Environmental Policy Water Pollution Air Pollution State & Local Issues Global Environment

Types of Water Pollutants  Organic wastes Sewage, residuals from factories, pesticides, oil, detergent  Inorganic substances Toxic metals, salts, acids, nitrates  Non-material Radioactivity, heat  Infectious agents Bacteria, viruses  Point source vs. Non-point source  Continuous vs episodic  Persistent vs degradable

Biochemical Oxygen Demand (BOD)  High levels of DO (dissolved oxygen) are good  DO used up in degradation process  BOD: amount of oxygen required to decompose organic material Time or Distance DO (ppm) t “sag”

Water Pollution Policy  Initial burden was on states/localities  EPA established in 1970 Federally set TBES State/local enforcement Municipal treatment subsidies  Refuse Act (1899)  Water Pollution Control Act (1948, 1956, 1972)  Introduced TBES in 1972; moved away from AQ standards  Loan subsidies for construction of water treatment facilities  Zero discharge goal by 1985  Clean Water Act (1977)  Fishable-swimmable goal  Focus on toxic effluents  Water Quality Act (1965, 1987)  Converted water treatment subsidies to revolving loan fund  Focus on non-point sources

Technology-Based Effluent Standards  Effluent standard set at the level of emissions a source would produce if it used particular technologies  Best Practicable Technology (BPT) by 1977  Best Available Technology (BAT) by 1983  Best Conventional Technology (BCT) after 1984

Estimated Total Costs and Emissions from Sugar-Beet Plants Using Alternative Abatement Technology Technological Options Emissions (kg/kkg of raw product processed No Control ABCDE BOD TSS Total Costs ($ mil/yr) 0.0$8.00$14.40$23.40$36.50$78.80 BAT = ? BPT = ? BCT = ?

Efficiency and Cost Effectiveness of TBES  Efficiency conditions not met  Equimarginal principle not satisfied  Marginal damages not considered  Two Questions: 1.How much has the nation’s water quality been improved as a result of the system? 2.How much more improvement could have been obtained with a more cost-effective approach? 600 subcategories of water-polluting industries

Rivers and Streams Supporting Recreational Uses: With and Without CWA Increase in Use Support Highest Supported Use Without-CWA Conditions (miles) With-CWA Conditions (miles) Miles Percent Increase Percent of Maximum Increase Swimmable222,120238,62716, % Fishable399,999424,71224, % Boatable454,038475,89421, % Nonsupport178,514156,658-21, % 632,552 Miles Analyzed during the mid-1990s If all point-source emissions are eliminated

Comparison of Point Source Water Pollution-Control Costs: TBES vs Least-Cost StudyWater ResourceWater Quality Target (mg/liter) Ratio of TBES to Least-Cost Johnson (1967)Delaware Estuary2.0 mg/liter DO 3.0 mg/liter DO 4.0 mg/liter DO O’Neill (1980)Fox River (Wisconsin) 2.0 mg/liter DO 4.0 mg/liter DO 6.2 mg/liter DO 7.8 mg/liter DO Eheart, Brill, and Lyon (1983)Willamette River Deleware Estuary 4.8 mg/liter DO 7.4 mg/liter DO 3.0 mg/liter DO 3.6 mg/liter DO Kneese and Bower (1968)Delaware Estuary2 ppm DO 3-4 pm DO Kerri (1966)Willamette River5.0 mg/liter DO1.58 Goodwin and Dobbins (1966)Merrimack River3.0 ppm DO1.34 Bennett, Thorpe, and Guse (2000) Long Island SoundTotal nitrogen loading (tons)1.25

TBESs and Incentives  Weak incentives to adopt cleaner technology  Creates bias toward “end-of-the-pipe” techniques  Ignores input reduction  Ignores output reduction  Ignores recycling technology

Enforcement  Discharge permits  Initial compliance vs continued compliance

Municipal Wastewater Treatment Subsidies  Federal subsidies to build plants  Degree of Treatment Primary: use physical steps (removes 35-40% BOD) Secondary: use biological means (removes another 45-55% BOD) Tertiary: use chemical process (removes most the rest)  WPCA (1972) mandated at least secondary by 1983 Progress in Public Wastewater Treatment Facilities Total US population (millions) Percent served by treatment systems Percentage of served population with: No treatment Primary treatment only At least secondary NA <1 9 91

