Transcript Lecture 19

Environmental Policy
• Frequently, environmentalists have
directed their efforts toward persuading
the public that there is in fact an
environmental crisis
• However, in the last few decades, the
deterioration of the environment has
moved from an issue of personal
inconvenience to a major issue on the
public policy agenda
• People have become aware that
population growth and the
accompanying growth of industry
and traffic congestion contribute to
environmental damage.
• Despite increasing awareness on
the part of the public, legislation to
address environmental issues since
the 1960s has been scattered
major pieces of legislation include:
– Clean Air Act 1963, amendments 1970, 1990
– National Environmental Protection Act 1970,
– The creation of the EPA by executive order of President
Nixon 1970
– Water pollution control Act 1972
– Endangered Species Act 1973
– Toxic Substances Control Act 1976
– Comprehensive Environmental Response Act of 1980which created a “Superfund” for cleaning up hazardous
waste sites if companies cannot afford to pay for the
clean up
What is Pollution?
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Pollution is simply a cost of production
•
Pollution comes in a variety of forms—
air pollution, damage from acid rain,
deforestation and soil erosion, water
pollution, depletion of the ozone layer,
toxic waste and greenhouse effects
• From a policy standpoint we are
interested in how government responds
to environmental problems
• Although pollution is a cost of
production, business does not (and
should not) bear the cost of polluting
alone; to do so would put many
companies out of business
• We noted earlier that externalities exist when
a producer or consumer does not bear the
full cost (negative externality) or they do not
receive the full benefit (positive) of a
transaction
• Externalities result in costs for third parties
Externalities exist for two reasons: 1) we do
not know how to produce or consume
some of these goods without waste, 2)
even if we did, the consumption or
production may be prohibitively expensive
Major Environmental Issues
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Global Warming
Air Pollution
Water Pollution
Hazardous Waste Disposal
Deforestation
Pandemics
• Environmental issues are both health and quality
of life issues
What is Global Warming?
• Recent scientific studies confirm that the
Earth is getting warmer due to the
environmental effects of greenhouse gas
(GHG) concentrations
• Greenhouse gases refer to those
atmospheric gases that are almost
transparent to incoming solar energy, but
trap infrared energy reflected from the
earths surface
• There are about 20 such “greenhouse” gases
but the focus has been on CO2
• CFC’s or chlorofluorocarbons are a man made
chemical that make up a smaller portion of GHG,
but have properties that give them a warming
potential several thousand times greater than
carbon dioxide
• In September 2006 U.S. climate scientist
reported that the world's temperature has
increased to levels not seen in at least 12,000
years
Policy Responses
The US and 30 other countries signed the
United Nations Framework Convention on
Climate Change, the first binding agreement
on climate change
Signed at the Earth Summit in Rio De Janero
in 1992, the agreement called for reducing
greenhouse gas emissions to 1990 levels by
the year 2000. Developing countries were
given more time to meet the target levels
In 1993, Clinton announced his Climate
Change Action Plan which included a series
of voluntary programs to persuade
companies to cooperate with federal
agencies to improve energy efficiency and
reduce GHGs
The goal was to have voluntary rather than
mandatory regulations, and there were some
positive steps taken, particularly by the
electric utility industry to reduce GHGs, but
soon it b/c apparent that voluntary actions
would not enable the US to meet emissions
goals
• Kyoto Protocol- in 1997, an amendment to
the Rio Treaty, the Kyoto Protocol was
negotiated under the United Nations
auspices.
• The landmark agreement, negotiated in
Japan's ancient capital of Kyoto in 1997
and ratified by 140 nations.
• Kyoto required that the US and other
signatories reduce emissions below 1990
levels by 2012
• This would entail a 40% reduction in fossil
fuel use, and although Clinton was
supportive, the Kyoto Protocol was
strongly opposed by US business interests
who lobbied members of Congress
intently.
• Clinton chose not to send the Kyoto
Protocol to the Senate because it would
have been defeated.
• The United States, the world's largest
emitter of such gases, has refused to ratify
the agreement, saying it would harm the
economy and is flawed by the lack of
restrictions on emissions by China and
India.
• Shortly after he took office in 2001,
however, President Bush withdrew U.S.
support for the Kyoto Protocol and refused
to submit it to Congress for ratification.
• As of today the U.S. still has not ratified the
Kyoto Protocol (although it has signed the
treaty). The signature is simply symbolic
and is non-binding on the United States
unless ratified by the Senate.
• Obama pledged to revive the Kyoto
Protocol debate during his election
campaign
• Obama has promoted green technology as
both an economic and environmental
policy.
Who Killed the Electric Car?