and won, becoming the representative from California’s 76th district.
Cultivate access and influence The next step in the policy
process entails gaining access to policymakers who have
the clout to enact change. People gain access and influence
through lobbying and campaign contributions. Anyone
can spend time or money trying to change an elected official’s mind, but this is much more difficult for an ordinary citizen than for the professional lobbyists employed
by businesses and organizations seeking a voice in politics.
Supporting a candidate’s reelection efforts with money is
another way to make one’s voice heard, and any individual
can donate money to political campaigns.
Both of these methods were employed by a privatesector consortium seeking to contract with the U.S. government to build a wastewater treatment plant to supplement the existing international plant. Backers of this
effort, the Bajagua Project, lobbied government officials
and gave campaign contributions to California congressional representatives, whom they hoped would support
their cause. Following years of such efforts, in 2006 the
International Boundary and Water Commission agreed
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House of Representatives
Senate
Member of House
introduces bill
Senator introduces
bill
If appropriate, bill
is referred to House
committee and
subcommittee
If appropriate, bill
is referred to Senate
committee and
subcommittee
Subcommittee
marks changes and
votes on bill
Subcommittee
marks changes and
votes on bill
Full committee
marks changes and
votes on bill
Full committee
marks changes and
votes on bill
Bill is voted on
by the full House,
in a House
floor vote
Bill is voted on
by the full Senate,
in a Senate
floor vote
A conference committee made up of both
House and Senate committees that worked on
the bill works out any differences between the
House and Senate versions of the bill
House approves
final bill
Senate approves
final bill
The White House
The final bill is sent to the President, who either signs
or vetoes it. (If the bill is vetoed, a 2/3 majority of the
House and Senate can overturn the veto.)
FIGURE 5.16 Before a bill becomes U.S. law, it must clear
hurdles in both legislative bodies. If the bill passes the House and
Senate, a conference committee works out differences between
House and Senate versions before the bill is sent to the president.
The president may then sign or veto the bill.
Science plays a role in policy
but can be misused
A nation’s strength depends on its commitment to science,
and this is why governments devote a portion of our taxes
to fund scientific research. The more information a policymaker can glean from scientific research, the better policy he
or she will be able to craft.
S Unfortunately, sometimes policymakers allow ideology
Malone to determine policy on scientific matters. In 2004, the
nonpartisan Union of Concerned Scientists released a stateI ment that faulted the George W. Bush administration for
T ignoring scientific advice; manipulating scientific information for political ends; censoring, suppressing, and editing
H reports from government scientists; placing people who were
, unqualified or had clear conflicts of interest in positions of
power; and misleading the public by misrepresenting scientific knowledge. More than 12,000 American scientists signed
J on to this statement. Many government scientists working on
sensitive issues such as climate change or endanO politically
gered species protection said they had found their work supS pressed or discredited and their jobs threatened. Many chose
H self-censorship.
For these reasons, most American scientists greeted the elecU tion of Barack Obama with relief, as Obama spoke of “restoring
A scientific integrity to government” and ensuring “that scientific
data [are] never distorted or concealed to serve a political agenda.” Of course, either political party can politicize science, and
6 as of 2011, the Union of Concerned Scientists was faulting the
Obama administration for failing to fully live up to its promises.
8
Whenever taxpayer-funded science is suppressed or distorted
for political ends—by the right or the left—we all lose.
9
Abuses of power generally come to light only when brave
0 government scientists risk their careers to alert the public and
B when journalists work hard to uncover and publicize these isWe cannot simply take for granted that science will play
U sues.
a role in policy. Scientifically literate citizens of a democracy
need to stay vigilant and help make sure our government representatives are making proper use of the tremendous scientific assets we have at our disposal.
Environmental Economics and Environmental Policy
➐
EPA) implement regulations. Policymakers evaluate the
policy’s successes and failures and may revise the policy as
necessary. Moreover, courts interpret law in response to
lawsuits, and much environmental policy has lived or died
by judicial interpretation. As societal and environmental
conditions change, the policy process may circle back to
its first step as fresh problems are identified, and the process may begin anew.
CHAPTER 5
➏
to support the Bajagua Project—although the commission
changed its mind two years later.
