Transcript Chapter 23

Mother nature doesn’t do bailouts.
Chapter 23-24
Environmental Economics and
Environmental Policy
(23.1 & 24.1-24.3)
Economic System
 social institution through which goods are produced,
distributed and consumed to satisfy people’s needs
and wants, EFFICIENTLY
 Three types of capital are used to produce goods and
services
 Natural capital

earths natural processes
 Human capital

peoples physical and mental talents
 Manufactured capital

machinery, equipment and factories
 economic growth: increase in a nations capacity to provide
goods and services to its people
 Goods and services initially depend on environmental
systems
 economic development: improvement of human living
standards through economic growth
 Can come up with solutions for environmental problems
caused by initial economic growth
 environmentally sustainable economic development: use
political and economic systems to encourage
environmentally beneficial and more sustainable forms of
economic development and discourage environmentally
harmful practices
Market based economy
 interaction of DEMAND and SUPPLY and PRICE
 companies try to increase profits any way
possible...push for government subsidies, tax breaks,
relaxed regulations, withhold information about harmful
environmental effects

Will do anything to get you to buy their product.
 government doesn’t require companies to disclose
environmental impacts of manufacturing products
 market price of an object doesn’t reflect the actual cost
to manufacture (environmental costs)
Market based economy
• economists believe that an economic system based
on private ownership without government interference
is the best way to solve problems
 Completely dependent on the market…supply and
demand
 Driven by the desires of the people for goods and
services
 Inferior products forced out of the market
 Informed decisions made on information about entire
cost of product (consumers have all information)
Measuring Economic Progress--
Wealth of a Country
 GDP: value of all products and services produced in a
year (does not include the cost of land degradation and
pollution)

Omits services provided by ecosystems

developed countries can purchase goods that lead to
environment improvements, but they consume more which
leads to degradation

many problems decline as income levels rise
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some problems increase then decline as they are identified
and addressed
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some problems increase without an end in sight
Measuring
Economic
Progress-Wealth of a
Country
 Genuine Progress
Indicator (GPI): assumes
some types of economic
activity are sustainable
and others are not.

Includes labor in
housework, parenting,
volunteering; costs of
crime, pollution, depletion
of nonrenewable
resources, loss of farmland

Ex.: US GPI for 2004 was
4.42 trillion;
GDP was 11.71 trillion
Conflicting views on economics
and the environment
 Natural resources important but can find substitutes if
needed (classic view)
 unlimited potential for economic growth
 increase the amount of matter/energy entering system to
produce more goods and services
 waste products end up in environmental sinks (air, water,
soil, organisms) where they cause harmful side effects
Conflicting views on economics
and the environment
 No substitutes for vital natural resources, humans
depend heavily on these resources (ecological view)
 when the capacity of the environment is exceeded to
remove waste products economic growth will become
unsustainable
 encourage full-cost pricing of goods
Government Role in Environmental
Issues
 Impose limits on the unsustainable exploitation of
natural resources; “promote the common good”
 Balance between halting free enterprise and
innovation (too much regulation) and environmental
degradation and social injustice (too little regulation)
 work toward full-cost pricing, leveling the playing
field between companies, regulating the
“commons” (preserving open-access resources)
Environmental Timeline
Assignment
 What are the environmental regulations that
are currently enforced to maintain our
environment?
Environmental Policy
 environmental laws and regulations that are designed,
enforced and implemented by government agencies
 Developed to solve problems brought on by economic
growth.
 Many current regulations focus on cleanup instead
prevention
 Major Policy Changes began in the late 1960s to early 1970s
(environmental revolution)

Most of the major US environmental laws were passed during this
time period. Many have been amended as needs change.
Environmental Policy
Development of Policy…The Policy Life Cycle.
 A cyclical feedback system that adjusts and monitors the
creation of environmental policy
 Four Stages:
 Recognition (identify problem)

