This lecture will help you understand:• Principles of economic theory • Economic growth, economic

health, and sustainability• Environmental and ecological

economics• Environmental policy• The history of U.S.

environmental policy• The environmental policy

process• Different approaches to policy

Just a Little Background

Marine Science Style ;)

What is Shifting Baselines:• Shifting baselines- termed in 1995

– Baseline data

• Examples:– 100 yrs ago there were very few obese people; weight loss

drugs, adult diabetes, cardiac arrest were things unnecessary or unheard of- Plus size clothing in junior dept

– Nevada thru early 70’s had a huge tarantula population that would migrate across roadways.

– Florida used to have a very large migratory bird population- not so much anymore

• But the q. is: Do YOU remember it?

http://www.topicsites.com/save-environment/what-you-can-do-to-help.htm

10 Most Polluted H2O in US• 1. Mississippi River TN, AR, LA, MO, IL, MN, WI, IA,

KY, MS• 2. Pacific Ocean OR, HI, CA• 3. Ohio River IL, IN, OH, KY, WV, PA • 4. Tennessee River KY, TN, AL 5. Houston Ship

Channel TX • 6. Ward Cove AK • 7. Savannah River GA, SC • 8. Delaware River DE, PA, NJ • 9.Thames River CT • 10. Grays Harbor WA www.freedrinkingwater.com

Activity:

Short video (4 minutes)Shifting Baselines• In pairs, discuss:

– Do your grandparents talk about “When I was a kid…….”

– What are some baselines that SHOULD NEVER be allowed to change through time?

– What do you know about watersheds, and water basins?

– Where are the watersheds in Florida?• How many do you think there are?

Answers:

• What is a Watershed:– An area or region drained by a river, river system,

or other body of water– A watershed describes an area of land that

contains a common set of streams and rivers that all drain into a single larger body of water.

• Where are the watersheds in Florida?– Watersheds 29 in Florida

Activity:

• H/W over Florida Watersheds• Be sure you understand the 2 big concepts

– Watershed– Shifting Baseline– Assignment

Day 2

Grab a textbook: Pre-read Central Case, Page 24

Chapter 2: Environmental Economics and Policy

San Diego and Tijuana

• The Tijuana River empties into the Pacific Ocean, carrying millions of gallons of untreated wastewater.

• San Diego’s waters receive storm water runoff.– Beaches are off-limits to swimming due to pollution from

the Tijuana River.• Rains wash pollutants onto U.S. and Mexican beaches, but

things are worse on the Mexican side.– The problem has grown worse with increased population

and pollution.• People on both sides of the border have pressed

policymakers to do something.

Where is it?

http://imperialbeach.patch.com/articles/tijuana-river-watershed-receives-poor-marks

Surf-rider perspective• The Basics of Wastewater Discharge• To comply with the Clean Water Act of 1972, most municipal wastewater treatment plants

use both primary and secondary treatment. Primary treatment involves screening out large floating objects, such as rags and sticks, removing grit, such as sand and small stones, and allowing wastewater to settle, followed by the removal of collected solids. In secondary treatment, primary-treated wastewater flows into another facility where bacteria consume most of the organic matter in the wastewater before it is discharged.

• Amendments to the law in 1977 allow for variances from secondary treatment for certain ocean discharges, provided the plant meets specified criteria. One important requirement is that the discharge must meet water quality standards adopted by the state to protect marine life and recreational activities such as swimming, surfing and fishing.

• Many coastal cities that once sought variances from secondary treatment have chosen to upgrade their treatment plants to meet Clean Water Act requirements without variances. This is especially true in areas with heavy recreational beach use. Also, as water supplies become more valuable, an increasing number of municipalities are adding advanced treatment technologies to their secondary treatment plants to clean the wastewater to the point it can be used safely for landscape irrigation and other uses.

Economics• Economics and environments are intimately

linked.• Protecting environment's is good for economy.

• Economics: studies how people use resources to provide goods and services in the face of demand.

• Most environmental and economic problems are linked.– Root “oikos” gave rise to both ecology and

economics.

