Environmental Economics Analysis - Term Paper Example

 Environmental Economics Introduction Human beings depend on nature for their survival. For instance, they use the energy and raw materials to produce various goods and consume the resources provided by nature like water and air. As any production activity generates some waste, humans depend on nature for disposing not only the waste arising out of production but also arising out of different human activities Economies in the world are growing with the help of goods and services provided by nature but without consideration of the limits set by nature. Not only is the society exhausting its capital but is also increasing some unwanted substances into the nature through its production which can have impact not only on human health and well-being but also on the ecological well-being on which the entire human survival depends. Environment problems are very complex in nature with a myriad of interactions occurring both with in and between the atmosphere and biosphere. Although there is overall recognition that many specific environmental problems are inextricably linked to or influenced by one another. The importance of these issues has led to the evolution of a new branch in the field of economics called "Environmental Economics" (coe.mse.ac.in) Environmental economics is a sub field of economics concerned with environmental issues (other usages of the term are not uncommon). In using standard methods of neo-classical economics, it is distinguished from green economics or ecological economics, which include the nonstandard approaches to environmental problems, environmental science/environmental studies, or ecology. (Wikipedia) The economy and the environment The economic growth is infact good for the environment, and there are limits to the contribution that economic growth can make to human well being. Forests are being depleted throughout the world since this is the economically optimal strategy for the owners. However, forests not only provide timber but also perform global ecosystem services. Forests absorb carbon dioxide, preserve biodiversity, prevent soil erosion, maintain hydrological cycle, etc. Hence, global environmental sustainability, a prerequisite for economic sustainability, might require that limits be placed on the depletion of natural resource stocks, even if it appears that this means sacrificing some of the monetary value of these stocks As the market cannot reflect all the values of the services provided by the natural environment, this implies that environmental sustainability places a constraint on economic growth. Because the services provided by natural resources are not traded in the markets, they are not reflected in the value of conserving natural resource stocks. In economic terminology, 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. (Wikipedia) Despite a greater commitment by the World Government’s to protect public health, forests, and wildlife, policies geared to develop the country's economy have taken precedence in the last 20 years. While industrial development has contributed significantly to economic growth in, it has done so at a price to the environment. Not only are industrial pollution increasing public health risks, but abatement efforts also are consuming a significant portion of countries gross domestic product (GDP). The world environmental situation is likely to be further aggravated by the increasingly rapid, large-scale global extinction of species. It occurred in the 20th century at a rate that was a thousand times higher than the average rate during the preceding 65 million years. This is likely to destabilize various ecosystems including agricultural systems. (Singh Anup & Malhotra 57-58) Menu of environmental issues/national priorities relevant to human development 1. Disasters (floods, drought, earthquakes, hurricanes) 2. Climate change 3. Decreasing biodiversity 4. Deforestation 5. Land degradation and soil erosion 6. Air pollution 7. Waste water 8. Lack of sustainable sources of energy Sustainable development The term sustainable development has its origin in the International Union for the Conservation of Natural Resources (IUCN) 1980 World Commission Strategy report. The commission defined sustainable development as 'development that meets the need for the present without compromising the ability of future generations to meet their own needs. The concept of sustainable development was brought into common use by the World Commission on Environment and Development (the Brundtland Commission) in 1987. There are six definitions for sustainable development. Concepts of Sustainability 1. A sustainable state is one in which utility (for consumption) is non- declining through time 2. A sustainable state is one in which resources are managed so as to maintain production opportunities for the future. 3. A sustainable state is one in which the natural capital stock is non-declining through time. 4. A sustainable state is one in which resources are managed so as to maintain a sustainable yield of resource services 5. A sustainable state is one, which satisfies minimum conditions of ecosystem stability and resilience through time. 6. Sustainable development as capacity consensus building Sustainability does not mean that resources must remain untouched. Progressing towards sustainable development implies that the objectives of increasing economic efficiency and material wealth must take into account social and environmental objectives Sustainable development implies using the environmental resources in such a way that it contributes to the long run economic and social health of the population. The challenge in measuring sustainable development lies in developing new indicators and combining these through for monitoring sustainable development tends to vary by country depending on their natural attributes, industrial structure, and political and social variables. Indicators are needed to illustrate to policy makers and the public the linkages and trade-offs between economic, environmental and social values to evaluate the longer-term implications of current decisions. Sustainable development does not prohibit the use of natural resources but restricts their use in such a way that enough, or as much as possible, is left for the future generations. It