Environmental Science
Chp. 2
Economics & Environmental Policy
Chp. 2 vocabulary terms (16)
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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
What is Economics?
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The study of how resources are
converted into goods & services, and
how they are distributed and used.
3 types of economies:
1. Centrally planned economy: government
decides
– Ex: Socialist & communist countries
2. Free market economy: individuals decide
3. Mixed economy: both gov’t &
individuals decide
– Almost all modern economies
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
Supply & Demand Curve
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.
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.
• 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.
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???
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.
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.
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.
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.
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?
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.
• 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.
• 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.
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 wellfunded agencies.
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.
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.
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)
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
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
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.
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.
Small Group Activity
• Discuss the advantages & disadvantages that
come with an international effort to protect the
environment.
1. Why is an international approach to pollution
reduction sensible?
2. What barriers might keep governments from
working together to form environmental
policies?
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 by many nations
• Air pollutants travel on wind currents
• Animals migrate
• Multinational corporations
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,…)
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
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
World Bank
• Established in 1944
• Owned by 186 member nations
• Provides interest-free credits, lowinterest 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
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
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
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.
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
Local Incentives
• Waste disposal charged by how much
is used
• Rebates given to residents for waterefficient toilets/appliances
• Market-based incentives can reduce
environmental impact, industry costs,
and concerns about gov’t regulations.
• More complicated than command-andcontrol approaches, but lessen
environmental impact at a lower
overall cost.
Environmental Policy Process
1. Identify the Problem
2. Identify the Causes
– Often requires scientific research
3. Envision a Solution
– Involves scientific, social & political ideas
4. Get Organized
– Get the attention of elected officials
5. Gain Access
– Lobbying can influence elected officials
6. Help a Solution become Policy
– Draft a bill, legislator introduces it, law?
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!!!!
Homework
• Study for your Jeopardy test review as if
you are taking the test tomorrow!!!
• Chapter Review pages 58-59 in your
textbook