Insert the data ;)

• Economy– Goods– Services

• Subsistance Economy• Capitalist Market Economy• Centrally Planned Economy• Mixed Economy

Answers:• Economy: a social system that converts resources into…

– Goods: manufactured materials that are bought, and sold– Services: work done for others as a form of business

• Subsistence economy: people get their daily needs directly from nature; they do not purchase or trade

• Capitalist market economy: buyers and sellers interact to determine production and distribution of goods and services

• Centrally planned economy: the government determines how to allocate resources

• Mixed economy: governments intervene to some extent

Mixed economies• Mixed economy: a hybrid economic system that combines

capitalist market and centrally planned economies• In modern mixed economies, governments intervene to:

– Eliminate unfair advantages held by single buyers or sellers– Provide social services (national defense, medical care,

education)– Provide “safety nets” for the elderly, victims of natural

disasters– Manage the commons– Mitigate pollution

The environment and economy are linked

• Economies receive inputs from the environment.

–Process them for use

–Discharge the wastes back into the environment

• Traditional economists ignore the environment.

–Environmental economists accept that human economies exist within, and depend on, the environment.

Environmental systems support economies

• Ecosystem services: essential services support the life that makes economic activities possible– For survival and quality of life

• Economic activities affect the environment.– Deplete natural resources– Produce pollution

The Millennium Ecosystem Assessment concluded that, in 2005, 15 of 24 ecosystem services were being degraded or used unsustainably.

Selected ecosystem servicesType of ecosystem service Example(s)

Regulating atmospheric gases and climate

Maintaining the ozone layer, controlling global temperature

Forming soil and cycling nutrients Weathering rock, cycling carbon, and nitrogen

Pollinating plants Wind and animal pollination

Providing habitat Species reproduction, survival

Providing food, resources Fish, crops, lumber, fuel

Recreational and cultural services Ecotourism, educational, and spiritual values

17 in your text

Activity:

• Go over the table on page 27, familiarize yourself with each

• Outline first part of chapter: pages 24-34 (Economics: Approaches & Env. Implications)

Types of Economics

Apes2013

Classical economics• Competition between people free to pursue

their own economic self-interest will benefit society as a whole (Adam Smith, 1723-1790).• The market is guided by an “invisible hand.”

• This idea is a pillar of free-market thought today.

• It is also blamed for economic inequality.• Rich vs. poor

• Critics think that market capitalism should be restricted by government.

Neoclassical Economics• Examines psychological

factors underlying consumer choices

• Market prices are explained in terms of consumer preferences.– Buyers vs. sellers

• The “right” quantities of a product are produced.

The market favors equilibrium between supply and demand.

Neoclassical Cost-Benefits

• Cost-benefit analysis: the costs of a proposed action are compared to the benefits that result from the action

• If benefits > costs: pursue the action

• Not all costs and benefits are identified or quantified.

• i.e., effects on health or life styles

• Monetary values are easier to determine than environmental costs.

• So economic development is favored over environmental protection.

Neoclassical: Positive Aspects• Generates enormous wealth and jobs

• Assumptions of neoclassical economics:

– Resources and workers are infinite or substitutable.

– Future effects are discounted because short-term effects are more important.

– Costs and benefits are internal and experienced only by the buyer and seller.

– Growth is needed to keep jobs and social order and increase opportunities for the poor to get rich.

• “Everyone gets a piece of the pie.”

• Some resources are unique and can’t be replaced.• Many environmental problems develop slowly and affect future

generations.• Costs and benefits of a transaction affect people other than the

buyer or seller.– Taxpayers clean up pollution.

• The “pie” can’t grow infinitely.• Economic growth is the yardstick that measures progress.

Neoclassical: Negative Aspects

Some examples of externalities• External costs: borne by someone not

involved in a transaction– Hard to account for and eliminate

• Human health• Property damage• Declines in desirable elements• Aesthetic damage• Stress and anxiety• Declining real estate values

• The rate of economic growth in recent years is unprecedented in human history.– The world economy is 7 times larger than 50 years ago!– All measures of economic activity are still increasing.

• Trade, rates of production, amount/value of goods• “More and bigger is better”

– Advertising has doubled in the past 20 years.– More goods available due to technology and global trade.

Is the growth paradigm good for us?

American citizens have embarked on a frenzy of consumption unparalleled in history.

Is the growth paradigm good for us?

The dramatic rise in per-person consumption is having numerous

consequences.

Is economic growth a good thing?• As long as economic growth is only a tool to achieve happiness• If it becomes an end in itself, it is no longer a good tool.• Affluenza: material goods can fail to bring contentment

– Like cancer, runaway growth can overwhelm and destroy our economic system.

– Resources are limited, so non-stop growth is not sustainable.

• Proponents of unrestrained growth include economists, businesspeople, and policymakers.– Technology can solve everything.

