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Economics, Public Policy, and the Environment

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Economics, Public Policy, and the

Environment

economics and public policy

resources and the wealth of nations pollution and public policy

benefit-cost analysis

politics, the public, and public policy

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Economics and Public Policy

the need for environmental public policy promote the common good

improvement of human welfare

protection of the natural world

relationships between economicdevelopment and the environment

many problems decline as income rises

some increase and then decline some just increase

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Economic Systems: Centrally Planned

Economy characteristic of socialist countries

ruling class makes all decisions

equity and efficiency theoreticallyachievable

North Korea and Peoples Republic ofChina last 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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Environmental View of Economic Activity

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The Wealth of Nations produced capital: human-made things

natural capital: goods and services supplied bynatural ecosystems

renewable

nonrenewable

subject to depletion intangible capital

human: physical, psychological, and culturalattributes

social: governments, the rule of law, civil liberties

knowledge assets: codified and written fund ofknowledge

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Shortcomings of Gross NationalProduct (GNP)

GNP = sum of all goods and services

produced in a country in a given timeframe

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Environmental Accounting

Does not account for

depreciation of natural capital Environmental accounting =putting environmental assetsand services into monetary units

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Pollution and Public Policy

public-policy development: the policylife cycle

economic effects of environmentalpublic policy

policy options: market or regulatory?

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The Policy Life Cycle

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Recognition Stage

low in political weight

media have popularized the policy

dissension is high

Rachel Carson

1962 Silent Spring

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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 apolicy are exacted

public concern and political weight aredeclining

issue not very interesting to media

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Control Stage

policies broadly supported

the environment is improving

regulations may become moresimplified

E l P bl h P l

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Environmental Problems in the PolicyLife Cycle

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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 and

economic 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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Benefit-cost Analysis

external and internal costs

the costs of environmental

regulations the benefits of environmental

regulation

cost-effectiveness analysis

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Benefit-cost Analysis

Benefit-cost analysis ofenvironmental regulations builds

efficiency into policy so that societydoes not have to pay more thannecessary for a given level of

environmental control

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External and Internal Costs

external bad: cost of adverse healthfrom pollution

external good: benefits fromimproved job performance inpollution-free work environment

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The Benefit-cost Ratio forReducing Pollution

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Have we shown progress?

total emissions of six principal airpollutants since 1970 (-53%)

lead in the blood of children since1976 (-85%)

between 1988 and 2004, release of

toxic chemicals (-68%)

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Other progress

increase in states with safe drinkingwater from 79% in 1993 to 94% in

2002 toxic air emissions since 1990 (-24%)

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Still more progress

> 333,000 underground storage tankscleaned up since 1990

since 1980, 975 out of 1,450Superfund sites completely cleanedup

recycling of MSW increased from 7%in 1970 to 30% in 2003

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Politics, the Public, and Public Policy

Politics and theenvironment

Citizeninvolvement

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Sustainable Communities

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Urban sprawl

based on our dependence on cars 200-300 miles/week (10 to 15K/yr)

definition low density residential areas, shopping malls,

industrial parks loosely connected by multi-lanehighways

perimeters of the city extended outwardinto countryside one development after another

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Origins

up to WWII few had cars, everythingwithin walking distance also public transportation

cars more available and affordable

lower taxes, cleaner and safer suburbanareas 1950s highways built (to stop congestion, but

made worse)

exurban migration in eastern cities Highway Trust Fund housing boom

f H h T F d

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Impact of Highway Trust Fund

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Environmental impacts

depletion of energy resources cars, homes

air pollution water pollution

highways, parking lots, urban pollutants

loss of agricultural lands loss of landscapes and wildlife

fragmentation of landscapes

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Environmental Impacts of Urban Sprawl

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Impacts of Urban Sprawl: Quality

of Life higher vehicle ownership and driving

mileage

greater risk of fatal accidents lower rates of walking and lessened use

of mass-transit facilities

no change in congestion delays higher costs for municipal services higher incidence of obesity and high

blood pressure

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Benefits of Urban Sprawl

lower-density residential living larger lot sizes

larger single-family homes better quality public schools lower crime rates

better social services greater opportunity to participate in

local governments

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Reining in Urban Sprawl: Smart

Growth Smart Growth forces communities

to purposely choose to develop in

more environmentally sustainableways sets boundaries on urban sprawl

saves open space develops existing urban space

creates new towns

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Moving toward Sustainable

Communities sustainable cities

proximity of people to residences, shops,

and workplaces use of solar energy

self-sufficiency in provision of food

stable population

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Think about your future

these decisions: where you live and work size of house, car, distances you drive what you buy (products, food) number of children

affect: environmental impact of your life all the things we have discussed this semester

the choice is yours