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  • 7/30/2019 Environmental Economics is a Distinct Branch of Economics That Acknowledges the Value of Both the Environment


    1. Environmental economics is a distinct branch of economics that acknowledges the

    value of both the environment and economic activity and makes choices based on those

    values. The goal is to balance the economic activity and the environmental impacts by

    taking into account all the costs and benefits. The theories are designed to take into

    account pollution and natural resource depletion, which the current model of market

    systems fails to do. This failure needs to be addressed by correcting prices so they take

    into account external costs. External costs are uncompensated side effects of human

    actions. For example, if a stream is polluted by runoff from agricultural land, the people

    downstream suffer a negative external cost or externality.

    The assumption in environmental economics is that the environment provides resources

    (renewable and non-renewable), assimilates waste, and provides aesthetic pleasure to humans.

    These are economic functions because they have positive economic value and could be boughtand sold in the market place. However, traditionally, their value was not recognized because

    there is no market for these services (to establish a price), which is why economists talk about

    market failure. Market failure is defined as the inability of markets to reflect the full socialcosts or benefits of a good, service, or state of the world. Therefore, when markets fail, the resultwill be inefficient or unfavorable allocation of resources. Since economic theory wants to

    achieve efficiency, environmental economics is used as a tool to find a balance in the worlds

    system of resource use.

    Three approaches in economic valuation are the following:

    Using market prices where the prices occur in the market for the environmental goodsand services, and where prices are revealed in some other market- the revealed

    preference approach (also called indirect approach). For example, the value of a

    wilderness area may be inferred by expenditures that recreationists incur to travel to thearea. Its disadvantage is that the attribute levels of the non-market good do not vary over

    time in a single cross-section. The value of the changes in the quality and quantity

    provided of the public good are difficult to estimate without panel data.

    Using willingness to pay estimates derived from questionnaires -thestated preferenceapproach (also called direct approach). For example, the research of Navarra and Paca

    regarding the economic value of Mt. Pulag through eco-tourism perspective. It

    specifically aimed to estimate the recreational benefits of the place derived from data

    gathered from interviews/questionnaires. Stated preference methods are commonly

    criticized because the behavior they depict is not observed (Cummings et al. 1986;

    Mitchell and Carson 1989) and thus they generally fail to take into account certain types

    of real market constraints (Louviere et al. 2000).

    Using values borrowed from existing studies - benefits transfer.For example, we apply the data derived from the mentioned above study to another

    recreational parks. Its advantages are it does not require large amount of expenditure and

  • 7/30/2019 Environmental Economics is a Distinct Branch of Economics That Acknowledges the Value of Both the Environment


    some data are easily transferred to another study. Its disadvantage is values borrowed

    from existing studies may not be actually applicable to be used on another study.

    2. Market-based instruments are regulations that encourage behavior through market signals

    rather than through explicit directives regarding pollution control levels or methods.

    These policy instruments, such as tradable permits or pollution charges, are often describedas harnessing market forcesbecause if they are well designed and implemented, they

    encourage firms (and/or individuals) to undertake pollution control efforts that are in their

    own interests and that collectively meet policy goals.

    Major Categories of Market-Based Instruments

    a. pollution charges;b. tradable permitsc. market friction reductionsd. government subsidy reductions

    The applicability of deposit-refund system on RA 9003 is the Reuse, Reduce and Recycle

    Scheme. This scheme can be employed in Materials Resource Facilities. Segregated

    materials are brought to MRFs then in return an equivalent payment is given.

    3. The Polluter Pays Principle, which is well established in the literature related to pollution

    and sustainable development, provides that "the polluter should bear the cost of the

    measures needed to ensure that the ecosystem is and remains in an acceptable

    state"(Dommen, 1993). Such measures would include those aiming at prevention andcontrol of pollution as well as mitigation of impacts and rehabilitation of affected areas.

    This principle is of direct relevance to fisheries where the sector is a source of significant

    pollution (e.g. fish processing) as well as dumping or involuntary loss of fishing gear. It

    could perhaps be extended to cover habitat damage. The principle can be implemented by

    various means, ranging from establishing process and products standards to application of


    4. OPINIONated

    Air, water, solid, toxic hazardous waste

    1. (a) City or Municipal Profile - The plan shall indicate the following background information

    on the city or municipality and its component barangays, covering important highlights of the

    distinct geographic and other conditions:

    (1) Estimated population of each barangay within the city or municipality and population

    project for a 10-year period;

  • 7/30/2019 Environmental Economics is a Distinct Branch of Economics That Acknowledges the Value of Both the Environment


    (2) Illustration or map of the city/municipality, indicating locations of residential,

    commercial, and industrial centers, and agricultural area, as well as dump, landfills and

    other solid waste facilities. The illustration shall indicate as well, the proposed sites fordisposal and other solid waste facilities;

    (3) Estimated solid waste generation and projection by source, such as residential,market, commercial, industrial, construction/ demolition, street waste,agricultural, agro-

    industrial, institutional, other waste; and

    (4) Inventory of existing waste disposal and other solid waste facilities and capacities.

    (b) Waste characterization - For the initial source reduction and recycling element of a local

    waste management plan, the LGU waste characterization component shall identify the

    constituent materials which comprise the solid waste generated within the jurisdiction of the

    LGU. The information shall be representative of the solid waste generated and disposed ofwithin the area. The constituent materials shall be identified by volume, percentage in weight or

    its volumetric equivalent, material type, and source of generation which includes residential,commercial, industrial, governmental, or other materials. Future revisions of waste

    characterization studies shall identify the constituent materials which comprise the solid wastedisposed of at permitted disposal facilities.

    (c) Collection and Transfer - The plan shall take into account the geographic subdivisions todefine the coverage of the solid waste collection area in every barangay. The barangay shall be

    responsible for ensuring that a 100% collection efficiency from residential, commercial,

    industrial and agricultural sources, where necessary within its area of coverage, is achieved.Toward this end, the plan shall define and identify the specific strategies and activities to be

    undertaken by its component barangays, taking into account the following concerns:

    (1) Availability and provision of properly designed containers or receptacles in selected

    collection points for the temporary storage of solid waste while awaiting collection and

    transfer to processing sites or to final disposal sites;

    (2) Segregation of different types of solid waste for re-use, recycling and composting;

    (3) Hauling and transfer of solid waste from source or collection points to processing

    sites or final disposal sites;

    (4) Issuance and enforcement of ordinances to effectively implement a collection system

    in the barangay; and

    (5) Provision of properly trained officers and workers to handle solid waste disposal.

    The plan shall define and specify the methods and systems for the transfer of solid waste from

    specific collection points to solid waste management facilities.

  • 7/30/2019 Environmental Economics is a Distinct Branch of Economics That Acknowledges the Value of Both the Environment


    (d) Processing - The Plan shall define the methods and the facilities required to process the solid

    waste, including the use of intermediate treatment facilities for composting, recycling,

    conversion and other waste processing systems. Other appropriate waste processing technologiesmay also be considered provided that such technologies conform with internationally-acceptable

    and other standards set in other standards set in other laws and regulations.

    (e) Source reduction - The source reduction component shall include a program and

    implementation schedule which shows the methods by which the LGU will, in combination with

    the recycling and composting components, reduce a sufficient amount of solid