 How are grants allocated?  Needs survey: existing population, problem areas  Political pork  Incentives?  Excess capacity: construction grants but no operating costs grants  Economic development?  No incentive to seek out more efficient tech for cities  Water Quality Act (1987)  Replaced direct grants with State Revolving Fund program (“loans”) Municipal Wastewater Treatment Subsidies

EPA estimates 50%+ of water violations due to NPS  Focus on Non-point sources  Design standards  No agricultural cultivation on steep slopes  Designs on urban storm sewers  Home builders must control run-off  Tax materials/activities leading to NPS  Fertilizers, chemicals  Total Maximum Daily Load program Total Maximum Daily Load program  Emission limits if TBES don’t achieve ambient standards  Tradable Discharge Permits Tradable Discharge Permits  Fox River, Chesapeake Bay, Long Island Sound, Dillon Reservoir  Problems  Thin markets  Trading ratios Water Policy Innovations

Air Pollution Policy

78% Nitrogen 21% Oxygen Ozone: filters out ultraviolet radiation Other gases provide for “greenhouse” effect

Federal Air Pollution Control Laws  Early law was local in nature; focus on “nuisance laws”  Air Quality Act (1967) Required states to established ambient standards for “criteria pollutants” expanded grants to states for air pollution control plans  Clean Air Act (1963, 1966, 1970, 1977, 1990) Established uniform NAAQS Established TBES Stationary vs mobile sources SO 2 tradable discharge permits  Early law was local in nature; focus on “nuisance laws”  Air Quality Act (1967) Required states to established ambient standards for “criteria pollutants” expanded grants to states for air pollution control plans  Clean Air Act (1963, 1966, 1970, 1977, 1990) Established uniform NAAQS Established TBES Stationary vs mobile sources SO 2 tradable discharge permits

Criteria Pollutants Particulate Matter Health: breathing symptoms; aggravation of existing respiratory and cardiovascular disease; impairment of the body’s immune systems; damage to lung tissue; premature mortality Welfare: damage to materials, soiling; visibility impairment Sulfur Dioxide Health: adverse effects on breathing; respiratory illness; alterations to lung’s defenses, aggravation of existing respiratory and cardiovascular disease Welfare: foliar damage on trees and crops; contribution to acid rain; accelerated corrosion of buildings Carbon Monoxide Health: exposure to elevated levels causes impairment of visual perception, work capacity, manual dexterity, learning ability and performance of complex tasks; individuals with existing cardiovascular disease are at greater risk Nitrogen Dioxide Health: lung irritation, reduced resistance to respiratory infection; continued or frequent exposure may cause higher incidence of acute respiratory disease in children Welfare: contributes to ozone formation and acid rain Ozone Health: reduced lung functioning; damage to lung tissue, increased sensitivity of the lung to other irritants Welfare: reduction in crop yields; foliar damage to crops and trees, damage to ecosystem Lead Health: damage to kidneys, liver, nervous system, and blood forming organs; changes in fundamental enzymatic, energy transfer, and homeostatic mechanisms in the body; excessive exposure can cause neurological problems such as seizures, mental retardation, and/or behavioral problems

National Primary and Secondary Ambient Air-Quality Standards (NAAQS) PollutantPrimary StandardSecondary Standard Particulate Matter (PM10) Daily mean 150 µg/m 3 Same as primary Particulate Matter (PM2.5) Annual mean Daily mean 15 µg/m 3 35 µg/m 3 Same as primary Carbon Monoxide 8-hour mean 1-hour mean 9 ppm 35 ppm None Nitrogen Dioxide Annual mean ppm Same as primary Ozone 8-hour mean ppm Same as primary Lead Quarterly mean 0.15 µg/m 3 Same as primary Sulfur Dioxide Annual mean 24-hour mean 3-hour mean 0.03 ppm 0.14 ppm none Same as primary 0.50 ppm Source:

Stationary Source Control: TBES  Non-Attainment Areas Existing Sources: RACT (Reasonably Available Control Technology) New Sources: LAER (Lowest Achievable Emission Rate)  Prevention of Significant Deterioration (PSD) Areas Existing Sources: None New Sources: BACT (Best Available Control Technology) Note: New Source Bias  Creates incentives to hold onto older, dirtier, factories  Creates incentives for older factories to produce to capacity whereas newer factories may have excess capacity  Non-Attainment Areas Existing Sources: RACT (Reasonably Available Control Technology) New Sources: LAER (Lowest Achievable Emission Rate)  Prevention of Significant Deterioration (PSD) Areas Existing Sources: None New Sources: BACT (Best Available Control Technology) Note: New Source Bias  Creates incentives to hold onto older, dirtier, factories  Creates incentives for older factories to produce to capacity whereas newer factories may have excess capacity

