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 1980-

which created a “Superfund” for cleaning up hazardous waste sites if companies cannot afford to pay for the clean up

What is Pollution?

• 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

• 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?