env 536: environmental economics and policy (lecture 2)
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ENV 536: Environmental Economics and Policy (Lecture 2). Assist.Prof. Sasitorn Suwannathep, Ph.d. School of Liberal Arts King Mongkut’s University of Technology Thonburi. Link between economic activity and nature. Natural Resource Economics. Nature. Environmental Economics. (b). (a). - PowerPoint PPT PresentationTRANSCRIPT
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ENV 536: Environmental
Economics and Policy (Lecture 2)
Assist.Prof. Sasitorn Suwannathep, Ph.d.School of Liberal Arts
King Mongkut’s University of Technology Thonburi
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Economy(a) (b)
Link between economic activity and nature
Nature Environmental Economics
NaturalResourceEconomics
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The Economy and the Environment (a) represents raw materials flowing into
production and consumption the nature plays its role as provider
(b) shows the impact of economic activity on the quality of the natural environment
the nature acts as a receiver.
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Relationship between economic activity and the environmentProvision of raw materialsReceptacle of wasteProvision of amenities
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Circular Flow Model of Economic Activity
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Materials Balance Model: The Interdependence of Economic Activity and Nature
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Using Science to understand the Material Balance
First law of thermodynamics: matter and energy can neither be created or destroy. This law can apply to the materials balance
model in the long run, the flow of materials and energy drawn from the nature into consumption and production must equal the flow of residuals that run from these activities back into the environment.
M = Rdp + R d
c
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Producers
Consumers
Raw materials (M)Goods
Residuals (Rp)
(G)
Discharged
(Rdp)
Discharged
(Rdc)
Residuals
(Rc)
Recycled (R rp)
Recycled (R rp)
Natural Environment
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Using Science to understand the Material Balance
Because matter and energy cannot be destroyed, then the materials flow can go forever. The second law of thermodynamics states that the nature’s capacity to convert matter and energy is not unlimited.
Even recycling can delay the disposal of residuals, but it cannot be perfect, each cycle must lose some proportion of the recycled material.
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Environment ManagementRd
p + Rdc = M = G + Rp – Rr
p – Rrc
Three ways to reduce M Reduce G (Goods and Services ↓ )
Reduce Rp (Production Residuals ↓ )
Increase (Rrp + Rr
c) (Recycling ↑ )
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Fundamental Concepts in Environmental Economics
Environmental economics is concerned with identifying and solving the problem of environmental damage, or pollution, associated with the flow of residuals.
Pollution >> The presence of matter or energy whose nature, location, or quantity has undesired effects on the environment.
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Fundamental Concepts in Environmental Economics
Environmental damage depends critically on identifying: the causes of damage the sources of damage the scope of the damage.
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Causes of Environmental Damage
Classifying by their origin Natural pollutants
Contaminants that come about through nonartificial processes in nature.
Volcanic eruptions Salt spray from oceans etc.
Anthropogenic pollutants Contaminants associated with human activity.
Gas from combustion Chemical wastes from production process etc.
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Sources of Environmental Damage
Sources Grouped by Mobility Stationary Source
A fixed-site producer of pollution (coal-burning power plants etc). Mobile Source
Any nonstationary polluting source (automobiles etc).
Sources Grouped by Identifiability Point Source
Any single identifiable source from which pollutants are released. Nonpoint Source
A source that cannot be identified accurately and degrades the environment in a diffuse, indirect way over a broad area.
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Scope of Environmental Damage
Environmental pollution is often classified according to the relative size of its geographic impact as local, regional, or global.
Local Pollution Environmental damage that does not extend
far from the polluting source. Ex. Urban Smog, Solid Waste Pollution
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Scope of Environmental Damage
Regional Pollution Degradation that extends well beyond the
polluting source. Ex. Acidic Deposition
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Acid Rain in Europe
source: http://science.howstuffworks.com/acid-rain.htm/printable
http://maps.grida.no/go/graphic/graphicid/
28536B4F-F03D-4D72-AF56-B6EF7211EB72
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Scope of Environmental Damage Global Pollution
Environmental effects that are widespread with global implications.
Ex. Global Warming, Ozone Depletion
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Scope of Environmental Damage
Source: www.met.sjsu.edu/~cordero/education/education.htm
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The Earth Summit A more comprehensive environmental agenda
was addressed at the United Nations Conference on Environment and Development (UNCED) held in Rio de Janeiro, Brazil, in 1992 and was attended by 6,000 delegates from more than 170 countries.
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From Stockholm to Rio In 1972 Stockholm had drawn attention to the
role of development in protecting the environment .
By 1992 there was a clear recognition of the inextricable link between environment and development but there was also a strident demand for appropriate ethics and principles of behavior to be clearly stated . It was rewarding to see, twenty years later, that the relevance of the spiritual and moral dimension was at last being so widely recognized on an international level .