Comparison of CAC Cost with Least Cost Programs StudyCAC BenchmarkRatio of CAC Costs to Least Cost Particulates, St. Louis (1974)SIP regulations6.00 SO 2, Four Corners Region (1981)SIP regulations4.25 Sulfates, Los Angeles (1982)Applicable CAA standards1.07 NO 2, Baltimore (1983)RACT regulations5.96 NO 2, Chicago (1983)RACT regulations14.40 Particulates, Baltimore (1984)SIP regulations4.18 SO 2, Delaware Valley (1984)Uniform percentage reduction1.78 Particulates, Delaware Valley (1984)Uniform percentage reduction22.00 Airport Noise, US (1983)Mandatory retrofit1.72 Hydrocarbons, domestic DuPont plants (1984)Uniform percentage reduction4.15 CFCs, US (1980)Proposed emission standards1.96 Source: Table 15.6, Field and Field (5e), p311

Cap-and-Trade (CAP) Program  1990 CAA: reduce SO 2 emissions by 40% from 1990 levels  Phase I: 1995 – power plants in 21 eastern/midwestern states # permits = (Avg Btu of fuel used) x (2.5 lbs SO 2 /million Btus)  Phase II: 2000 – present Covers all power plants in US (approx. 1000) # permits = (Avg Btu of fuel used) x (1.2 lbs SO 2 /million Btus) Overall cap of 8.95 million permits in 2010  Trading Rules Participants: corporations, individuals, green groups, speculators EPA tracks all trades, monitors emissions $2581 fine for excess SO 2  1990 CAA: reduce SO 2 emissions by 40% from 1990 levels  Phase I: 1995 – power plants in 21 eastern/midwestern states # permits = (Avg Btu of fuel used) x (2.5 lbs SO 2 /million Btus)  Phase II: 2000 – present Covers all power plants in US (approx. 1000) # permits = (Avg Btu of fuel used) x (1.2 lbs SO 2 /million Btus) Overall cap of 8.95 million permits in 2010  Trading Rules Participants: corporations, individuals, green groups, speculators EPA tracks all trades, monitors emissions $2581 fine for excess SO 2

Clean Air Markets in Action Affected Sources Allowance Prices Trends in SO2 Emissions Cross-State Air Pollution Rule  AEP Muskingum River Plant  98,515 tons of SO2 in 2010  4 coal-units producing 840 MW  159 full-time workers  AEP Dresden  Natural gas unit producing 580 MW  25 full-time workers

Mobile Source Emissions Federal focus has been on emissions per mile Equimarginal principle suggests all RHS factors should be balanced New Car Emission Standards VOC, NOx, CO, PM “Technology forcing” Inspection and Maintenance programs Technology Standards Reformulated fuels Alternative fuels: methanol, natural gas, hydrogen Clean cars: electric vehicles, hybrids Total Emissions Number of Vehicles Average Miles Traveled Emissions per Mile = xx Massachusetts v US EPA: Supreme Court rules 5-4 that CO 2 is a pollutant and the EPA is responsible for its regulation

Emissions (million short tons) Carbon monoxide Stationary Mobile Nitrogen oxides Stationary Mobile Volatile organic compounds Stationary Mobile Sulfur dioxide Stationary Mobile Particulate matter (PM10) Stationary Mobile Lead Stationary Mobile Stationary and Mobile Sources of Criteria Pollutants in the US Source: Table 15.1, Field and Field (5e), p302

Emissions (hundred tons per day) 1990 Actual 2000 Without CAA 2000 With CAA VOC NO CO SO PM Source: Table 15.2, Field and Field (5e), p302 Estimated Impacts of 1990 Clean Air Act

State & Local Issues Municipal Wastes Land Use Control

Environmental Federalism “States as laboratories” Fed policy may pre-empt state actions State regulations must be at least as strict as Fed regulations State policy can not discriminate against interstate trade Centralized or decentralized approach? Depends on extent of emissions mixing

RegionStates Per Capita Expenditures West CoastCA, OR, AK, HI, WA$69.90 SoutheastFL, GA, NC, TN, KY, AL, MS, SC$64.11 MountainsMT, AZ, UT, ID, CO, WY, NM, NV$59.92 PlainsIA, SD, MO, ND, NE, KS$59.40 Mid-AtlanticPA, WV, VA, MD, NJ, DE$52.43 MidwestIL, WI, MI, OH, IN, MN$44.72 South CentralLA, TX, AR, OK$42.54 NortheastNY, ME, NH, MA, RI, VT, CT$36.21 State Environmental and Natural Resource Expenditures per Capita, 2003 Source: Environmental Council of the States,

Municipal Solid Waste  Disposal Options Landfills Incineration Recycling  NIMBY Media switching?

