Chapter 2: Economics and Environmental Policy - PowerPoint Presentation

Chapter 2: Economics and Environmental Policy

Section 1: Economics

What is Economics? Supply and demand and cost-benefit analysis are two economic concepts that greatly contribute to decision making. Economics is the study of how resources are converted into goods and services and how these goods and services are distributed and used . Goods are the manufactured materials and products that individual consumers and businesses buy Services are the work that someone or a company does for others as a form of business

Almost all modern economies are mixed economies : both the government and individuals play roles in making decisions about what is made, how it is made, and who gets what. The amount of a product offered for sale at a given price is supply . The amount of a product people will buy at a given price if free to do so is demand .

Decision makers commonly use a method called cost-benefit analysis in which they compare what they will sacrifice and gain by a specific action. If costs outweigh the benefits , then the idea will often be revised or abandoned Not all costs and benefits can be easily identified or defined

Economics and the Environment All economies depend on the environment for resources and for management of wastes, but these connections are often overlooked. When economic activity depletes natural resources or produces too much pollution , ecological systems can be harmed .

Economists tend to assume that costs and benefits only affect buyers and sellers directly involved in transactions – internal costs and benefits. Economists often do not consider that resources can run out. Some resources can be substituted but others cannot be replaced

Growth Some argue that nonstop economic growth is not sustainable : Earth’s limited resources will run out Others argue that technology will continue to overcome obstacles to economic growth, making it sustainable .

Economics and Sustainability A new trend in economics is the recognition that suppliers of goods and services need to consider how to conserve resources and reduce harm to the environment. Ecological economics applies the principles of Earth’s systems to economics Environmental economics links environmental and economic costs .

Ecosystem services provided by Earth’s systems are said to have non-market values – values not usually included in the price of goods and services. Many ecosystems services are exploited because there is no value associated with them

When markets do not reflect the full costs and benefits of actions, they “ fail .” Market failure occurs when markets: Do not consider the environment’s positive effects on economies Do not reflect the negative effects of economic activity on the environment or people

Changing consumer values have become a driving force in encouraging corporations and businesses to pursue sustainability goals. Ecolabeling is a labeling system that tells consumers which brands are made with processes that do not harm the environment Due to consumer and investor demands, many corporations are finding ways to increase energy efficiency, reduce use of toxic substances, increase the use of recycled materials, and reduce greenhouse gas

Section 2: U.S. Environmental Policy

What is Environmental Policy? Environmental policy makes use of science , ethics, economics, and the political process to solve environmental problems . Policy consists of a formal set of general plans and principles for addressing problems and guiding decision making

Environmental policy consists of general plans and principles that address the interactions between humans and the environment Aims to protect environmental quality , protect natural resources, and ensure that resources are shared fairly

Each of the three branches of government are involved in environmental policy Legislative: a policy enters the federal government when legislation (proposed law) is introduced by either the House of Representatives or the Senate Executive: legislation is enacted or vetoed by the President Judicial: interprets and enforces laws Important environmental policy is also created at the state and local levels

History of U.S. Environmental Policy Throughout its history, the United States government has reinvented its approach to the relationship between the nation’s goals and the environment.

The First Period ( 1780s to late-1800s) The laws enacted dealt primarily with the management of public (federally owned) lands and accompanied the westward expansion of the nation Laws reflected the perception that the land and natural resources in the West were endless

The Second Period (late-1800s to mid 1900s ) Laws of this period aimed to reduce some of the environmental problems associated with westward expansion Forest Reserve Act of 1891 Soil conservation laws if the 1930s Wilderness Act of 1964 Policies eventually led to the national forest system, national wildlife refuge system, and national parks system

The Third Period (mid- to late- 1900s ) Several events triggered increased awareness of environmental problems and brought about a shift in public priorities and public policy Publication of Silent Springs by Rachel Carson Fires on the oil-polluted Cuyahoga River

Modern U.S. Environmental Policy Modern U.S. environmental policy reveals lessons learned from past misuse of resources and strives for a sustainable future. The first Earth Day was on April 22, 1970 and participation has now spread to nearly every country

On January 1, 1970, President Nixon signed the National Environmental Policy Act ( NEPA ) into law . NEPA created the Council on Environmental Quality and required that an Environmental Impact Statement (EIS) be prepared for any major federal action that might significantly affect the environment. An EIS requires government agencies and any businesses that contract with them to evaluate the impact of a project on the environment before proceeding with the design.

Nixon also instituted the Environmental Protection Agency (EPA) which is responsible for conducting and evaluating research , monitoring environmental quality, and setting and enforcing standards for pollution levels. Also educates the public and assists states in meeting federal standards

The Federal Water Pollution Control Acts of 1948 and 1972, and the Clean Water Act of 1977 regulate the discharge of wastes into rivers and streams. The Clean Water Act also protects wildlife , and grants permits for limited discharge of pollutants.

The 1960s and 1970s were a time of major advances in environmental reform Starting in the 1980s, there was a backlash against these environmental policies because many felt that some laws imposed too great an economic burden on businesses and individuals.

Section 3: International Environmental Policy and Approaches

International Environmental Policy International organizations, laws, and treaties help governments of the world come to agreement on environmental issues . Some environmental issues involve more than one nation: transboundary problems Ex: many rivers flows through more than one nation; animals migrate across international borders

In 1945 , representatives of 50 nations founded the United Nations (U.N.), which now has 190 nations. The United Nations Environment Programme promotes sustainable development with research and programs that provide information to international policymakers .

The European Union (EU) consists of 27 nations and was formed after World War II with the goal of promoting Europe’s economic and social progress. The main objective of the EU’s European Environment Agency is to produce thorough, current environmental data and analyses that can be used to guide policymakers.

The World Trade Organization (WTO) was established in 1995 and promotes free trade and enforces fair trade practices among its member nations. The World Bank , established in 1944, is owned by 186 member nations and provides interest-free credits, low-interest loans , or grants to poor nations for projects that will improve their citizens’ living standards

Non-Governmental Organizations ( NGOs ) are not affiliated with government, but still exert influence over international environmental policy Ex: Greenpeace ; Conservation International

Approaches to Environmental Policy Approaches to environmental policy may include direct laws from a government body or policies with economic incentives With the command -and- control approach, a government body sets rules and threatens punishment for violations Has both successes and failures

Governments may give tax breaks to businesses or individuals who participate in environmentally friendly actions A subsidy is a giveaway of cash or public resources that is intended to encourage a particular activity or lower the price of a product Green taxes are taxes imposed on companies that participate in activities or produce products that are harmful to the environment

In a cap -and- trade system, a government determines the overall amount of pollution it will accept for a specific pollutant and issues permits that allow polluters to emit a certain fraction of that amount. Permits can be bought , sold, and traded among companies, utilities, or industries.

Many policy tools of local governments involve financial incentives Ex: charging for waste disposal; rebates for water-efficient appliances

The Environmental Policy Process Steps of the environmental policy process include identifying a problem, finding the cause, proposing solutions , getting organized, gaining access to policymakers , and guiding the solution to law.

Identifying the problem: requires curiosity , observation, recordkeeping , and an awareness of the relationship between people and their environment. Identify causes: often requires scientific research

Envision a solution: science proposes a solution that often involves social or political actions Get organized: organizations are generally more organized than individuals Gain access: gaining access to officials who have the ability to sponsor new bills often is done through lobbying – influencing an elected official into supporting a specific interest

Help a solution become policy: prepare a bill that describes the desired policy so that it can be introduced by a member of legislature Many national environmental policies began as movements in towns and small cities inspired by one person or a small group of people