Other types of economists• Ecological economists: civilizations cannot overcome

environmental limitations– Apply principles of ecology and systems science– Natural systems are models: take a long-term perspective

• Steady state economies: mirror natural ecological systems– Quality of life will continue to rise, along with technology– Calls for revolution

• Environmental economists: unsustainable economies have high population growth and inefficient resource use– Modify neoclassical economics to increase efficiency– Calls for reform of the current system

Ecosystem serv. & non-market values• Non-market values = values not included in the price of a good or

service

Valuing ecosystems goods and services

• Environmental and ecological economists have tried to assign monetary values to ecosystems services.– Surveys: determine how much people are willing to pay to

protect or restore a resource– Money, time, effort people expend to travel to parks for

recreation– Inferring the dollar value of landscapes, views, and peace and

quiet– Costs required to restore natural systems

The biosphere provides at least $44 trillion (2009 dollars) worth of ecosystem services per year — more than the gross domestic product of all nations combined!

Corporations are becoming sustainable

• Industries, businesses, and corporations can make money by “greening” their products and practices.– Ben & Jerry’s ice cream– Patagonia outdoor apparel– WalMart, Ford, Toyota, McDonald’s, Starbucks, Nike

• Some corporate greening efforts are rhetoric = “greenwashing”– Mislead consumers

• Consumers must encourage trends in sustainability by rewarding those corporations that promote sustainable solutions.

Markets can fail• Market failure: occurs when markets do not

account for the environment’s positive impacts– Or, when markets do not reflect the negative effects of

activities on the environment or people (external costs)

• Government intervention counters market failure– Laws and regulations– Green taxes: penalize harmful activities– Economic incentives to promote conservation and

sustainability

Activity:• Tonight read the, “Calculating the Economic Value

of Earth’s Ecosystems” on page 32-33• Answer the following:

– What is your overall thought on the idea of putting a price on ecosystems?

– Do you think this will help or hurt them? Why?– Do you think the numbers are adequate, or do you see

areas they overshot or undercut?– Was there a need for a second study? Should there be

a third? If so, what would you like to see?

Activity:

• After we look at the overview of what Env Policy is, we will:

• Jigsaw next four chunks of text: – US Env Policy– International Env Policy– Env Policy Process– Approaches to Env Policy

Environmental policy• People persuade government leaders to solve a problem through

the making of policy.• Policy: a formal set of general plans and principles to address

problems and guide decisions • Public policy: policy made by governments that consists of laws,

regulations, orders, incentives, and practices • Environmental policy: pertains to human interactions with the

environment – Regulates resource use or reduction of pollution

– Promotes equity in resource use

Environmental policy and resource use

• Policies include science, ethics, and economics.

Environmental policy and equity• The capitalist market economic systems of democracies are

driven by incentives for short-term economic gain.– Not for long-term social and environmental stability– Provides little incentive to minimize environmental impacts– Market failure is justification for government intervention

Environmental policy goals: protect environmental quality and natural resources and promote equity in people’s resource use

Environmental policy and resource use

• Environmental policies exist to protect resources from:• (1) The tragedy of the commons: we must develop policies

for commonly held resources – Restrict use and actively manage resources– Safeguard against exploitation and depletion

• (2) Free riders: reducing environmental impacts tempts any one person to cheat – Private voluntary efforts are less effective than efforts

mandated by public policy• (3) External costs: environmental policies promote fairness

by preventing people from using resources in ways that harm others

In 4 groups

• Jigsaw each section:– US Environmental Policy– International Environmental Policy– Environmental Policy Process– Approaches to Environmental Policy

• The U.S. provides a good example of environmental policies.– The U.S. has pioneered innovative environmental policy.– U.S. policies have served as role models — of success and

failure for other nations.– The U.S. influences other nations.– Understanding U.S. environmental policy helps us

understand environmental policy at local, state, and international levels.

U.S. environmental policy

• 3 branches of the U.S. federal government (legislative, executive, and judicial) are involved in aspects of environmental policy:– Legislation (statutory law) is passed by Congress– Signed or vetoed by the president– Implemented and enforced by administrative agencies

within the executive branch• Administrative agencies: the “fourth branch”

– Established by the president or Congress– Monitors compliance and enforces law– Issue regulations: specific rules based on statutory law

Framework of U.S. policy: 3 branches

State and local governments mirror federal policies

• The structure of the federal government is mirrored at the state level.

• State laws cannot violate principles of the U.S. Constitution.– If laws conflict, federal laws take precedence.– California, New York, and Massachusetts have strong

environmental laws and well-funded environmental agencies.

– The interior western states put less priority on environmental protection.

