Scorse_What_Environmentalists_Need_to_Know_entire

Scorse_What_Environmentalists_Need_to_Know_entire - What...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: What Environmentalists Need to Know About Economics B y: Jason Scorse December 2008 Table of Contents Introduction ................................................................................................................................................. v Part I: How Economists Approach Environmental Issues ............................................................................. 1 Chapter 1: The Root Causes of Environmental Problems ......................................................................... 3 Chapter 2: Determining the “Optimum” Amount of Pollution ............................................................... 11 Chapter 3: Valuing Ecosystems ............................................................................................................... 19 Chapter 4: Putting Monetary Values on the Environment and Living Things ........................................ 25 . Chapter 5: Valuing Future Generations .................................................................................................. 33 Chapter 6: Tools to Address Environmental Problems ........................................................................... 39 Part II: Putting Economic Analysis to Work................................................................................................. 55 Chapter 7: Climate Change ..................................................................................................................... 57 Chapter 8: Conservation and Biodiversity Preservation ......................................................................... 67 Chapter 9: Agriculture ............................................................................................................................. 79 Chapter 10: Chemical Pollution .............................................................................................................. 91 Chapter 11: Fisheries .............................................................................................................................. 97 Chapter 12: Deforestation .................................................................................................................... 103 Chapter 13: Population Growth & Technological Change .................................................................... 109 Chapter 14: Demand‐Side Interventions .............................................................................................. 115 Final Thoughts & Additional Resources .................................................................................................... 121 Comprehensive Reference List ...................................................................................................................... i What Environmentalists Need to Know – Contents iii Introduction This book was inspired by the warm reception I received from a short essay I wrote back in 2005 entitled, “Why Environmentalists Should Embrace Economics.” I would like to thank the dozens of people around the world who sent me encouraging messages, and convinced me that there was a need for a larger treatment of the issues raised in this piece. I would like to thank my advisor at UC‐Berkeley, Michael Hanemann, who showed me that economics should always be relevant to real‐life issues. Thanks also goes to all of the students at the Monterey Institute of International Studies whose insights have helped me to refine my own. And a special thanks to Kira Darlow for her outstanding work as my research assistant. The target audience for this book is those interested in environmental issues with an eye towards actually solving them: students, citizens, policy‐makers, and activists. No economics background is required for this text, although some basic microeconomics knowledge is helpful. Even those with more advanced training in economics may find some new perspectives in this volume that they may have not considered before. Of the many criticisms of economists, one of the more truthful is that often they are poor communicators (even when they are not presenting complex mathematical models and abstract theories). For this reason I have tried to write this book in a clear and accessible manner with no graphs or charts and no mathematical formulas. The primary objective of these chapters is to help develop the economic intuition necessary to address a wide range of environmental issues; i.e. how to think like an economist in the environmental realm. Given the complexity of the issues dealt with in this volume (each of which individually could span multiple volumes), this treatment provides nothing more than a basic foundation for future study, discussion, and inquiry. I have provided a short list of books, websites, and organizations at the end of the book where interested readers can continue to increase their knowledge of economic approaches to environmental issues. Because I also want this book to be rigorous, I have provided lengthy footnotes for those who want additional information. Part I presents the basic intellectual architecture that underlies how economists think about environmental issues and the tools and insights that they use to address them. Part II surveys the major environmental issues of the day and presents a range of solutions that economists propose. It is recommended that readers read all of Part I before they delve into the specific issues in Part II. Part II does not follow any predetermined sequence, and therefore does not require following the chapters in order. Throughout the chapters I try to differentiate the ways in which theory and theoretical conditions may deviate from real‐world situations. In such instances, I present the key insights from the theories that are still applicable even if they do not perfectly mirror reality. In addition, because politics is so integral to getting environmental policies enacted and enforced, I provide political insights where appropriate, making special note of interest group dynamics. All of this is for the purpose of increasing the relevancy of this volume for actually solving the world’s environmental problems, which is the ultimate goal. What Environmentalists Need to Know – Introduction v I warmly invite all constructive criticism of the contents of this book, for which I am solely responsible. I can be reached at jason.scorse@miis.edu. Sincerely, Jason Scorse Central California Fall 2008 What Environmentalists Need to Know – Introduction vi Part I How Economists Approach Environmental Issues Chapter 1 The Root Causes of Environmental Problems Environmental problems exist at varying scales—local, regional, national, and international—yet they almost always share similar features, be it air pollution in Mexico City or Los Angeles, habitat loss in Kenya or Brazil, or fisheries collapse in the Indian, Pacific, or Atlantic oceans. Environmentalists trying to make sense of these issues are posed with difficult questions: — Why do relatively rational actors buying and selling goods and services very often not take into account the toxic pollution that results from their choices? — Why do fishermen routinely over‐exploit the fisheries that they depend on? — Why are the ecological services provided by forests and wetlands, which produce tangible and wide‐ranging values for society, usually not taken into account when decisions are made? — How can there be such massive pollution and resource use involved in industrial agriculture, and yet food is so cheap? Economists have been studying questioning like these for many decades and have devised a fairly comprehensive framework for understanding the root causes of environmental problems, which is where we begin. Those who believe that economists have an unalterable faith in the power of markets, may be surprised to learn that economists long ago understood that there are conditions under which markets will not lead to socially optimum outcomes, especially in the environmental realm. 