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Transcript of Chapter 22 Economics, Public Policy, and the Environment Copyright © 2008 Pearson Prentice Hall,...
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Chapter 22Economics, Public Policy,
and the Environment
Copyright © 2008 Pearson Prentice Hall, Inc.
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22.1 - Economics and Public Policy
• The need for environmental public policy• Promote the common good• Improvement of human welfare• Protection of the natural world
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Economic Systems: Centrally Planned Economy
• Characteristic of socialist countries• Ruling class makes all decisions• Equity and efficiency theoretically achievable• Former Soviet Union was an example• North Korea and People’s Republic
of China last current holdouts
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Economic Systems: Free Market Economy
• Driven by supply and demand• Market driven• Easily manipulated • Only offer free access to goods and
services not based on ability to pay• Developed countries
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Classical View of Economic Activity
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22.2 - Resources and the Wealth of Nations
• Economic production is the process of converting the natural world into a manufactured world.
•Example: trees to paper to trash
•Natural capital = ecosystems and mineral resources = a major element in the wealth of nations (see Fig. 22-3)
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Environmental View of Economic Activity
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The Wealth of Nations
• Produced capital: human-made things• Natural capital: goods and services
supplied by natural ecosystems• Renewable• Nonrenewable • Subject to depletion
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The Wealth of Nations•Intangible capital
•Human: physical, psychological, and cultural attributes •Social: governments, the rule of law, civil liberties•Knowledge assets: codified and written fund of knowledge
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Gross National Product
GNP = sum of all goods and servicesproduced in a country in a given timeframe.
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Shortcomings of Gross National Product (GNP)
• GNP does not account for depreciation of natural capital - why?
• Environmental accounting = putting environmental assets and services into monetary units.
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Resource Distribution• Essential conditions for achieving equity
in the distribution of resources• A well-developed body of law• Honest legal system• Inclusiveness• Broad civic participation• Free press
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Intergenerational Equity
• Meeting the needs of the present without compromising the ability of future generations to meet their needs.
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Examples of Intergenerational Equity? (True or False)
• Let future generations cope with global climate change
• Cut all the trees and sell the timber today
• Hold on to the trees for a better price in the future
• Give up short-term gains for sustainable long-term harvests
False
False
True
True
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22.3 - The Policy Life Cycle
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Recognition Stage
Rachael Carson1962 Silent Spring
• Low in political weight• Media have popularized the policy• Dissension is high
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Formulation Stage
• Rapidly increasing public weight• Media coverage is high• Debate about policy options occurs
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Implementation Stage• Real political and economic costs of a
policy are exacted•Public concern and political weight are
declining•Issue not very interesting to media
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Control Stage
• Policies broadly supported• The environment is improving• Regulations may become more simplified
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Environmental Problems in the Policy Life Cycle
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Economic Effects of Environmental Public Policy
• Attributes of the best policies (Three “E’s”)• Effectiveness• Efficiency• Equity
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Economic Effects of Environmental Public Policy
• Costs of policies: real or subsidized costs? Who really pays for access to public resources?
• Impact on the economy…
States and nations with the strictest environmental regulations have the highest rates of job growth andeconomic returns.
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Cattle Grazing on BLM-managed Land
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Timber Harvesting in Olympia National Forest
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Impact of Environmental Policy on the Economy
• Transfers wealth from polluters to pollution controllers
• Led to the creation of an environmental protection industry as major GNP participant
• Great for the economy
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Policy Options: Market or Regulatory?
• Objective of Environmental Policy
To change the behavior of polluters and resource usersas to benefit public welfareand the environment!
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How Can Corporations Respond?
• Meet consumers’ demand for sustainable products and services
• Ecolabeling - Tells consumers which brands are made with processes that do not harm the environment
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How Can Corporations Respond?
• Industries, businesses, and corporations can make money by “greening” their operations
-Local sustainably oriented businesses are being started
-Large corporations are riding the “green wave” of consumer preference for sustainable products (ex: Nike, Gap, Wal-Mart, etc.)
What is “GREENWASHING”?Consumers are misled into believing companies are acting sustainably!!
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Greenwashing
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22.4 - Benefit-cost Analysis
• Benefit-cost analysis (or cost-benefit) of environmental regulations builds efficiency into policy so that society does not have to pay more than necessary for a given level of environmental control.
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External and Internal Costs• External bad: cost of adverse health from pollution• External good: benefits from improved job performance in pollution-free work environment
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Pollution control strategies generally demand high initial costs.
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Benefits negligible in the short-term.
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Cost-effectiveness Analysis
• Significant benefit may be achieved by modest degrees of cleanup in the short-term.
• Reducing level of pollutant below threshold levels will not yield observable improvement
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Progress• Total emissions of six principal air
pollutants since 1970 (-53%)• Lead in the blood of children since 1976
(-85%) • Between 1988 and 2004, release of toxic
chemicals (-68%)• Increase in states with safe drinking
water from 79% in 1993 to 94% in 2002
• Toxic air emissions since 1990 (-24%)
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Progress• > 333,000 underground storage tanks
cleaned up since 1990• Since 1980, 975 out of 1,450 Superfund
sites completely cleaned up• Recycling of MSW increased from 7% in
1970 to 30% in 2003
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22.5 - Politics and the Environment
• Typically Democrats pro-environment, but not always. Some Republicans, like Schwarzenegger, were very pro env.• Environmental policy “hurts the economy” – NOT True• Big business often hires lobbyists to influence politicians.• Bush Admin. not a friend to the environment.
• Ex. scientists were muzzled or censored
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Citizen Involvement • Become involved in local environmental
problems• Join an environmental NGO• Inform legislators that you support
particular environmental policies• Watch how politicians react to
environmental policies• Stay informed