Natural Resource Utilization & Pollution of the Environment

Paul L. Schumann, Ph.D.

2002 by Paul L. Schumann. All rights reserved.

Issues
Resource utilization: Resource depletion Resource allocation across time Pollution

Resource Depletion
Issue: Are we at risk of running out of

important natural resources?

Example: oil

Related issue: Do we need government

regulation to deal with the problem? Depletion Models:

Exponential Depletion Peaked Depletion

Exponential Depletion
Quantity of Resource Consumed Each Year

Rate of use

increases exponentially over time Resource is used until it is depleted

Today Depletion Time

Peaked Depletion
Quantity of Resource Consumed Each Year

Usage: Increases exponentially for a while Then peaks Then declines Resource
Today Time

never depleted

Peaked Depletion
Quantity of Resource Consumed Each Year

Today

Time

Reasons: As use increases, cost of extraction rises Higher costs result in higher prices Higher prices create incentives

Peaked Depletion
Quantity of Resource Consumed Each Year

Incentives: Consumers:
Cut use directly Substitutes

Producers:
Substitutes

Today

Time

Resource Depletion / Conservation

Supporters of free markets: Dont worry about resource depletion Free markets automatically take care of the issue

Critics: Dont assume that technology will bail us out of the problem

Issues
Resource utilization Resource depletion Resource allocation across time Pollution

Resource Allocation Across Time

Issue: Do the current generations have a

moral obligation to save (conserve) resources for future generations? Apply principles:
Utilitarian Rights Distributive Justice

Resource Allocation Across Time

Utilitarian Principle Free market ensures resource will be used at the time of its highest value
Why? Owner of resource wants the greatest value

Critics:
Uncertainty Discounting to present value Problem of multiple access / Dilemma of the commons

Resource Allocation Across Time

Rights: Which generation has a right to use

the resource?
People who do not exist cannot have rights If they have rights, are they of higher priority than our rights? Rights protect interests. We dont know the interests of future generations.

Distributive Justice
Issue: Is it fair that the current generations

get the benefits of using the resource and leave the burdens for the future generations?
John Rawls: Put yourself in the original position
Conclusion: Fix what you can, but at least dont make things worse

Issues
Resource utilization Resource depletion Resource allocation across time Pollution

Pollution
Why do we pollute? We treat the natural environment as a free good
No one owns it, so no owner seeks to protect it Allows us to externalize the cost of disposing of our wastes by simply dumping it into the environment

We treat the natural environment as an unlimited good

Each persons pollution is small compared to the natural environment

Pollution Moral Issues

Rights Principle Human Rights: Each human being has a moral right to life and to a livable environment Animal Rights: All animals have a moral right to life and to a livable environment
PETA: www.peta.com PETA Summary: www.peta.com/mc/facts.html

Rights of All Living Things: All living things have a moral right to life and to a livable environment Eco-feminists: Care for the natural environment: all things have a right to exist

Pollution Moral Issues

How far do we have a moral duty to go in

order to protect moral rights to a livable environment?

Protect the environment at all costs?

Leads to a consideration of the utilitarian

principle

Pollution Moral Issues

Utilitarian Principle Private cost: cost born by the seller External cost: cost not born by the seller Pollution is an example of an external cost
Example: dump hazardous waste into a river

Social cost = Private cost + External cost Unregulated free market only considers private cost: market price reflects private cost only

Effects of External Costs

Free market
Price Social Costs = Private Costs + External Costs External Costs Supply = Private Costs

price is too low

Free market price does not consider the external costs Regulation needed to raise the market price

P* Pc

Demand

Q*

Qc

Quantity

Optimum Pollution Removal

$

Optimum
Incremental Costs

amount of pollution to remove depends on:

Benefits of removing pollution Costs of removing pollution

Incremental Benefits

Optimum

% Pollution Removed

Pollution Regulation
$

Standards

Approach
Incremental Costs

Incremental Benefits

Optimum

% Pollution Removed

Regulation specifies the maximum amount of pollution allowed Set standard at optimum

Pollution Regulation
Incentives
Price Social Costs = Private Costs + External Costs External Costs Supply = Private Costs

Approach
More efficient than standards approach Methods:
Pollution tax Marketable pollution rights

P* Pc

Demand

Q*

Qc

Quantity

Case: Genetic Engineering

Is it ethical for Monsanto/Pharmacia to

market genetically engineered plants? Why?

Utilitarian Analysis.
What are examples of externalities in this case?

Rights Analysis.
What human rights are at stake? Other rights?

Distributive Justice Analysis. Ethics of Care Analysis. Virtue Ethics Analysis.

Case: Genetic Engineering

What government regulations, if any, would

be appropriate:
To correct externalities? To protect rights? To ensure fairness? To provide appropriate care?