Municipal Solid Waste Total quantity generated (mil. tons) Quantity generated per capita (lbs/person/day) Disposal, percent of total: Landfill Combustion Recycled Municipal Solid Waste Source:

Source:

Municipal Solid Waste Generated and Recovered in the United States, 2005 Waste Generated (million tons) Materials Recovered (percent of total) Paper Yard waste Plastics28.96 Metals Wood13.99 Food waste29.22 Glass Other Total Municipal Solid Waste Source: Municipal Solid Wastes in the US: 2005 Facts and Figures. Available at

Municipal Solid Waste  Disposal Options Landfills Incineration Recycling  NIMBY  Technical Options for Reducing MSW TM = VM + RM VM = TM – RM = TM(1-r)  Reduce TM  Reduce economic activity  Reduce materials intensity  Increase Recycling Media switching? TM = total materials used VM = virgin materials used RM = recycled materials used r = RM/TM “rate of reuse”

Economics of Recycling Producer and Consumer Decisions Private costs versus social costs

Reasons to Recycle 1. Feels good? 2. Saves energy? 3. Saves money? 4. Creates good jobs? 5. Saves trees? 6. Improves environment? 7. Saves landfill space?

Producer Decisions D S2S2 S1S1 PVPV P V + t q1q1 q2q2 q0q0 With S 1 : q 1 units will be recycled; reuse ratio = q 1 /q 0 Increase reuse ratio?  Raise q 1, hold q 0  Reduce q 0, hold q 1 Public curbside collection Reduce overall demand  do both! Increase P V thru tax Materials Cost Effectiveness? Minimum content standards?  Taxes or TDP? $

Consumer Decisions Which goods to buy? In what quantities? Should I recycle? Worksheet on Landfill vs Recycling Mandatory recycling Disposal taxes Deposit Refund

Product AProduct B Value to Consumer Purchase Price100 Net Value Landfill Option Disposal Costs Private Costs10 External Costs1040 Net Benefits Private Social Recycling Option Disposal Costs Private1040 Community Transport--10 External Costs100 Value of Recovered Materials020 Net Benefits Private Social (20)(10) (20)(30)

Global Environmental Issues Ozone Depletion Global Warming Biodiversity

Ozone Depletion Physical Problem surface ozone produced when hydrocarbons and nitrogen oxides mix under sunlight stratospheric ozonestratospheric ozone: 7-10 miles above earth; maintains earth's radiation balance late 1970s evidence started coming in about depletion; 1985 hole over Antarctica Antarctica Causes? CFCs: refrigerants, propellants, polystyrene halons: fire suppressants Damages? increase in ultraviolet radiation health impacts: skin cancer, eye disease agricultural losses: damaged crops

Ozone Policy CFC ban on aerosols by US in 1978 Montreal Protocol (1987) phaseout CFCs by 2000 multilateral fund to help developing countries trade restrictions Success? Chlorine levels declining Bromine levels increasing Ozone hole fluctuating

Global Warming  Climate Sensitivity Doubling of CO2  + 1 °C  Feedback effects Water vapor: °C Clouds ??? Major Greenhouse Gases GasPreindustrial Level Current Level Major Source Water Vapor CO 2 280ppm387ppmFossil fuel combustion, deforestation, cement production CH 4 (methane)700ppb1745ppbLandfills, enteric fermentation N2ON2O270ppb314ppbFertilizers, biomass burning, fossil fuel combustion CFC-12Refrigerants, propellants 280ppm  560ppm: + 1 °C 560ppm  1120ppm: + 1 °C

“Hockey Stick” graph

IPCC Report  Temperature increases caused by (human generated) CO 2 increases  0.5°C (1° F) over last 100 years  1.5° - 4.5°C over next 100 years  rising sea levels on coastal societies  rapid change does not allow for evolutionary changes  agricultural and forestry changes Stern Review Critique of Stern Review

