Chapter 23-24Chapter 23-24Environmental Economics and Environmental Economics and

Environmental PolicyEnvironmental Policy

(23.1 & 24.1-24.3)(23.1 & 24.1-24.3)

Mother nature Mother nature doesn’t do bailouts.doesn’t do bailouts.

Economics

Study of how humans allocate scarce resources in the production, distribution, and consumption of goods and services

Economic Systemsocial 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 servicesNatural capital

Earths natural processesHuman capital

Human knowledge and abilitiesManufactured capital

machinery, equipment and factories (all goods and services produced)

economic growth: increase in a nations capacity to provide goods and services to its peopleGoods and services initially depend on environmental

systems

economic development: improvement of human living standards through economic growthCan 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 EconomyMost global economies function this way.

Costs are determined by supply and demand Delicate balance between the two, as supply increases demand

decreases…supply decreases demand increases Price determined by quantity available

interaction of DEMAND and SUPPLY and PRICEcompanies 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 and maximize their profit

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)

externality

Measuring Economic Progress--Measuring Economic Progress--Wealth of a CountryWealth of a CountryGDP: value of all products and services produced in a

year (does not include the cost of land degradation and pollution) Includes consumer spending, government spending,

investments, and exports minus imports 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 some problems increase then decline as they are identified

and addressed some problems increase without an end in sight

Not an accurate measure of wealth, and does not reflect the true cost of production

Measuring Measuring Economic Economic Progress--Progress--Wealth of a Wealth of a CountryCountryGenuine 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, general health of the population

Ex.: US GPI for 2004 was 4.42 trillion

GDP was 11.71 trillion

GDP has steadily increased over time,

while GPI has stayed the same or decreased

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 Government Role in Environmental IssuesEnvironmental 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 Policyenvironmental 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 PolicyDevelopment 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

enforcementControl (monitor and adjust)

Most difficult to reach Policies amended if needed Agencies regulate implementation of laws

•Energy policy•Petroleum allocation

•Electric power generation

•Air and water pollution•Noise•Pesticides•Solid waste•Radiation•Toxic substances

President

White HouseOffice

•Endangered species•Energy•Minerals•National parks•Public lands•Fish and wildlife•Water development

•Civil works construction•Dredge and fillpermits•Pollution controlfrom defensefacilities

•Soil conservation•Forestry

•Environmental litigation

•Health

•Licensing andregulation ofnuclear power

•Internationalenvironment

•Oceanic andatmosphericmonitoring and research

•Occupational health

•Housing•Urban parks•Urban planning

•Airplane noise•Mass transit•Oil pollution•Roads

•Overall policy•Agency coordination

•Budget•Agency coordination and management

•Environmental policy•Agency coordination•Environmental impact statements

Office ofManagementand Budget

Council onEnvironmental

Quality

Departmentof Health

and HumanServices

EnvironmentalProtection

Agency

Departmentof Justice

Departmentof the

Interior

Departmentof

Agriculture

Departmentof

Defense

NuclearRegulatoryCommission

Departmentof State

Departmentof Commerce

Departmentof

Labor

Departmentof Housingand Urban

Development

DepartmentOf

Transportation

Departmentof

Energy

TennesseeValley

Authority

Environmental PolicyPrinciples 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 (net-energy)

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 Legislationenvironmental 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 Lawsset 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 influencedifficult to pinpoint who is responsible (not easy to measure)

Many laws are pressured to be weakenedDrilling for oil in ANWR

Endangered Species Act and Polar Bears

A local example…Initiative 522 Labeling Genetically Modified Foods

(GMOs)Put on the 2013 November Ballot as a result of petition

signaturesControversial 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: 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)

20

Pro I-522Give information about what

is in our food (consumers useful 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

Against I-522

Food labeled as GM even if not

GE foods have been used 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

21

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/GuidanceDocumentsRegulatoryInformation/LabelingNutrition/ucm059098.htm

22