Shepherd the solution into law The next step is to prepare a bill, or draft law, that embodies the desired solutions. Anyone can draft a bill, but members of the House
and Senate must introduce the bill and shepherd it from
subcommittee through full committee and on to passage
by the full Congress (FIGURE 5.16). If it passes through all
of these steps and gains the president’s signature, the bill
becomes law, but it can die in countless fashions along
the way.
Implement, assess, and interpret policy Following a
law’s enactment, administrative agencies (such as the
105
APPROACHES TO
ENVIRONMENTAL POLICY
When most people think of environmental policy, what
comes to mind are major laws, such as the Clean Water Act,
or government regulations, such as those specifying what a
factory can and cannot dump into a river. However, environmental policy is far more diverse.
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THE SCIENCE BEHIND THE STORY
106
THE SCIEN CE B EHIND THE S TORY
Workers assemble television circuit
boards for Panasonic in a maquiladora in Tijuana, Mexico.
A
Assessing the Environmental
Impacts of NAFTA
number of international treaties address environmental issues (see
Table 5.2). But treaties not aimed specifically at environmental concerns
may still have major environmental consequences. The North American
Free Trade Agreement (NAFTA) is one such treaty.
Mexico, the United States, and
Canada signed NAFTA to promote
free trade among them. NAFTA, which
came into force in 1994, eliminated
trade barriers such as tariffs on imports
and exports. Nations erect tariffs in
order to raise prices on foreign goods
so that foreign industries won’t drive
domestic industries out of business—
but if nations can agree to mutually eliminate tariffs, it makes goods
cheaper for everyone.
Many people worried that NAFTA
threatened to undermine protections
for workers and the environment. For
instance, if a nation’s regulations to
protect environmental quality or worker
safety are viewed as a barrier to trade or
investment, under NAFTA those regulations can potentially be overturned.
Moreover, many people felt that
industries, motivated to decrease
costs and increase profits, would
move their factories (and jobs) to the
nation with the weakest regulations.
S
This could create “pollution havens.”
MMexico would
Many people thought
be overrun by maquiladoras
seeking
I
to profit from lax regulation and that
T suffer intensive
Mexico would thereby
pollution (see figure).
HPeople predicted that once such a migration began,
, to the botthis could lead to a “race
tom” whereby all three nations would
begin gutting their regulations in an
J
attempt to lure business. This was
part of the reason that
O NAFTA caused
so many blue-collar U.S. workers to
S
fear that their jobs would migrate to
H
Mexico.
In response to these fears, two
U
side agreements for labor and environAnegotiated. The
mental concerns were
environmental agreement, the North
We follow three types
of policy approaches
Today’s environmental policy can follow a variety of strategies within three major approaches (FIGURE 5.17).
Lawsuits in the courts Prior to the legislative push of
recent decades, most environmental policy questions in the
United States were addressed with lawsuits in the courts. Individuals suffering external costs from pollution would sue
polluters, one case at a time. The courts sometimes punished
polluters by ordering them to stop their operations or pay
damages to the affected individuals. However, as industrialization proceeded and population grew denser, pollution
became harder to avoid, and judges were reluctant to hinder
industry. People began to view legislation and regulation as
more effective means of protecting public health and safety.
Command-and-control policy Most environmental
laws of recent decades, and most regulations enforced by
agencies today, use a command-and-control approach. In the
American Agreement on Environmental Cooperation, set up a tri-national
Commission on Environmental Cooperation (CEC). The CEC has monitored
NAFTA’s effects on the environment
over the years, testing hypotheses
about the impacts that NAFTA was
predicted to have. The CEC has held
four symposia, for which dozens of
researchers have published over 50
research papers analyzing different
aspects of the topic.
This research suggests that for the
most part, the feared consequences
have not occurred or have not been
due to NAFTA. Researchers testing
for a “race to the bottom” did not find
evidence for it. Instead, they found
that several measures of environmental
quality improved during the 1990s and
that NAFTA did not seem to influence
these measures.
