Economics, Public Policy, and the Environment

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

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 economic
development and the environment
many problems decline as income rises
some increase and then decline
some just increase

Economic Systems: Centrally Planned

Economy

characteristic of socialist countries

ruling class makes all decisions
equity and efficiency theoretically
achievable
North Korea and Peoples Republic of
China last holdouts

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

Classical View of Economic Activity

Environmental View of Economic Activity

The Wealth of Nations

produced capital: human-made things
natural capital: goods and services supplied by
natural ecosystems
renewable
nonrenewable
subject to depletion
intangible capital
human: physical, psychological, and cultural
attributes
social: governments, the rule of law, civil liberties
knowledge assets: codified and written fund of
knowledge

Shortcomings of Gross National

Product (GNP)
GNP = sum of all goods and services
produced in a country in a given time
frame

Environmental Accounting

Does not account for

depreciation of natural capital
Environmental accounting =

putting environmental assets

and services into monetary units

Pollution and Public Policy

public-policy development: the policy
life cycle
economic effects of environmental
public policy
policy options: market or regulatory?

The Policy Life Cycle

Recognition Stage
low in political weight
media have popularized the policy
dissension is high

Rachel Carson
1962 Silent Spring

Formulation Stage
rapidly increasing public weight
media coverage is high
debate about policy options occurs

Implementation Stage
real political and economic costs of a
policy are exacted
public concern and political weight are
declining
issue not very interesting to media

Control Stage
policies broadly supported
the environment is improving
regulations may become more
simplified

Environmental Problems in the Policy

Life Cycle

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.

Cattle Grazing on BLM-managed Land

Timber Harvesting in Olympia

National Forest

Benefit-cost Analysis
external and internal costs
the costs of environmental
regulations
the benefits of environmental
regulation
cost-effectiveness analysis

Benefit-cost Analysis
Benefit-cost analysis of
environmental regulations builds
efficiency into policy so that society
does not have to pay more than
necessary for a given level of
environmental control

External and Internal Costs

external bad: cost of adverse health
from pollution
external good: benefits from
improved job performance in
pollution-free work environment

The Benefit-cost Ratio for

Reducing Pollution

Have we shown progress?

total emissions of six principal air
pollutants since 1970 (-53%)
lead in the blood of children since
1976 (-85%)
between 1988 and 2004, release of
toxic chemicals (-68%)

Other progress
increase in states with safe drinking
water from 79% in 1993 to 94% in
2002
toxic air emissions since 1990 (-24%)

Still more progress

> 333,000 underground storage tanks
cleaned up since 1990
since 1980, 975 out of 1,450
Superfund sites completely cleaned
up
recycling of MSW increased from 7%
in 1970 to 30% in 2003

Politics, the Public, and Public Policy

Politics and the

environment
Citizen
involvement

Sustainable Communities

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-lane
highways

perimeters of the city extended outward

into countryside
one development after another

Origins
up to WWII few had cars, everything
within walking distance
also public transportation

cars more available and affordable

lower taxes, cleaner and safer suburban
areas

1950s highways built (to stop congestion, but

made worse)

exurban migration in eastern cities

Highway Trust Fund
housing boom

Impact of Highway Trust Fund

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

Environmental Impacts of Urban Sprawl

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

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

Reining in Urban Sprawl: Smart

Growth
Smart Growth forces communities
to purposely choose to develop in
more environmentally sustainable
ways

sets boundaries on urban sprawl

saves open space
develops existing urban space
creates new towns

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

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