Scientific research, public and media involved
 Formulation (look for solutions)
 Debate about policy options, media coverage, lobbying
 Consider effectiveness, efficiency and equity in policy
 Implementation (implement solutions)
 Policy moves to regulatory agencies, emphasis shifts to
enforcement
 Control (monitor and adjust)
 Most difficult to reach
 Policies amended if needed
 Agencies regulate implementation of laws
President
White House
Office
•Overall policy
•Agency
coordination
Department
of Health
and Human
Services
•Health
Nuclear
Regulatory
Commission
•Licensing and
regulation of
nuclear power
Office of
Management
and Budget
•Budget
•Agency coordination
and management
Environmental
Protection
Agency
•Air and water
pollution
•Noise
•Pesticides
•Solid waste
•Radiation
•Toxic substances
Department
of State
•International
environment
Council on
Environmental
Quality
•Environmental policy
•Agency coordination
•Environmental impact statements
Department
of Justice
•Environmental
litigation
Department
of Commerce
Department
of the
Interior
•Endangered species
•Energy
•Minerals
•National parks
•Public lands
•Fish and wildlife
•Water development
Department
of
Labor
•Oceanic and
atmospheric
monitoring
and research
•Occupational
health
Department
of
Energy
Tennessee
Valley
Authority
•Energy policy
•Petroleum allocation
•Electric power generation
Department
of
Agriculture
Department
of
Defense
•Soil conservation
•Forestry
•Civil works
construction
•Dredge and fill
permits
•Pollution control
from defense
facilities
Department
of Housing
and Urban
Development
•Housing
•Urban parks
•Urban planning
Department
Of
Transportation
•Airplane noise
•Mass transit
•Oil pollution
•Roads
Environmental Policy
 Principles that Guide the Development of Policy
 Our understanding of how nature works is limited (humility)
 Don’t make a decision that can’t be reversed later
(reversibility)
 Don’t use technology that spreads low net-energy yields (netenergy)
 Take measures to reduce harm to human health and the
environment (precautionary)
 Prevent a problem from occurring or becoming worse
(prevention)
 Ensure polluters bear the cost of dealing with pollutants and
waste (polluter-pays)
 Develop policy so no one group bears an unfair share of the
burden (environmental justice)
Role of Environmental
Legislation
 environmental law: body of laws and treaties that
broadly define what is acceptable environmental
behavior
 Most environmental laws have resulted from civil
suits. Difficult to win due to burden of proof,
statute of limitations, and identifying exactly who is
responsible.
 too many variables
Major Types of Environmental
Laws
 set standards for pollution
 screens new substances for safety and sets
standards
 encourage resource conservation
 set aside or protect certain species, resources or
ecosystems.
 evaluate environmental impact of activities
 Many environmental laws under attack due
to...
 large corporations influence
 difficult to pinpoint who is responsible (not
easy to measure)
 Many laws are pressured to be weakened
 Drilling for oil in ANWR
A local example…
 Initiative 522 Labeling Genetically Modified Foods
(GMOs)
 Put on the November Ballot as a result of petition signatures
 Controversial due to way law is currently written, costs
associated with implementation, alignment with current
labeling standards, and enforcement. As proposed, the law
states no label is necessary if:
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If the food is from or derived from an animal that isn’t genetically
engineered itself (even if it was fed or injected with GM products)
If the crop/food was grown without knowing or intentional use of GM
products (farmer must testify)
Processed food made with enzymes from genetic engineering
Alcohol
If the GM materials are less than .9% of the total weight of the
processed food
Organic food (already must be non-GMO)
Food not packaged for retail sale or non-immediate human
consumption (restaurants)
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Pro I-522
Against I-522
 Give information about what is in  Food labeled as GM even if not
our food (consumers useful
 GE foods have been used
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information)
64 countries already label for
GMO ingredients
Not enough data investigating
the impacts of GM organisms on
people
Argue won’t cost more at the
grocery store
Follows current labeling
framework
More marketable to overseas
countries with regulations
 Sponsored by organic
farmers/organic food companies
successfully for 20+ years
 USDA deems safe
 Purified food ingredients don’t
contain the GM protein..so why
label it GM
 Estimated to increase grocery
cost by $450 per year (due to
labeling)
 Too many exemptions for
certain food products
 Added costs for farmers, food
producers and grocery
companies
 Sponsored by GM agriscience
companies and grocer
associations
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 In the 1992 policy, FDA also addresses the labeling of foods derived from
new plant varieties, including plants developed by bioengineering. The 1992
policy does not establish special labeling requirements for bioengineered
foods as a class of foods. The policy states that FDA has no basis for
concluding that bioengineered foods differ from other foods in any
meaningful or uniform way, or that, as a class, foods developed by the new
techniques present any different or greater safety concern than foods
developed by traditional plant breeding.
 FDA has reviewed information in the comments received in response to the
1992 policy and the 1993 information request as well as the comments from
the 1999 meetings. Most of the comments that addressed labeling
requested mandatory disclosure of the fact that the food or its ingredients
was bioengineered or was produced from bioengineered food. However,
these comments did not provide data or other information regarding
consequences to consumers from eating the foods or any other basis for
FDA to find under section 201(n) of the act that such a disclosure was a
material fact. Many of the comments expressed concern about possible long
term consequences from consuming bioengineered foods, but they did not
contend that any of the bioengineered foods already on the market have
adverse health effects. The comments were mainly expressions of concern
about the unknown. The agency is still not aware of any data or other
information that would form a basis for concluding that the fact that a food or
its ingredients was produced using bioengineering is a material fact that
must be disclosed under sections 403(a) and 201(n) of the act. FDA is
therefore reaffirming its decision to not require special labeling of all
bioengineered foods. **Labeling is voluntary**
 http://www.fda.gov/Food/GuidanceRegulation/GuidanceDocumentsRegulato
ryInformation/LabelingNutrition/ucm059098.htm
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