chapter 14 managing environmental quality this chapter: explains how pollution risks are assessed...
TRANSCRIPT
Chapter 14
Managing Environmental QualityThis chapter: Explains how pollution risks are assessed to determine
which are most important to regulate. Discusses alternative approaches to regulation with
emphasis on new, more flexible initiatives. Illustrates how many companies are now managed
differently so they can move beyond simple legal compliance.
McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc. All rights reserved
The Commerce RailyardsOpening Case
The city of Commerce, near Los Angeles, is a vibrant jumble of factories, businesses, and residential neighborhoods.
The city has four railyards and they saturate Commerce with diesel exhaust.
The people in the neighborhoods near the railyards have an estimated cancer risk elevation of up to 800 chances in a million.
The EPA and California regulators have sought emission-reduction measures.
The people of Commerce think that progress in emission-reduction is too slow.
The case of diesel exhaust emission in Commerce is an example of how regulators attempt to assess pollution risks and manage environmental quality.
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Regulating Environmental Risk
The majority of the benefits and costs produced by Federal regulation are derived from environmental rules.
For every dollar spent on environmental regulation the nation gets between $2.15 and $10.52 in benefits.
Environmental expenditures need to be focused on the highest risks to human health and the natural environment.
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Elements of Risk Assessment and Risk Management and Their
Sequence
Re-label as Figure 14.2
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Risk Assessment
In theory, risk assessment is a scientific process leading to an objective, quantitative measure of the risks posed by any substance.
The EPA and other agencies make a series of precautionary assumptions based on the fear that scientific data might understate risks to human health.
Risks are often overstated to ensure that public health is protected with a margin of safety.
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Hazard Assessment
Hazard assessment establishes a link between a substance and human disease.
Animal testing is one method, with problems: Scientists rely heavily on strains of rats and
mice genetically disposed to high rates of tumor production.
In animals exposed to large amounts of a chemical, tumors can arise from tissue irritation rather than carcinogenesis.
Animal physiology can be so different from humans that disease processes are unique.
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Hazard Assessment (continued)
A second method of identifying hazards is epidemiological study.
Epidemiological studies have the advantage of measuring real human illness, but also have problems. Low statistical power riddled with uncertainties. Cancer latency periods so these studies may
not detect harm done by recent exposures. Data from one population may not predict risk
for another population.
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Dose-Response Assessment
A dose-response assessment is a quantitative estimate of how toxic a substance is to humans or animals at increasing levels of exposures.
For most chemicals, regulators use extrapolation from high doses to predict the effects on human populations at much lower doses. Linear-dose response rate
The EPA makes the precautionary assumption that risk estimates should be based on the linear curve.
Industry favors the use of sublinear and threshold models that support less regulation.
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Exposure Assessment
Exposure assessment is the study of how much of a substance humans absorb through inhalation, ingestion, or skin absorption.
To make exposure assessments, researchers measure activities that bring individuals in contact with toxic substances.
Regulators present their estimates as a distribution of individual exposures.
McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc. All rights reserved
Risk Characterization
Risk characterization is an overall conclusion about the dangers of a substance. It is a detailed, written narrative
describing the scientific evidence, including areas of ambiguity.
Risk characterizations are built on scientific calculations of toxicity, potency, and exposure. The precision of risk characterizations
are limited.McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc. All rights reserved
Risk Management
Control options These are alternative methods for
reducing most risks. Legal considerations
Many environmental laws are specific about risk reduction required and methods of achieving it.
Economic and social factors Risk decisions cannot always be based
solely on scientific findings.McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc. All rights reserved
Cost-Benefit Analysis
Cost-benefit analysis is the systematic calculation and comparison of the costs and benefits of a proposed action.
Cost calculations typically include such factors as: Enforcement costs Capital and compliance costs to industry Potential job losses and inflation Reduced productivity such as lowered crop
yields or the costs of substitution for a banned substance
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Cost-Benefit Analysis (continued)
Benefits can include: Lives saved Reduced absenteeism from work Lower health care expenditures Rising property values Increase tourism Heightened aesthetic appeal
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Advantages of Cost-Benefit Analysis
Forces methodical consideration of each economic impact a policy will have on society.
Injects rational calculation into emotional arguments.
Cost-benefit analysis that reveals marginal abatement costs can help regulators find the most efficient levels of regulation.
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Criticisms of Cost-Benefit Analysis
Fixing price values of costs and benefits is difficult and controversial. Contingent valuation is one method of measuring the
monetary value of ecosystem goods. A second method is the value of a statistical life, the
willingness to pay for reducing risk of premature death in a population exposed to a pollution hazard.
Cost-benefit approaches compromise ecosystems deserving absolute, not conditional, protection.
Benefits and costs of a program often fall to separate parties.
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The Spectrum of Regulatory Options
Re-label as Figure 14.5
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Command-and-Control Regulation
One cause of high pollution-abatement costs is heavy reliance on command-and-control regulation.
Advantages It enforces predictable and uniform standards. There is great equity in applying the same rules to all
firms in an industry. It produces abatements and it comforts the public to know
that the EPA is watching and regulating.
However, this approach can be inefficient and increase costs without commensurate increases in benefits.
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Market Incentive Regulation
Gives polluters financial motives to control pollution while giving them flexibility in how reductions are achieved. Environmental taxes Emission trading (cap and trade)
Carbon offsets Some environmentalists ridicule carbon
offsets Information disclosure
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Voluntary Regulation
Another way that regulation is made more flexible is the voluntary program.
When a company signs up for a voluntary program, there are often reporting requirements, but no enforcement actions are taken for failure to meet goals.
Company motives for participating: Companies believe more regulation is imminent
and want to prepare control strategies now. Nonregulatory pressures for companies to be
environmentally responsible.
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Managing Environmental Quality
Environmental management systems (EMS) have been adopted by many firms.
The leading international model for EMSs is ISO 14001.
Actions to reduce environmental impacts Precautionary action Pollution prevention Product analysis Environmental marketing Environmental metrics
Environmental management system (EMS)
A set of methods and procedures for aligning corporate strategies, policies, and operations with principles that protect ecosystems.
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Concluding Observations
This chapter looked more deeply into the methods of regulations.
New, more flexible, market-based approaches can be used to achieve environment-preserving goals.
Much progress has been made in protecting both ecosystems and human health.
The sum of regulatory activity and voluntary business action has been inadequate to avert climate change.
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