1. Environmental Science
Chp. 2
Economics & Environmental Policy

2. Chp. 2 vocabulary terms (16)
Economics
Supply
Demand
Cost-benefit analysis
Ecological economics
Environmental economics
Non-market value
Ecolabeling
Policy
Environmental policy
Environmental Impact Statement (EIS)
Command-and-control approach
Subsidy
Green tax
Cap-and-trade
Lobbying

3. What is Economics?
The study of how resources are converted into goods & services, and how they are distributed and used.
3 types of economies:
Centrally planned economy: government decides
Ex: Socialist & communist countries
Free market economy: individuals decide
Mixed economy: both gov’t & individuals decide
Almost all modern economies

4. Supply & Demand
Supply: how much of a product is offered for sale at a given price
Demand: how much of a product people will buy at a given price if free to do so
Sellers want to sell the most at the highest price
When demand is LOW: seller may drop price and slow production
When demand is HIGH: seller may raise price and increase production
Equilibrium: amount produced = demand

5. Supply & Demand Curve

6. Cost-Benefit Analysis
A method used to compare what they will sacrifice and gain by a specific action
If benefits outweigh costs, the action is usually pursued
Not all costs & benefits can be easily identified, so the analysis can be complicated and controversial
You can use the Decision-Making Model you were taught in Unit 1 for this.

7. Economics & the Environment
All economies depend on the environment for resources & management of wastes
Think of natural resources as the “goods” produced by nature
Ecosystem services are provided that purify air & water, recycle nutrients, and contain wastes.
When economic activity depletes or pollutes the “goods,” economic activity is affected.
Ex. Vacation destination’s sewage system can no longer keep up with wastes. Result: polluted water, swimming areas closed, tourists stop coming & local businesses suffer.

8. Traditionally, many environmental factors such as beautiful views, fresh air, & clean water don’t have a monetary value assigned to them, therefore they are not always considered in the Cost-benefit Analysis.

9. When considering the impact on the environment, look at:
Internal Costs & Benefits: only affect buyers & sellers directly.
External costs & benefits involve parties other than the buyers & sellers
Short-term Effects: usually given more weight than long-term effects, such as resource depletion.
Endless Resources: economists often do not consider that resources can run out or be overused.
Growth: economists assume that continued economic growth is required to keep employment high and maintain social order. Sustainability???

10. Economics & Sustainability
Ecological economics apply the principles of the Earth’s systems to economics, advocating economies that remain stable & sustainable
Environmental economics contend economies are unsustainable if resource use is not made more efficient, but can be sustainable if environmental challenges are addressed.
Both trends in economics recognize that suppliers of goods & services need to consider how to conserve resources and reduce harm to the environment.

11. We Need to Assign Market Values
Services provided by our ecosystems have non-market values (aesthetic value, cultural value, scientific value, educational value)
Because they lack a specific $ value, they can become exploited.
Surveys are often used to ask people to estimate how much they would pay for these.
Comparisons are also used. Ex.- prices of similar homes, some overlook a woodlot v.s. some that do not have a “green” view.

12. Market Failure
Market failure occurs when markets don’t consider the environment’s positive effects on economies or reflect the negative effects of that economic activity on the ecosystem.
To counteract, governments can give economic incentives to conserve resources or reduce pollution, or they can penalize with taxes & fines for not doing so.

13. Changing Consumer Values
Ecolabeling: labels that show how the products were grown, harvested or manufactured, telling consumers which brands do not harm the environment.
Encourages businesses to a more sustainable process when consumer choose ecolabeled products.

14. Small Group Activity
Refer to “Cleaning the Tides of San Diego and Tijuana” on page 35 of your textbook.
Apply the Decision-Making Model we learned in Unit 1 to the following question:
How can we best balance our own interests and needs with the health of the environment?

15. What is Environmental Policy???
Policy: formal set of generalized plans to address problems & guide decision-making
Environmental policy: policy that addresses interactions between humans and the environment.
It’s goal should be to protect environmental quality, protect natural resources, and ensure equity.

16. When government is making environmental policies, it interacts with citizens, organizations, and businesses.
There also must be input from science, ethics, and economics.
The U.S.A. has been a pioneer in this area, involving all 3 branches of government.

17. Legislative branch: a policy enters as a proposed law
Legislative branch: a policy enters as a proposed law. If both houses pass the bill, it moves to….
Executive branch: legislation is either approved or vetoed by the President, becoming law and assigned an agency to enact/enforce it.
Judicial branch: lawsuits are tools to ensure compliance with the law. The courts also hear complaints if laws are infringing on rights of citizens and businesses.

18. State and Local Policy
Environmental policy is also created at the state and local levels, which mirror the federal.
State laws canNOT violate US Constitution.
Environmental policy strength varies area to area. It becomes more of a priority in cities that have dealt with issues & messy cleanups.
California, New York & Massachusetts have strong environmental laws and well-funded agencies.

19. History of U.S. Environmental Policy
The 1st Period (1780s to late 1800s)
Mostly laws dealing with public land management and westward expansion.
Public perception was that lands and natural resources in the West were endless.
Westward expansion relieved crowded conditions in eastern cities, but displaced Native Americans.

20. The 2nd Period (late 1800s – 1900s)
Public perception & government policy toward natural resources began to shift, realizing they could be used up.
Forest Reserve Act of 1891
Soil Conservation Acts of 1930s
Wilderness Act of 1964
Reduced environmental problems associated with westward expansion
Policies led to the national forest system, refuge system and park system.