Early U.S. environmental policy

• Involved management of public lands (1780s to the late 1800s) – Promoted settlement in the west – Extraction of natural resources

• Increased prosperity • Relieved crowding in Eastern cities• Displaced millions of Native

Americans • People believed that land was

infinite and inexhaustible.

The second wave of U.S. policy

• During the late 1800s: addressed environmental problems/impacts caused by westward expansion

• Public perception and government policy shifted.– Yellowstone National Park, the world’s first national park,

opened in 1872.• Other protected areas were created.

– National wildlife refuges, parks, and forests • Reflected a new understanding that the West’s resources

were exhaustible and required legal protection

– Soil conservation after the 1930s Dust Bowl– 1964’s Wilderness Act: “where man is but a visitor”

The third wave of U. S. environmental policy

• Responded to pollution• Mid-to-late 20th century

• Better off economically • But dirtier air, dirtier water, waste, and

toxic chemicals • Increased awareness of environmental

problems shifted public priorities and policy. • 1962: Silent Spring (by Rachel Carson)

described the negative ecological and health effects of pesticides and industrial chemicals

Modern U.S. environmental policy

• The Cuyahoga River (in Ohio) was polluted with oil and industrial waste.– It caught fire in the 1950s and 1960s.

• Today, public enthusiasm for environmental protection remains strong.– The majority of Americans favor environmental protection. – Each April, millions of people celebrate Earth Day.

National Environmental Policy Act (NEPA)

• 1970: The dawn of the modern era of environmental policy• The National Environmental Policy Act (1970) (NEPA), signed

into law by President Nixon:– Created the Council on Environmental Quality– Requires an Environmental Impact Statement (EIS) for any

Federal action that might impact the environment– NEPA forces the government and businesses to evaluate

the environmental impacts of a project.

The EPA shifts environmental policy

• In 1970, Nixon created the Environmental Protection Agency (EPA) by Executive Order.– An integrated approach to environmental policy– Conducts and evaluates research– Monitors environmental quality – Sets and enforces standards for pollution levels– Assists states in meeting standards and goals– Educates the public– Involves water and air quality, pollution, solid waste

Significant environmental laws

• The public demanded a cleaner environment and supported tougher environmental legislation.

The social context for policy can change

• Three factors allowed major advances in environmental policy in the 1960s and 1970s:• Wide evidence of environmental problems • People could visualize policies to deal with problems • Public support and leaders who were willing to act

• Starting in the 1980s, the political climate changed.• People felt burdened by environmental regulations.• Politicians tried to roll back or weaken environmental laws.• The U.S. retreated from its leadership role in environmental

policy.

We need to stop labeling problems as environmental and show they are quality of life issues.

The fourth wave of environmental policy

• The 1992 Earth Summit in Rio de Janeiro, Brazil, drew leaders from 179 nations.– It centered on the idea of

sustainable development.• This fourth wave of

environmental policy focuses on sustainable development. – Finding ways to safeguard

natural systems while raising living standards for the world’s poorest people

International Environmental Policy

• International law is vital to solving international problems. • Customary law: arises practices or customs held by most

cultures • Conventional law: arises from conventions or treaties

between nations– Montreal Protocol (1987): 160 nations agreed to reduce

ozone-depleting chemicals

An international wastewater treatment plant

Organizations help shape international policy

• International organizations influence the behavior of nations.• Provide funding, apply peer pressure, direct media attention

• United Nations: created in 1945 to maintain international peace and prosperity• United Nations Environment Programme (UNEP): helps

nations understand and solve environmental problems• The World Bank: established in 1944; one of the world’s largest

funding sources for economic development• Dams, irrigation, infrastructure• Funds unsustainable, environmentally damaging projects

The European Union (EU)

• The European Union seeks to promote Europe’s unity and economic and social progress– One of its goals is promotion of solutions to environmental

problems.– Contained 27 member nations– Can enact binding treaties– Its regulations have the same authority as national laws.– Can also issue advisory directives

The World Trade Organization (WTO)

• Established in 1995• Represents multinational corporations to promote free trade• Has authority to impose penalties on nations that don’t

comply with its directives• Interprets some environmental laws as unfair barriers to free

trade• Brazil and Venezuela filed a complaint against the U.S.’s

EPA regulations requiring cleaner-burning fuel.• The WTO agreed with Brazil and Venezuela, despite threats

to human health.• Critics charge the WTO aggravates environmental problems.