Global Warming Policy  Kyoto Protocol (1997) Prescribed emission reduction targets for 6 GHGs Signatories must reduce GHG 5% below 1990 levels by  Technical Responses Increase earth’s absorption abilities Reduce emissions  Stern Review Damage estimates: 5-20% loss in annual global GDP Annual mitigation costs: 1% global GDP to meet 550ppm target  Policy Options Differences in control costs suggests incentive-based strategies  Tradable discharge permits  Emissions tax Differences in contributing factors complicate global agreements between nations Total CO 2 Production = pop x (GDP/pop) x (energy/GDP) x (CO 2 /energy)

Cost-Effectiveness of Alternative Means of Reducing CO 2 MeansCosts per Ton of CO 2 ($) Co-firing boilers with natural gas$10 Early retirement of coal plants, replaced with nonfossil fuels280 Increased energy efficiency in homes175 to 300 Increased energy efficiency in commercial buildings-190 to 75 Cogeneration—commercial85 to 210 Increased fuel efficiency in cars-220 to -410 Increased fuel efficiency in light trucks-510 to -410 Mass transit1,150 to 2,300 Cogeneration—industry55 to 120 Urban tree planting180 Afforestation with CRP35 Increased CO2-abscorbing capacity through management of existing forests 150 to 200 Source: Table 20.3, Field and Field (4e)

Stern Review  CO 2 target = 550ppm  Choice:  Costs of strong and early action (1% GDP)  Costs of not acting (5% - 20% GDP)  3 Elements of Policy  Pricing of carbon: taxes, cap-and-trade, regulation  Support innovation and deployment of low-carbon technologies  Remove barriers to energy efficiency (inform, educate, persuade)  International response is required  Emissions trading  Technology cooperation  Reduced deforestation  Adaptation “Climate change is the greatest market failure the world has ever seen” Requires emissions 25% below current levels by 2050 Kyoto Protocol (1997)

Stern Critique: Overestimated MD  Demographics: assumes rapid pop. growth and low income growth in low latitudes  Discount rate Low discount rate (r = 1.4%) use for evaluating the cost of future damages Mitigation costs are evaluated using r ≈ 4%  Adaptation is not taken into account  Extreme weather events increase: from 0.2 percent of GDP to 5% of GDP  Non-market damages suffer from sampling bias  Equity: extra weight given to damages suffered by poor people MAC Stern MD Stern CO 2 e 550 t* MD Mendelsohn $ E* PV of damages = $85 per ton of CO 2 ($300 per ton of carbon)

 Must reduce emissions by 25% below current level by 2050 Renewable energy sources (42%) Nuclear power (15%) Carbon capture (15%) Energy efficiency (27%)  Ignores value of lost fossil fuels  Ignores impact of renewables on land usage/prices MAC Stern MD Stern CO 2 e 550 t* MD Mendelsohn MAC Mendelsohn E** Stern Critique: Underestimated MAC $

Economic and CO 2 Emissions Data for Selected Countries, 2008 CountryPopulation (millions) GDP per capita ($) Total Emissions (million tons) Emissions per capita (tons) Emissions per Dollar GDP (kg/$) China1,3266,6797, United States30342,6565, India1,1252,6221, Russia14214,7301, Japan12731,2751, Germany8232, Brazil1929, Source: Gapminder.orgGapminder.org Global Warming Policy

Copenhagen Consensus “What would be the best ways of advancing global welfare, and particularly the welfare of the developing countries, illustrated by supposing that an additional $75 billion of resources were at their disposal over a four-year initial period?”

Economic and CO 2 Emissions Data for Selected Countries, 2008 CountryPopulation (millions) GDP per capita ($) Total Emissions (million tons) Emissions per capita (tons) Emissions per Dollar GDP (kg/$) China1,3266,6797, United States30342,6565, India1,1252,6221, Russia14214,7301, Japan12731,2751, Germany8232, Brazil1929, Source: Gapminder.orgGapminder.org Global Warming Policy United Nations Climate Change Conference from Durban, South Africa

Biodiversity Types Genetic material Species Ecosystems Species Stock Random mutations Extinction rates Over-exploitation Habitat destruction Introduction of non-native species

Policy Approaches Endangered Species Act (1973) 1,967 species have been listed as endangered or threatened Prohibition on takings Protection of habitats CITES (1975) Export/import controls 5000 animals/28,000 plants Coase Theorem Alternative? Zimbabwe’s CAMPFIRE Costa Rica and Merck 51 species have been removed 23 have been recovered 12 listed in error or due to taxonomic change 10 have gone extinct 6 discovery of new populations