21. The 3rd Period (mid-to late-1900s)
U.S. was more densely populated and driven by technology, heavy industry, & intensive resource consumption.
Silent Spring by Rachel Carson
Fires on the oil-polluted Cuyahoga River
National Environmental Policy Act (1969)
Earth Day (1970)

22. Modern U.S. Environmental Policy
We’ve learned from the past, regulating pesticides more, and cleaner air & water.
Annual Earth Day celebrations
National Environmental Policy Act (NEPA)
Formation of Environmental Protection Agency (EPA)
Marine Mammal Protection Act
Endangered Species Act
Clean Air Act
Pollution Prevention Act

23. National Environmental Policy Act
January 1, 1970 President Nixon signed NEPA into law
Created an agency: Council on Environmental Quality
Environmental Impact Statement requires gov’t agencies & businesses to evaluate the impact of project on the environment before proceeding.
EISs involve citizens in the policy process

24. Environmental Protection Agency
President Nixon called for a new approach based on understanding environmental problems are interrelated
Now a single major entity would oversee tasks (EPA)
EPA is responsible for conducting/evaluating research, monitoring environmental quality, and setting & enforcing standards for pollution levels, as well as educating the public.

25. Post-1980
Backlash – many felt some laws imposed too great an economic burden on businesses and individuals.
Global warming and climate change are becoming more evident
New era focused on cleaning up toxic chemicals and sustainability
Obama administration is focusing on conserving energy, developing renewable energy technologies, and reducing carbon emissions.

26. Small Group Activity
Discuss the advantages & disadvantages that come with an international effort to protect the environment.
Why is an international approach to pollution reduction sensible?
What barriers might keep governments from working together to form environmental policies?

27. International Environmental Policy
Solving Environmental problems worldwide requires creativity and cooperation among nations.
Environmental problems are not restricted by borders, so international laws are needed to solve issues among nations (trans-boundary problems).
Rivers are often shared my many nations
Air pollutants travel on wind currents
Animals migrate
Multinational corporations

28. The United Nations (U.N.)
Formed in 1945, headquartered in NYC
Currently 190 nations are members
Purpose: promote peace and to help solve economic, social, cultural & humanitarian problems.
UN has helped shape international environmental policies.
Does not have the power to enforce laws, but they can influence behavior of nations (funding, peer pressure, media,…)

29. The European Union (EU)
Formed after World War II
Currently has 27 member nations
Goal: promoting Europe’s economic and social progress
EU can sign treaties and enact regulations that have the same authority as national laws in each member nation
EU’s European Environment Agency produces current environmental data and analyses to help guide policymakers

30. World Trade Organization (WTO)
Established in 1995
Promotes free trade & enforces fair trade practices among its member nations.
WTO has the authority to impose fines on nations that do not comply
Criticism: some feel WTO often adds to the environmental problems (ex. – EPA regulations on burning gasoline discriminated against some international petroleum companies according to WTO

31. World Bank Established in 1944 Owned by 186 member nations
Provides interest-free credits, low-interest loans, or grants to poor nations for projects that improve standard of living
Shapes environmental policy by funding projects
Criticism: it sometimes funds projects that are not sustainable

32. Non-Government Organizations
Environmental organizations that are not affiliated with governments
Influence international policy through research, lobbying, education, and protest
Ex. – Greenpeace, Population Connection, Conservation International
Contribute considerable funding, expertise and research which helps solve environmental problems

33. Command-and-Control Approach
Approach that helps governments set rules & threaten punishment for violations
In U.S., most policies are legislation from Congress and regulations from administrative agencies.
Many successes: cleaner air & water, safer workplaces, healthier ecosystems.
Sometimes well meaning actions lead to unexpected circumstances
Incentives: tax breaks & subsidies

34. Tax Breaks and Subsidies
Subsidy: giveaway of cash or public resources to encourage an activity or lower the price of a product.
Green taxes: imposed on companies whose activities are harmful to the environment (widely used in Europe)
Both are incentives to reduce pollution while allowing the company to decide how best to do it.

35. Cap-and-Trade
Governments determine the overall amount of pollution it will accept for a specific pollutant and issues permits that allow polluters to emit a certain %.
Permits can be bought, sold & traded among companies, utilities, industries
Allows owner to make $, meet the needs of factories, and not increase pollution
Problem: trading can concentrate area of pollution with buying extra permits

36. Local Incentives Waste disposal charged by how much is used
Rebates given to residents for water-efficient toilets/appliances
Market-based incentives can reduce environmental impact, industry costs, and concerns about gov’t regulations.
More complicated than command-and-control approaches, but lessen environmental impact at a lower overall cost.

37. Environmental Policy Process
Identify the Problem
Identify the Causes
Often requires scientific research
Envision a Solution
Involves scientific, social & political ideas
Get Organized
Get the attention of elected officials
Gain Access
Lobbying can influence elected officials
Help a Solution become Policy
Draft a bill, legislator introduces it, law?

38. Getting Involved!!!
Policy process is long & difficult, but it yields effective results across the nation
Many environmental policies began as movements in small towns inspired by one person or a small group of people.
Young people can make an impact.
Join an environmental group.
Use social media responsibly.
You can make a difference!!!!