The State of the Environment and Government Environmental Policy - Research Paper Example

The critically evaluation of the view that the of the environment and government environmental policy is an economic as well as an ecological question Environmental economics is regarded as a subfield of economics that deals with issues that are, broadly speaking, related to the environmental concerns. The main purpose of Environmental economics is to use the universal methods of economics, mainly and mostly neo classical, to achieve its goal. But it should also be remembered that the approach of Environmental economics is quite different from that of green economics or ecological economics. This is because these forms of economics use virtually non standard approaches to ecology, environmental studies, environmental science, or environmental problems. It would be very relevant to quote a few sentences regarding the definition of Environmental economics laid down by the National Bureau of Economic Research Environmental Economics program. According to the National Bureau of Economic Research Environmental Economics program Environmental economics "undertakes theoretical or empirical studies of the economic effects of national or local environmental policies around the world. Particular issues include the costs and benefits of alternative environmental policies to deal with air pollution, water quality, toxic substances, solid waste, and global warming." (para 6) According to Davis Lamb the environmental economics' focal point is to centralise on the perception of externality of environment. In other word some or more of the outcomes of a commotion are not evaluated in accordance to its fiscal result. As an example he states that when the pollution level of a given state reaches its optimum level the price of the producer of this pollution subject should be taken into consideration otherwise the balance would be in the brink of commotion. Therefore it is encouraged to formulate the outcome of a polluting medium in respect of utility oriented price format. To formulate this Davis points out at Garrett Hardin's Tragedy of the Commons, where it is found that the occurrence "in connection to public goods (goods that are "non-excludable" and "non-rival" - that is, they are open to all). Visitors to an open-access recreational area will use the resource more than if they had to pay for it, leading to environmental degradation. This of course assumes that there is no other policy instrument (for example, permits, regulation) being used to control access." (Lamb, 2006, 148) In economic terminology, according to, Davis Lamb in his book Cult to Culture: The Development of Civilization on the Strategic Strata, "these are examples of market failures, and that is an outcome which is not efficient in an economic sense. Here the inefficiency is caused because too much of the polluting activity will be carried out, as the polluter will not take the interests of those adversely affected by the pollution into account. This has led to controversial research into measuring well-being which tries to measure when pollution is actually starting to affect human health and general quality of life". (Lamb, 2006, pg 149) Therefore it is quite evident that the prime concern of the subject environmental economics is to formulate logical outcome and settlement of the issue of pollution and control thereby saving the environment. To attain this objective there are four major solution schemes present as effective tool. Along with these four there are also other alternative tools that are quite logical in implementation. The four basic formulations could be enumerated as Better defined property rights Taxes and tariffs on pollution or Removal of "dirty subsidies" Quotas on pollution Environmental regulations According to the Coase Theorem the assigning property rights is based on a fact that there is all probability that this application would lead to an optimal solution of environmental policies of economics whereby in accordance to regardless of who receives them, the basic cost of transaction would reveal an inconsequential state where the stake holders of the negotiating parties would be minimised. In other words, if there is a factory operating over a substantial period of time and polluting the surrounding area all along the way and the local population is suffering for that reason then a negotiation committee should be set up to find a perfect formulation that would help either way. One of the most logical conclusion could be the factory would be held responsible for the pollution and the suffering of the local population as the factory is polluting and banishing the local population's right to proper and healthy environment. For this the factory should pay the local population as a price for a better living surrounding. Alternatively, the local population could pay the factory a negotiated amount that would help the factory implement better machineries or technologies to make sure that there is no further pollution from the factory's part. This way, both parties are satisfied and the end goal is achieved by sustaining the environment in either circumstances. One classic example of this implementation could be The US River Keepers Law of the 1880s. The US River Keepers Law of the 1880s gave the local population living in the down stream of a river the right to act against the population and factories situated at the upstream to the point of abolishing pollution if the government is unable to act under any circumstances. This could be regarded as an early example of bioregional democracy. (Lamb, 156) In case of taxes and tariffs on pollution or alternatively removal of "dirty subsidies" it could be stated that there is a perception that if the government acts on this subject of controlling pollution to the point of social optimal level by implementing taxes on factories and other polluting agents there is a probability that the amount of pollution released would comedown substantially. According to the advocators of this strategy this implementation of pollution tax would be of greater impact than added sales or income tax. This is also referred to as 'green tax shift'. As per the issue of Quotas on pollution is taken into consideration Davis states that "often it is advocated that pollution reductions should be achieved by way of tradeable emissions permits, which if freely traded may ensure that reductions in pollution are achieved at least cost. In theory, if such tradeable quotas are allowed, then a firm would reduce its own pollution load only if doing so would cost less than paying someone else to make the same reduction. In practice, tradeable permits approaches have had some success, such as the U.S.'s sulphur dioxide trading program, though interest in its application is spreading to other environmental problems." (Lamb, 2006, pg 161) Similarly, on the strata of Environmental regulations the government would be responsible for implementing special task forces who would be instrumental in computing the impact of pollution on social context and on environment as a whole. The usual method is to be accomplished by the dint of cost-benefit analysis. The two main form of action by this task force would be as follows: 1 Fines would be implemented if the level of pollution rises above the prescribed level. 2 The task force must keep a note of the amount of pollution and this monitoring system would be responsible if the pollution level rises beyond prescribed level and would act by enforcing fines. This format is also known as 'command and control' strategy. In the same context it should noted that the above mentioned strategies of pollution control viz. Better defined property rights, Taxes and tariffs on pollution or Removal of "dirty subsidies", Quotas on pollution and Environmental regulations are all regarded as the specific theories of Natural Capitalism mostly advocated by Lovins and Hawken. (Lamb, 170) In relation to the alternate measurements of environmental economics and policies it could be remembered that the "context in which externalities apply is when globalization permits one player in a market who is unconcerned with biodiversity to undercut prices of another who is - creating a "race to the bottom" in regulations and conservation. This in turn may cause loss of natural capital with consequent erosion, water purity problems, diseases, desertification, and other outcomes which are not efficient in an economic sense. This concern is related to the subfield of sustainable development and its political relation, the anti-globalization movement." (Lamb, 2006, pg 195) Environmental economics in today's world is one of the most relevant issues concerned. It should be remembered that the perception of Environmental economics is directly included into the peripheral view of the subject economics and is inseparable in nature. It is also believed that Environmental economics is in actuality three-fifths of ecology as per economist Mike Nickerson. (Lamb, xii) Environmental economics is often regarded as a consolidation of conventional economics and political economy. Environmental finance and theories of natural capitalism are also highly influenced by the variables of Environmental economics. References: Environmental Economics. NBER Working Group Descriptions. National Bureau of Economic Research. Retrieved on 2006-07-23. Lamb, Davis; 2006; Cult to Culture: The Development of Civilization on the Strategic Strata; National Book Trust. Read More