Chapter 2 Environmental Laws, Economics and Ethics, Part II

Readings last Week and this Week: Chapter # 1 – “Hooknose” Chapter # 2 – “The Five Houses of Salmon”

US Environmental Legislation o Numerous laws passed since 1970 o They address: Clean water Clean water Clean air Clean air Energy conservation Energy conservation Hazardous waste Hazardous waste Pesticides Pesticides Federal regulation of pollution Federal regulation of pollution

US Environmental Legislation o Environmental Protection Agency Est Est o National Environmental Policy Act (NEPA) Cornerstone of Environmental Law Cornerstone of Environmental Law Requires Environmental Impact Statements (EIS) for any proposed federal action Requires Environmental Impact Statements (EIS) for any proposed federal action Ex: highway or dam construction Ex: highway or dam construction EIS must answer many questions (next slide) EIS must answer many questions (next slide) Revolutionized environmental protection in US Revolutionized environmental protection in US

Environmental Impact Statements

Effects of Environmental Legislation (According to EPA’s Draft Report on the Environment 2003) o Since 1970, 6 air pollutants have dropped by 25% 6 air pollutants have dropped by 25% o Since 1990 wet sulfate levels decreased 20-30% wet sulfate levels decreased 20-30% o In % of US had healthy drinking water (up from 79% in 1993) 94% of US had healthy drinking water (up from 79% in 1993) o As of of 1498 Superfund Sites are cleaned up 846 of 1498 Superfund Sites are cleaned up o Fewer streams violate water standards

Economics and the Environment o Economics- study of how people use limited resources to satisfy unlimited wants Analytical tools include models Analytical tools include models

Precepts to study Economics o Economics is utilitarian Goods and services have value that can be converted to currency Goods and services have value that can be converted to currency o Rational Actor Model Assumes all individuals spend limited resources to maximize individual utilities Assumes all individuals spend limited resources to maximize individual utilities o Ideal economy Resources are allocated efficiently Resources are allocated efficiently

Optimum Level of Pollution o Optimum Level of Pollution Cost to society of having less pollution is offset by benefits (short-term?) to society of activity creating pollution. Cost to society of having less pollution is offset by benefits (short-term?) to society of activity creating pollution. o Must identify Marginal Cost of Pollution- Cost of small additional amount of pollution. Marginal Cost of Pollution- Cost of small additional amount of pollution. Marginal Cost of Abatement- Cost of reducing small amount of pollution. Marginal Cost of Abatement- Cost of reducing small amount of pollution.

Economic Optimum Level of Pollution

Private vs Social Cost of Pollution

Strategies for Pollution Control o Command and Control Solutions Government agency requires limitations to emissions or pollutants Government agency requires limitations to emissions or pollutants Discourages development of low-cost alternatives Discourages development of low-cost alternatives Economists dislike this Economists dislike this o Environmental Taxes/ Tradable Permits If taxes are set at correct level private marginal cost of pollution = social cost of pollution If taxes are set at correct level private marginal cost of pollution = social cost of pollution Economists like this Economists like this

Critiques of Environmental Economics o Difficult to assess true costs of environmental pollution and abatement Impacts of pollution on people and nature is uncertain (not anymore!) Impacts of pollution on people and nature is uncertain (not anymore!) Ecosystem services have no known value (not quite!) Ecosystem services have no known value (not quite!) o Utilitarian economics may not be appropriate Dynamic changes and time are not considered Dynamic changes and time are not considered Based only on monetary value – what is monetary value of clean earth? (A better question: what is the value of a polluted, damaged Earth?) Based only on monetary value – what is monetary value of clean earth? (A better question: what is the value of a polluted, damaged Earth?)

National Income Accounts o Estimates of National Economic Performance and used in Politics Gross Domestic Product (GDP) Gross Domestic Product (GDP) Net Domestic Product (NDP) Net Domestic Product (NDP) o Environment may be overexploited to yield a higher GDP in developing countries (Tragedy of the Commons) o EPI (Environmental Performance Index) Assesses a country’s commitment to environmental and resource management Assesses a country’s commitment to environmental and resource management

Case Study- Environmental Problems in Eastern Europe o Fall of Communist governments revealed large environmental destruction Soil and water poisoned Soil and water poisoned Unidentified leaks in dumping sites Unidentified leaks in dumping sites Industry with air pollutants causing acid rain Industry with air pollutants causing acid rain Children with chronic asthma, bronchitis, and heart problems Children with chronic asthma, bronchitis, and heart problems

o Meeting industrial quotas took precedence over environmental concerns o Switch from communism to market economies- need to improve environment Will take decades to clean up polluting economics of communism Will take decades to clean up polluting economics of communism o Success varies by country Romania- EPI = 90 th Romania- EPI = 90 th Czech Republic- EPI = 4 th Czech Republic- EPI = 4 th Case Study- Environmental Problems in Eastern Europe

Environmental Ethics o Field of ethics that considers the moral basis of environmental responsibility o Western Worldview Human superiority and dominance over nature Human superiority and dominance over nature o Deep Ecology Worldview All species have an equal worth to humans All species have an equal worth to humans o Most people’s ethics fall somewhere in between (a gradient of ideas)

Societies and Sustainability Ecological systems (“Ecosystems”) and the services they provide to economic systems are interdependent. Society Sustainability

For economies, societies and cultures to be sustainable, extraction of resources from ecological systems must not exceed the biological populations’ (and ecological systems’) ability to produce them. Societies and cultures have multiple purposes: RecreationalCultural AestheticEconomicEducational Societies and Sustainability

The Bill of Rights (and responsibilities and…) A right: A just moral, ethical or legal claim. A privilege:A special right or immunity granted to a person or group. Source: Webster’s Dictionary Do responsibilities come with rights? Do we need rights w/respect to the ecological system? Why?

In Summary o Environmental Legislation Effects. o Environmental Economics Analyses? o Sustainable Economics? Rights and privileges Rights and privileges Individual and Societal Ethics Individual and Societal Ethics