Chapter 23-24

1. Mother nature doesn’t do bailouts. Chapter 23-24 • Environmental Economics and • Environmental Policy • (23.1 & 24.1-24.3)

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

3. Economic System • social 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 services • Natural capital • Earths natural processes • Human capital • Human knowledge and abilities • Manufactured capital • machinery, equipment and factories (all goods and services produced)

4. economic growth: increase in a nations capacity to provide goods and services to its people • Goods and services initially depend on environmental systems • economic development: improvement of human living standards through economic growth • Can 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

5. Market-based Economy • Most 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 PRICE • companies 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

6. Measuring Economic Progress--Wealth of a Country • GDP: 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

7. Measuring Economic Progress--Wealth of a Country • Genuine 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

8. 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

9. 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

10. Government Role in Environmental 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)

11. Environmental Policy • environmental 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.

12. Environmental Policy Development 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 enforcement • Control (monitor and adjust) • Most difficult to reach • Policies amended if needed • Agencies regulate implementation of laws

13. President Office of Management and Budget Council on Environmental Quality White House Office • Overall policy • Agency coordination • Budget • Agency coordination and management • Environmental policy • Agency coordination • Environmental impact statements Department of Health and Human Services Environmental Protection Agency Department of the Interior Department of Agriculture Department of Defense Department of Justice • Air and water pollution • Noise • Pesticides • Solid waste • Radiation • Toxic substances • Environmental litigation • Endangered species • Energy • Minerals • National parks • Public lands • Fish and wildlife • Water development • Soil conservation • Forestry • Civil works construction • Dredge and fill permits • Pollution control from defense facilities • Health Department of Housing and Urban Development Nuclear Regulatory Commission Department of Labor Department Of Transportation Department of State Department of Commerce • Licensing and regulation of nuclear power • International environment • Oceanic and atmospheric monitoring and research • Housing • Urban parks • Urban planning • Airplane noise • Mass transit • Oil pollution • Roads • Occupational health Department of Energy Tennessee Valley Authority • Energy policy • Petroleum allocation • Electric power generation

14. Environmental Policy • Principles 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)

15. Role of Environmental Legislation • environmental 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

16. Major Types of Environmental Laws • set 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

17. Many environmental laws under attack due to... • large corporations influence • difficult to pinpoint who is responsible (not easy to measure) • Many laws are pressured to be weakened • Drilling for oil in ANWR • Endangered Species Act and Polar Bears

18. A local example… • Initiative 522 Labeling Genetically Modified Foods (GMOs) • Put on the 2013 November Ballot as a result of petition signatures • Controversial 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)

19. Pro I-522 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 • Give 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

20. 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