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Rio de Janeiro Declaration on Environment and Development
Source: www.env.go.jp/en/wpaper/1993/eae220219000001.gif
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Identifying Environmental Objectives The agenda setting is a political process. Today, virtually every environmental decision is
guided by what have become worldwide objectives : environmental quality, sustainable development, and biodiversity.
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Identifying Environmental Objectives
Environmental Quality A reduction in anthropogenic contamination to
a level that is ‘acceptable’ to society. Some pollution is natural and then not
controllable. The absence of anthropogenic pollutants could
be achieved only if there were a prohibition on all goods and services that characterize modern living.
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Identifying Environmental Objectives
Sustainable development Management of the earth’s resources such that
their long-term quality and abundance is ensured for future generations.
Achieving an appropriate balance between economic growth the preservation of natural resources is the essence of the sustainable development.
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Identifying Environmental Objectives
Biodiversity The variety of distinct species, their genetic
variability, and the variety of ecosystems they inhabit.
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Source: http://www.brazadv.com/images/biodiversity.bmp
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Identifying Environmental Objectives
The goals of environmental quality, sustainable development, and biodiversity set an ambitious agenda.
All of society must work toward developing effective environmental policy initiatives. Central to this effort is a planning process in which public officials, industry, and private citizens participate.
This process involves a series of decisions about assessing environmental risk and responding to it.
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Environmental Policy Planning :
An Overview Environmental policy planning involves the
interdependence of many segments of society, including government agencies, private industry, the scientific community, and environmentalists.
Each group of participants, albeit from a different vantage point, plays a significant role in formulating policy, and each offers expertise to outcome.
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Environmental Policy Planning : An Overview
Policy Planning in the United States The Environmental Protection Agency (EPA)
acts as a sort of liaison between various constituents of each sector. EPA established in 1970 by President Nixon.
The National Environmental Policy Act (NEPA) NEPA directs the integration of tasks across agencies,
executive departments, and branches of government. Environmental policy planning relies on careful
research and analysis, which in turn depends on individuals with expertise in many disciplines, among them biology, chemistry, economics, law, and medicine.
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Parties Involved in Environmental Policy Planning
Environmental Protection
Agency
Public Sector
• Executive Branch
•Congress
•Judiciary
•FDA
•Occupation Safety And Health Adm.
•Other AdministrativeAgencies
•State and Local Gov’t
Private Sector
•Environmentalist
•Private Industry
•Scientists
•Economists
•Labour Unions
•Private Citizens
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Environmental Policy Planning :
An Overview Policy Planning Process Tool
Risk Analysis Risk Assessment Risk Management
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Environmental Policy Planning : An Overview
Risk Analysis Risk Assessment
The environmental problems are identified, and prioritized, which are done through scientific assessment of the relative risk to human health and the ecology of a given environmental hazard.
The assessment must determine whether or not a causal relationship exists between the identified hazard and any observed health or ecological effects, if yes, then the scientists need to quantify how the effects change with the increased exposure to the hazard.
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Environmental Policy Planning : An Overview
Risk Analysis Risk Management
After risk assessment, the planning process enters to risk management.
The decision-making process of evaluating and choosing from alternative responses to environmental risk.
The objective of risk management to choose a policy instrument that reduces the risk of harm to society.
Normally, risk responses to various types of control instruments.
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Environmental Policy Planning :
An Overview Risk Analysis
Risk Management Policy Evaluation Criteria: these criteria are based on
measures of risk, costs, or benefits - either singularly or in comparison to one another.
Allocative efficiency Requires that resources be appropriated such that the
additional benefits to society are equal to the additional costs.
Cost-effectiveness Requires that the least amount of resources be used to
achieve an objective. Efficiency and cost-effectiveness are rooted in
resource allocation.
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Environmental Policy Planning : An Overview
Risk Analysis Risk Management
An Environmental equity criteria: Environmental Justice
Fairness of the environmental risk burden across segments of society or geographical regions.
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Environmental Policy Planning : An Overview
Risk Analysis Risk Management
Government’s Overall Policy Approach: Command-and-control approach : the Regulatory
Approach A policy that directly regulates polluters through the use of rules
or standards.
Market approach: An incentive-based policy A policy that encourages conservation practices or pollution
reduction strategies. A fee on pollutant release or tax levied on pollution-
generating commodities. the “polluter-pays principle”, found that approximately 270
economic instruments were in use across these countries.
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http://www.ijc.org/rel/boards/wqb/psfig3.gif
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Environmental Policy Planning : An Overview
Risk Analysis Risk Management
Setting the Time Horizon Management strategies - This approach is to target policy at more immediate
or short-term problems.- Methods that address existing environmental problems and attempt to reduce the damage from the residual flow.
Pollution preventionA long-term strategy aimed at reducing the amount or toxicity of residuals released to nature.
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Next lecture will be on Dec 7, 2008 at Room LNG 702
School of Liberal Arts Building