can be achieved by increasing efficiency or cutting down on waste or by adopting other methods such as imposing a tax on environmental use, as well as using non-traditional sources. Understanding sustainable development linkages and achieving the required policy trade-offs across the environmental, economic and social spheres requires novel methodologies based on new types of statistical approaches. The valuation of environmental resources In recent years, environmental economics has grown as a discipline both within government and outside. In particular, there is a vigorous debate about the advantages and disadvantages of trying to put monetary values on environmental assets, and around the techniques used to try to calculate the costs and benefits of environmental policies. Cost-benefit analysis (CBA) is an appraisal of the advantages and disadvantages of a proposal, valuing as many as possible of these in monetary terms. Cost-benefit analysis provides an organizational framework for identifying, quantifying, and comparing the costs and benefits of a proposed policy action. The notion that a zero pollution objective is not necessarily ideal policy is one of the more difficult concepts for environmental economists to convey. Environmental economics provides a powerful tool for helping solve environmental problems. Economists in general study how people make decisions when faced with scarcity. Scarcity implies that resources devoted to one end are not available to meet another; hence there is an opportunity cost of any action. This includes environmental policy Environmental economists are tasked with recommending policies that reflect scarcity of this type at the society level. For both individuals and societies scarcity necessitates tradeoffs, and the reality of tradeoffs can make the complete elimination of pollution undesirable. The benefits of environmental regulations can include, for example, reduced human and wildlife mortality, improved water quality, species preservation, and better recreation opportunities. “Economics provides a structured framework for evaluating outcomes absent hype and advocacy. Cost-benefit analysis is a part of this. By using the tools of their field environmental economists can contribute unbiased information that can lead to better policy decisions, and ultimately better environmental outcomes." Environment problems Among the environmental problems linked to population are desertification, global warming, pollution, rain forest destruction, loss of biodiversity, and degradation of the agricultural base, ultimately leading to reduced food supplies. The population issue is probably the most uncomfortable and divisive of all the environmental concerns and the most important ecological problem facing the planet today and in the future. Specific environment resource issues such as climate change and ozone depletion, agricultural lands, water, tropical forests, and biodiversity, linkages are established to such quality of life issues as health, employment, landlessness, urbanization, population distribution and migration, environmental refugees, wastes and pollution, poverty, and women's status. Most of these deal with specific environmental problems related to population and development, such as water scarcity, energy, acid rain, climate, deforestation, species extinction, etc. If population issue is ignored, it will eventually render all other environmental concerns irrelevant. The problem of pollution is aggravated due to increased population, industrial growth and increasing demand for energy and materials. With the trade liberalization, the impact on environment due to trade is adverse. This stresses the need for more efficient and sustainable resource and environmental management. Several economists saw pollution and over-exploitation as a consequence of the lack of well-established market processes and property rights for some the resources like Air, Water, Forests, and Biodiversity etc. Humans have basic needs for fresh water, food, a safe place to live, health care, a chance to learn, and a job. Poor people all over the world lack these basics, and supplying them becomes increasingly difficult when population is increasing rapidly. Humans already make huge demands on the resource base, and that will only increase, as the needs of more and more people must be met. Air pollution caused by more and more cars and industry is causing health problems, poisoned lakes and streams, disruption of the ozone layer, and possibly climate change. Water resources are already overtaxed and existing supplies are being polluted. Topsoil is being lost at alarming rates as the land is pushed to provide more food. Tropical forests are being destroyed for fuel wood and cash. Hundreds of thousands of species will be lost, but that means little to a hungry farmer struggling to feed his growing family. Significance of population growth rates and the impacts these rising numbers have on deforestation, soil erosion, poverty, disease and starvation, particularly in the developing countries. World Resources is a frequently cited source of statistics on resource use and environmental issues all over the world. Though it contains information on all kinds of environment and development issues, most are directly or indirectly related to population and sustainable development. World’s energy consumption is increasing rapidly, from 25.16 quadrillion Btu (quads) in 1980 to 12.8 quads in 2001. This 338% increase is largely the result of increasing population and the rapid urbanization higher energy consumption in the industrial, transportation, and residential sectors continues to drive energy usage upwards at a faster rate. Beginning with the industrial revolution in the 1850s and accelerating ever since, the human consumption of fossil fuels has elevated CO2 levels from a concentration of ~280 ppm to more than 370 ppm today. These increases are projected to reach more than 560 ppm before the end of the 21st century. Along with rising methane levels, these changes are anticipated to cause an increase of 1.4-5.6 °C between 1990 and 2100. (Wikipedia) Coal-fired power plants and large manufacturing businesses are two other major contributors to local air pollution.   