International treaties can discourage protection

• International treaties allow industries and corporations to weaken environmental protection laws.• These laws are seen as barriers to trade.• Under the North American Free Trade Agreement (NAFTA),

an investor of one country can sue another country for hindering the investor’s ability to make profits.

• i.e., Canada’s cattle industry demanded $300 million from U.S. taxpayers for banning Canadian beef after mad cow disease was found in Canadian cattle

• With billions of dollars at stake, these treaties discourage states and nations from passing new environmental protection laws.

Non-governmental Organizations (NGOs)

• Non-governmental Organizations (NGOs): entities that influence international policy– Some do not get politically involved, such as The Nature

Conservancy.– Others try to shape policy through research, lobbying,

or protest.• Greenpeace, Population Connection

• They apply more funding, research, and expertise toward solving environmental problems than many national governments.

Six steps to making environmental policy

Identify specific causes: involves scientific research

Identify the problem: requires curiosity, observation, awareness

Six steps to making environmental policy

Envision a solution and set goals: involves science, social and political action

Get organized: organizations are more effective, but a motivated, informed individual can also succeed

Six steps to making environmental policy

Manage development of policy: Prepare a bill, or draft a law, containing solutions

Cultivate access and influence:• Lobbying: spending time and

money to influence a politician• Environmental advocates are

not very influential.

How a bill becomes law

• After a law’s enactment:– Administrative agencies

implement regulations.– Policymakers evaluate the

policy’s successes or failures.

– The judicial branch interprets the law.

Science plays a role in policy• Science provides information to make better policy.

– A nation’s strength depends on its commitment to science.• Sometimes policymakers distort science.

– Manipulating data– Censoring, suppressing, and editing reports– Placing unqualified people in powerful positions– Placing people with conflicts of interest in positions– Ignoring scientific advice– Misleading the public

Approaches to environmental policy

• Command-and-control approach: environmental policy sets legal limits and threatens punishment for violators– Has resulted in successes: cleaner air and water– Most current environmental laws

• Have resulted in safe, healthy, comfortable lives • Top-down, sometimes heavy-handed• Interest groups — people seeking private gain —

unduly influence politicians.– Alternative approaches involve using creative

economic incentives.

Subsidies are widespread

• Taxbreak: the government relieves the tax burden on a business or individual to promote desirable industries or activities

• Subsidy: a government giveaway of cash or resources to promote environmentally sustainable activities– Can be used to support unsustainable activities– i.e., subsidies for non-renewable fuels, roads in national

forests, mining on public lands

The U.S. taxpayer pays $4,000/year in environmentally harmful subsidies and on increased prices through environmental degradation.

Green taxes discourage undesirable activities

• Taxation can be used to discourage undesirable activities• Internalizes external costs

• Green taxes: taxes on environmentally harmful activities and products– Polluter pays principle: the price of a good or service includes

all costs, including environmental degradation– Gives companies financial incentives to reduce pollution– But, costs are passed on to consumers

Market permitting and incentives

• Markets in permits can save money and produce results• Permit trading: the government creates a market in permits

for an environmentally harmful activity– Companies, utilities, and industries buy, sell, and trade

rights to conduct the activity– Cap-and-trade system: the government sets the amount

of allowable pollution and issues permits to polluters to emit a certain fraction of that amount

• Polluters can exchange these permits • Governments can reduce the amount of emissions

Billions of dollars each year have been saved from the permit trading system.

Ecolabeling empowers consumers• Another strategy that uses the market to

counteract market failure• Ecolabeling: tells consumers which brands

use sustainable processes• A powerful incentive for businesses to

switch to better processes– “Dolphin safe” tuna

– Socially responsible investing in sustainable companies

Market incentives on the local level

• Many people take part in transactions involving financial incentives as policy tools.– Residents pay for waste disposal according to the amount of

waste they produce.– Power companies may offer discounts to customers who buy

high-efficiency light bulbs and appliances.

Public and private sectors can work together

• Society is trying to take advantage of the most effective aspects of government regulation and private enterprises.– Combine them in public–private partnerships– A for-profit entity performs the work efficiently so it can profit.– The for-profit entity, however, operates within the confines

agreed upon with a public entity that acts as an overseer.– Hopefully, the public policy goal will be achieved in a timely

and cost-efficient manner.

Conclusion• Environmental policy is a problem-solving tool.

– It uses science, ethics, and economics.– It requires an understanding of the political process.

• Conventional command-and-control approach• Uses legislation and regulations• Innovative environmental policy tools have been

developed• Economic welfare does not require a trade-off with

environmental quality.