Researchers also have not found
strong evidence for creation of a “pollution haven” in Mexico. One reason
is that businesses have many factors
to weigh when considering whether to
6
8command-and-control approach, an agency prohibits certain
or sets rules, standards, or limits, and threatens pun9actions,
ishment for violations. This simple and direct approach to
0policymaking has brought citizens of the United States and
other nations cleaner air, cleaner water, safer workBmany
places, healthier neighborhoods, and many other improveUments in quality of life. The relatively safe, healthy, comfortable lives most of us enjoy today owe much to the commandand-control environmental policy of the past few decades.
Economic policy tools Despite the successes of command-and-control policy, many people have grown disenchanted with the top-down, sometimes heavy-handed, nature
of an approach that dictates particular solutions to problems.
As a result, political scientists, economists, and policymakers
today are exploring alternative approaches that aim to channel the innovation and economic efficiency of market capitalism in directions that benefit the public. Such economic
policy tools use financial incentives to promote desired
outcomes, discourage undesired outcomes, and encourage
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H
CEC-sponsored researchers also
tested hypotheses,that NAFTA might
enhance sustainability by facilitating the spread of environmentally
J
superior technology, products, and
approaches amongO
nations. Researchers found plenty of examples. Canada
S
began using the EPA’s Energy Star
H banned the
program (p. 344). Mexico
pesticide DDT. Chemical manufacturU
ers set up a transnational program
A And the three
for reducing hazards.
nations began conferring on how
private entities competing in a marketplace to innovate and
produce new or better solutions at lower cost.
Each of these three major approaches has strengths and
weaknesses, and each is best suited to different conditions.
The approaches may also be used together. For instance, government regulation is often needed to frame market-based efforts, and citizens can use the courts to ensure that regulations
are enforced. Let’s now explore several types of economic
policy tools.
Green taxes discourage
unsustainable activities
In taxation, money passes from private parties to the government, which reapportions it in services to benefit the public.
Taxing undesirable activities helps to “internalize” external
costs by making them part of the cost of doing business. Taxes
on environmentally harmful activities and products are called
green taxes. When a business pays a green tax, it is essentially reimbursing the public for environmental damage it causes.
6
8
Under green taxation, a firm owning a factory that pollutes
a waterway would pay taxes on the amount of pollution
9
it discharges—the more pollution the higher the tax payment.
0 This gives firms a financial incentive to reduce pollution while
B allowing them the freedom to decide how to do so. One polmight choose to invest in technologies to reduce its polU luter
lution if doing so is less costly than paying the taxes. Another
Environmental Economics and Environmental Policy
relocate, and environmental regulations are merely one of these. Ironically, the one clear case of a pollution
haven occurred not in Mexico, but in
Canada! Exports of hazardous waste
(mostly from steel and chemical
factories) from the United States to
Canada more than quadrupled soon
after NAFTA went into effect. Disposal
was cheaper in Canada, with fewer
regulations and liability concerns.
Canada responded by tightening its
regulations.
CHAPTER 5
S
Maquiladoras in the border areas of Mexico flourished in theM
years after
NAFTA, employing many people but creating substantial pollution. Perhaps
the worst pollution occurred at the site shown here. At this Iabandoned lead
recycling plant, Metales y Derivados, the U.S. owner left 6,600
T tons of hazardous waste amid a working-class Tijuana neighborhood.
to protect threatened species and
habitats.
Moreover, consumer demand
in the United States and Canada for
sustainably produced products helped
encourage improvement in Mexico.
Many Mexican coffee farmers converted to sustainable plantations, and
researchers found that maquiladoras
selling products north of the border
made more environmental improvements than those selling only in
Mexico.
However, despite all this, environmental impacts in Mexico grew worse
after NAFTA. For instance, air and
water pollution from maquiladoras in
border areas such as Tijuana increased
greatly. Yet, researchers determined
that this was due not to a pollution
haven or race to the bottom, but to accelerated economic growth in Mexico.
Consumption and pollution from
economic growth simply outpaced the
country’s ability to enhance regulation
and environmental protection.
Overall, CEC-sponsored research
in the years since NAFTA has shown
that trade liberalization can lead to
environmental improvements, but only
if policymakers pay close attention to
trends and are ready to make adjustments. Opportunities for creating
win-win policies that benefit both
trade and environmental quality exist,
researchers say, and are ready to be
seized.