Coal burning is particularly dirty - releasing sulfur dioxide, carbon dioxide, carbon monoxide, and nitrous oxides. Vehicle emissions include carbon dioxide, carbon monoxide, nitrous oxides, polyaromatic hydrocarbons (PAHs), particulates and other combustion byproducts. Escaped gasoline vapors contain a variety of petroleum pollutants. World’s fuel share of energy consumption 2005 (btu) Coal –50.9%, Petroleum-34.4%, others includes: Natural gas 6.5% Hydro 6.3%, Nuclear 1.7%, Geothermal wind- 0.2% SOURCE: RIVM/UNEP.2004 Population is linked to economic development. Because this is a global crisis, the rich and poor nations of the world must work together, the necessity for international cooperation and on the ethical obligation to go beyond national boundaries and see the entire planet as one country. The industrialized countries with their excessive consumption of natural resources have caused most of the environmental damage. They need to moderate their consumption, and they have the technological and financial means to do so. However, the poor countries, forced by crushing foreign debt payments, trade barriers, and population growth to consume their resources at unsustainable levels, need assistance from the wealthy countries if they are to improve their environmental situation. The rich countries of the world cannot abandon the poor countries if they are to have any hope of solving the world's environmental problems and living sustainably on the Earth. Legislation and Administration of Environmental Conservation Many of our current environmental problems are due to widespread ignorance of basic ecological facts of life, especially among our elected officials. In addition, special interest groups and lobbyists are deliberately spreading false information, which further confuses our political leaders. Even several years is a very short time to judge environmental change, and few comprehensive reports exist to document such change at a global level. Yet scientists have recently uncovered significant new symptoms of planetary stress, and improved assessments have clarified known or suspected problems. There are even encouraging signs that environmental management efforts are bringing concrete improvements. Some of these, compiled from the recent scientific literature and UN reports by the UN system-wide Earth watch with the cooperation of UN system partners. In the U.S. the National Environmental Policy Act {NEPA) of 1969 set forth requirements for analysis of major projects in terms of specific environmental criteria. Numerous state laws have echoed these mandates, applying the principles to local scale actions. The upshot has been an explosion of documentation and study of environmental consequences before the fact of development actions. (Wikipedia) Urban Environmental Issues Industrialization and urbanization have resulted in a profound deterioration of environment’s air quality. Sources of air pollution, world’s most severe environmental problem, come in several forms, including vehicular emissions and untreated industrial smoke. Continued urbanization has exacerbated the problem of rapid industrialization, as more and more people are adversely affected and cities are unable to implement adequate pollution control mechanisms .The biggest air polluter is vehicle traffic. Cars and trucks release a wide variety of toxic gases and particulates, and because we have so many of them, their combined health effects are high. (Shyam 40) THRUST AREAS Economic development and environmental effects are inseparable. The extent of environmental degradation is dependent on the efficient use of resources and effective control of adverse effects 1.Regional Environmental and Resource Planning Industrialization has contributed immensely to the economic development of the world, but in its wake has caused environmental degradation. Since humans have to live within their environment, the process of development should be sustainable so that environmental quality is maintained within safe limits. The value of emphasizing sustainability is essentially to integrate industrial development and environmental management in the development process. It is only through an integrated effort of the environmental aspects into the planning and management of industrial development that significant progress towards sustainable society can be made. Therefore efforts would be made to provide solutions to the complex inter-related problems implicit in sustainability through holistic approach 2.Air pollution control in urban areas The major source of air pollution in urban India is vehicular pollution. The steep increase in vehicular population has resulted in corresponding increase in pollutants emitted by these vehicles. The purpose of research in area would be to provide policy direction on the mix of transport system, automobiles technologies, fuel options, emission factors and standards. 3.Solid waste management Solid waste management has emerged as a major environmental issue in recent decade. Today more than 245 million tonnes of waste are generated from the urban centers, which are collected poorly (average collection efficiency at about 72%), transported inadequately (70% cities lack required transportation capacities) and disposed unscientifically (no sanitary landfills exists). 4. Renewable energy The developing countries are facing acute power shortage. The demand and supply gap of power is likely to increase in future unless significant capacity additions are made. Conventional fuels are both costly and environmentally hazarduous. Looking at the current socio-economic situation, the renewable energy technologies are assured of increased usage in future. ENVIRONMENT MANAGEMENT The scientific and engineering community has made a major contribution to the health and well being of mankind by developing potential of an earth rich in natural resources. However, there is a new, pressing challenge created by the adverse effects of depletion of planetary resources, environmental pollution, rapid population growth and damage to the fragile eco-systems through which life on Earth can survive. The technological growth essential to social, economic and cultural advance should ensure sustainability of development by conserving and enhancing environment. Within the concept of sustainable development there is recognition of the inherent conflict between conservation of the