107
polluter might choose to pay the taxes instead—funds the
government might then apply toward mitigating pollution in
some other way.
Green taxes have yet to gain widespread support in the
United States, although similar “sin taxes” on cigarettes and
alcohol are tools of U.S. social policy. Taxes on pollution have
been widely instituted in Europe, where many nations have
adopted the polluter-pays principle, which specifies that the
party that pollutes should be held responsible for covering
the costs of its impacts. Today there is debate about whether
we should implement carbon taxes—taxes on gasoline, coalbased electricity, and fossil-fuel-intensive products—in order
to fight climate change (p. 321).
Essential Environment: The Science Behind the Stories, Fourth Edition, by Jay Withgott and Matthew Laposata.
Published by Benjamin Cummings. Copyright © 2012 by Pearson Education, Inc.
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PROBLEM: Pollution from factory harms people’s health
SOLUTIONS: Three policy approaches
1 Sue factory in court seeking damages and/or
injunction.
FIGURE 5.17 For any given environmental problem, such as pollution from a factory, we may consider three major types of policy
approaches:
seeking compensation through lawsuits,
limiting pollution through command-and-control legislation and
regulation, and
reducing pollution through market-based or
other economic strategies.
➋
➊
➌
Green taxation provides incentive for industry to lower
emissions not merely to a level specified in a regulation, but
to still lower levels. However, green taxes do have drawbacks.
One is that businesses will most likely pass on their tax expenses to consumers.
Subsidies promote certain activities
108
Another type of economic policy tool is the subsidy, a government giveaway of money or resources that is intended to
encourage a particular industry or activity. Subsidies take
many forms, and one is the tax break. Relieving the tax burden on an industry, firm, or individual assists it by reducing
its expenses.
Subsidies can be used to promote environmentally sustainable activities, but all too often they are used to prop up
unsustainable ones. In the United States, subsidies for timber
extraction (pp. 193–194), grazing (p. 144), and mineral extraction (pp. 241–242) on public lands all benefit private parties while often degrading publicly held resources. Fossil fuel
industries have benefited as well. From 2002 to 2008, the U.S.
government gave $72 billion of its citizens’ money—$240 per
person—to fossil fuel corporations, while spending only $29
billion on renewable energy efforts. About $54 billion of the
fossil fuel subsidies were in the form of tax breaks.
In total, the world’s governments spend roughly $1.45
trillion each year on subsidies judged to be harmful to the
environment and to the economy, according to environmental scientists Norman Myers and Jennifer Kent—an amount
larger than the economies of all but five nations. The average
U.S. taxpayer pays $2,000 per year in environmentally harmful subsidies, plus $2,000 more through increased prices for
goods and through degradation of ecosystem services, Myers
and Kent estimate.
S
M
I
T
H
,
J
O
S
H
U
A
EPA
2 Government regulation restricts emissions allowed.
3 Market-based approaches: factories that pollute less
outcompete polluting factory through permit-trading,
avoiding green taxes, collecting subsidies, or selling
ecolabeled products. Polluting factory must find ways
to cut emissions to survive in marketplace.
6Permit trading can save money
8and produce results
9In the innovative market-based approach known as permit
trading, the government creates a market in permits for an
0environmentally
harmful activity, and companies, utiliBties, or industries are allowed to buy, sell, or trade rights to
the activity. For instance, to decrease emissions of
Uconduct
air pollutants, a government might grant emissions permits
and set up an emissions trading system. In a cap-and-trade
emissions trading system, the government first determines
the overall amount of pollution it will accept (i.e., it caps the
total amount of pollution allowed) and then issues permits
to polluters that allow them each to emit a certain fraction
of that amount. Polluters may exchange these permits with
other polluters, and each year the government may reduce the
amount of overall emissions allowed (Figure 14.23, p. 321).
Suppose, for example, you are a plant owner with permits
to release 10 units of pollution, but you find that you can become more efficient and release only 5 units instead. You then
have a surplus of permits, which might be very valuable to
some other plant owner who is having trouble reducing pollu-
Essential Environment: The Science Behind the Stories, Fourth Edition, by Jay Withgott and Matthew Laposata.
Published by Benjamin Cummings. Copyright © 2012 by Pearson Education, Inc.
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advocates oppose emissions trading because
they view it as giving polluters “a license to pollute.” How do you feel about emissions trading
as a means of reducing air pollution? Would you favor
command-and-control regulation instead? What advantages and disadvantages do you see in each approach?
16
SO2 emissions (million tons)
14
Emissions after first year of
cap-and-trade program
Allowances allocated
to recent years
12
market failure allows consumers to play the key role. When
manufacturers designate on their labels how their products
J were grown, harvested, or manufactured, this approach—
O called ecolabeling—tells consumers which brands use environmentally benign processes (FIGURE 5.19). By preferentially
S buying ecolabeled products, consumers provide businesses a
H powerful incentive to switch to more sustainable processes.
early example of this was labeling cans of tuna as “dolU One
phin-safe,” indicating that the methods used to catch the tuna
A avoid the accidental capture of dolphins. Other common examples include labeling recycled paper (p. 387), organic foods
(pp. 154–157), and lumber harvested through sustainable for6 estry (pp. 197–199).
8
Market incentives also operate
9 at the local level
0 You may have already taken part in transactions involving fiB nancial incentives as policy tools. Many municipalities charge
for waste disposal according to the amount of waste
U residents
they generate. Other cities place taxes or disposal fees on items
10
8
6
4
2
19
90
19
9
19 5
9
19 6
9
19 7
9
19 8
9
20 9
0
20 0
0
20 1
0
20 2
0
20 3
0
20 4
0
20 5
0
20 6
0
20 7
0
20 8
09
0
Year
FIGURE 5.18 Emissions of sulfur dioxide from sources participating in the emissions trading program mandated by the 1990
Clean Air Act amendments have fallen 64% since 1990. As of 2009,
emissions throughout the United States had dropped well below
the amount allocated in permits (black line). Data from U.S. Environmental Protection Agency.
Environmental Economics and Environmental Policy
A License to Pollute? Some environmental
S FIGURE 5.19 Ecolabeling gives consumers information on
products with low environmental impact and enables consumers to
M encourage more sustainable business practices through their purI chasing decisions. Organic juices are just one example of ecolabeled
products that have become widely available in the marketplace.
T
H Ecolabeling empowers consumers
, Another strategy that uses the marketplace to counteract
CHAPTER 5
tion or who wants to expand production. In such a case, you
can sell your extra permits. Doing so generates income for you
and meets the needs of the other plant, while the total amount
of pollution does not increase. By providing companies an
economic incentive to find ways to reduce emissions, permit
trading can reduce expenses for both industry and the public
relative to a conventional regulatory system.
A cap-and-trade system for sulfur dioxide has been in place
in the United States since 1995, established by amendments to
the Clean Air Act (p. 283) that mandated lower emissions of
this air pollutant, which contributes to acid deposition (pp.
291–294). Since then, sulfur dioxide emissions from sources
in the program have declined by 64% (FIGURE 5.18), sulfate
deposition has been reduced, and air quality and visibility have
improved. The cuts were attained at much less cost than was
predicted, with no apparent effect on electricity supply or economic growth. Savings from the permit trading system are estimated at billions of dollars per year, and the EPA calculates
that the program’s benefits outweigh its costs by about 40 to 1.
Currently, European nations are operating a market in carbon emissions in an effort to address climate change (p. 321).
Some U.S. industries take part in carbon trading through the
Chicago Climate Exchange, and emissions trading programs
are being established by coalitions of U.S. states (p. 321).
109
whose safe disposal is costly, such as tires and motor oil. Still others give rebates to residents who buy water-efficient appliances,
because the rebates cost the city less than upgrading its wastewater treatment system. Likewise, power companies sometimes
offer discounts to customers who buy high-efficiency lightbulbs
and appliances, because doing so is cheaper for the utilities than
expanding the generating capacity of their plants.
The creative use of economic policy tools is growing at all
levels, while command-and-control regulation and legal action in the courts continue to play vital roles in environmental
policymaking. As a result, we have a variety of effective policy
strategies we can consider as we seek sustainable solutions to
our society’s challenges.
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