environment and man present path of development. Resolving that conflict is the task, which confronts all mankind. We clearly cannot maintain the quality of human development if we continue to degrade the environment; but equally man cannot renounce industrial development in favour of environmental protection. The management of these two conflicting objectives is what is called environmental management. It has become imperative that resource conservation and environmental protection must now become a part of overall management as Environmental Management System to be adopted as a strategy by the enterprise for meeting the expectations of the society as well as sustainable growth. Solutions advocated in Environmental Management System include: 1. Better-defined property rights 2. Taxes and tariffs on pollution/ 3. Quotas on pollution 4. Environmental regulations. Here the economic impact has to be estimated by the regulator. Usually this is done using cost-benefit analysis. There is a growing realization that regulations (also known as "command and control" instruments) are not so distinct from economic instruments as is commonly asserted by proponents of environmental economics. E.g.1 regulations are enforced by fines, which operate as a form of tax if pollution rises above the threshold prescribed. E.g.2 pollution must be monitored and laws enforced, whether under a pollution tax regime or a regulatory regime. Environmental economic regulations find the cheapest emission abatement efforts first, then the more expensive methods second. (Wikipedia) The achievement of more sustainable and equitable development requires effective environmental policies, plans and programmes; the full integration of environmental, social and economic issues with development and project planning; and the adoption of effective and efficient environmental management systems and technologies by the private sector. There is therefore an urgent need to harness the talent of the science/engineering graduates to develop the necessary skills in environmental management Environmental Change and human health Environmental health problems vary dramatically from region to region, reflecting geography, climate and perhaps most important, a country’s level of economic development and policy choices Many environmental health problems are associated with poverty and lack of essential resources, chief among them sufficient and clean water, food shelter fuel and air. Environment threat to health are by no, means limited to developing countries .In the united states, some 80 million people are exposed to levels of air pollution that can impair health in China, which has one of world’s fastest growing economies, 2 million people die each year from the effects of air and water pollution, according to one recent estimate. Nearly 100 countries, both developed and developing still used leaded gasoline, unnecessarily exposing their citizens to a pollutant long known to cause permanent brain damage. Conclusion The concept of the "environment" has evolved significantly over the last 30 to 40 years. The importance of environmental issues to human development is often underestimated and lacks clear recognition. As the global concern for environmental issues is heightening, more nations are realizing the relevance of addressing them in improving human development and the importance of realizing the linkages between human development and the environment. The effort to save the environment derive much of its political popularity from the impact of immediate personal inconveniences: a sewage polluted beach, the smog that leaves one’s eyes watering, the black granules of soot that that drift in through an open window, traffic congestion, noise ugliness, the smoking vehicles and industries. The Recent intensified effort to save the environment has succeeded in bringing the subject to world notice. It has helped to identify problems and a arouse concern. But it has been deficient in solution – and for very good reasons –effective steps to save the environment will require a highly expert knowledge of political in fighting, knowledge of how tough and enforceable legislation might be written. But the significance of the current concern for the environment goes much deeper than nuisance abatement, It is a belated recognition that as a we “ succeeded in terms of production, size speed growth the quality of life may deteriorate catastrophically. It is a belated recognition of our oneness with nature, a concern for man himself and his natural environment. It is a belated awareness that our fate as individuals is inseparable from our fate as a species, and the future of life on this planet. Our young people need to learn basic natural resource and survival information from a young age, to ensure that future generations will understand the value and importance of pollution controls, resource conservation and wildlife habitat protection. “Continuous progress has been made in confronting environmental challenges; nevertheless the environment has continued to degrade in nations of all regions. Progress towards a sustainable future has simply been too slow.” Work Cited Bansal Sangeeta & Gangopadhyay S. Incentives for Technological Development: BAT is Bad, Environmental and Resource Economics. 2005 pp-345-367 “Conservation & Environmental Issues.” Members.aol.com. [http://members.aol.com/bowermanb/conservation.htm] Dudley N .1992Forests in Trouble: A review of the status of temperate forests Worldwide. World Wildlife Fund.Gland.Switzerland “Environmental Economics.” Wikipedia.org. [http://en.wikipedia.org/wiki/Category: Environmental_economics] Environmental Economics. Coe.mse.ac.in December 2,2006 [http:/ / coe.mse.ac.in /overview_With_Content.asp] “ Measurement and Indicators for Sustainable Development.” International Institute for Sustainable Development. 2002. [www.iisd.ca/measure/faqindicator.htm] RIVM/UNEP.2004.The Future of the Global Environment: A model based analysis Supporting UNEP’s First global Environment Outlook. Shah Anup. Environmental Issues. Global Issues.org. December 5,2006 [http://www.globalissues.org/EnvIssues] Singh Anup & Malhotra.Environmental Science Journals.Delhi.Madras University.2006 .Pp 19-176. Shyam K.Global Environment Statistics2005.Tata Mc Graw Hills Publication.2005 Pp 20-42. Read More