1 In fact, in the environmental arena market imperfections are ubiquitous. Readers may also be pleasantly surprised to discover that the economic theories that explain why markets fail also hold the keys to solving the myriad environmental problems we face. Virtually all of the policies being discussed in the political realm, NGO board meetings, and on environmental websites can be traced to economic theories that were derived dating back as early as the 1940s, and are still vigorously debated in academic settings around the world to the present day. The three most important sources of environmental problems are 1) market failure, 2) the tragedy of the commons, and 3) the under‐provision of public goods, which I will discuss independently, even though some of their features overlap. Market Failure One of the first principles of free markets is that in order for them to work effectively all of the costs of an activity must be borne by the parties involved. If this is not the case, both producers and 1 In 1848, John Stuart Mill was the first economist to break from classical economics and recognize positive social externalities such as education and public utilities. In 1901, Henry Sidgwick further developed the theory of externalities through examples of overuse of natural resources. Sidgwick found that one of the reasons for overusing natural resources stems from a failure to take all the positive and negative social costs into account (Medema, 2004). What Environmentalists Need to Know – (1) Root Causes 3 consumers of a good will supply and demand more or less of the good than they would have had they had to pay the full costs. For example, there are many types of air and water pollutants that exact a significant price on human health and degrade ecosystems, yet which are not included in the costs of production or at the consumer level. These costs, which are borne by society, but not the individual producers and consumers of the goods, are called externalities. This represents a market failure because in order for the market to supply the proper amount of goods and services the prices need to correctly reflect the true costs. Nowhere is this type of market more common than in the environmental realm. Some specific examples of widespread environmental externalities are: — Heavy metals emitted from power plants that cause cancer, birth defects, and harm animals and plants, but which most power companies and consumers of electricity are not required to pay for — Greenhouse gas emissions, which have no cost almost anywhere in the world (except in the EU), so no matter how much a person or company emits they pay no penalty for their contribution to global warming — Biodiversity loss from clear‐cut logging, which timber companies can essentially ignore because there is no cost to factor into their decisions, and which consumers can ignore because they too do not pay for the negative consequences of the wood products they buy Economists characterize a situation where the costs of environmental externalities are not included in the price of a good as a form of passive subsidy. Think of it this way: every time any of us use power from a coal‐fired power plant we are getting energy at a price much cheaper than its true cost (once all of the harmful effects are calculated and included). These harmful effects are not simply theoretical, they represent real damages that have real monetary value. In effect, our energy use from coal is being subsidized by all of the people who get sick from the resulting sulfur pollution and from the money lost when our natural heritage and infrastructure are degraded by acid rain. Much of the rest of this book will discuss the various ways to get people and companies to take these environmental costs into account, which economists refer to as a way of internalizing the externalities into their decision‐making. But externalities are not the only thing that can lead to market failure. In economic models of well‐ functioning markets, one of the strongest assumptions is that the parties involved must have perfect information about products and services, as well as the consequences of the consumption and production of these goods. It doesn’t take a critic of economics to realize that this assumption is very strong and unlikely to be met in the real world. And again, nowhere are the deviations from perfect information more prominent than in the environmental realm. Even with major scientific advances, our knowledge of the interaction of many industrial chemicals is still in its infancy and our knowledge of how ecosystems function is still woefully incomplete. Even what we do know is extremely complex and beyond the ability of anyone but the most senior scientists to fully comprehend. Both producers and consumers of goods, therefore, must often rely What Environmentalists Need to Know – (1) Root Causes 4 on outside sources in order to make informed decisions about what they produce and what they buy. This is another area where the market left completely to its own devices is not likely to provide the necessary information in order for people to make the most well‐informed decisions. For example, as forests are cut down how does this impact the watersheds and how is this information conveyed to the people that rely on them? How are municipalities supposed to decide whether they want to approve the development of a new factory that emits some quantity of air and water pollution? Precisely what information is needed and what is the best way to provide it? These questions will be explored in subsequent chapters. A third cause of market failure arises from an incomplete and/or non‐transparent distribution of property rights in society. In situations where it is unclear who has the right to use an environmental resource, it is also unclear whose rights can be restricted in order to promote environmental goals. In situations where this is the case, often environmentally destructive behavior will ensue because there is no one that can be held liable for the environmental costs. The issue of liability sometimes takes subtle turns that have large environmental consequences. For example, in the famous 1989 Exxon Valdez case, in which an Exxon tanker spilled over 11 million barrels of oil into the pristine ecosystem of Prince William Sound in Alaska, one of the key questions was whether Exxon was responsible for the damage to this public resource, above and beyond the clean‐up costs. Put another way, did the public hold the right to Prince William Sound in its pristine state, or was a private company allowed the right to severely damage the resource without compensation, as long as they “cleaned it up”? The courts held that Exxon was liable, and even though the initial case was ultimately settled outside of court, 2 the damage estimates that were calculated included a measure of compensation to the general public. It is now on record that oil companies operating tankers in American waters will be held liable for damages, which in the case of the Exxon case were estimated in the billions of dollars (Carson et al, 2003). Whether this added liability is at all responsible for the fact that there has not been another oil spill of this magnitude in American waters since 1989 is an open question, but it is reasonable to assume that it has influenced the behavior of oil companies. 3 It is important to point out that when economists talk of property rights this does not automatically mean private property rights. In the case of market failure due to a lack of transparent and enforceable property rights, the issue can sometimes be addressed by assigning property rights to government agencies or some form of community organization. These options entail their own set Shipping Company, owned by Exxon Mobile Corporation) liable for $5 billion in punitive damages. These damages were reduced to $2.5 billion after three appeals. On June 25, 2008, the United States Supreme Court ruled that for cases such as this with no “exceptional blameworthiness,” under maritime law, the upper limit of appropriate punitive damages should be set by a 1:1 ratio with the amount of compensatory damages. The Court accepted the district court’s calculation of $507.5 million in total relevant compensatory damages (Exxon v. Baker, 2008). 3 The largest oil spill (not caused by weather) in US waters since the Exxon­Valdez incident was in November 2000 when the oil tanker Westchester ran aground near Port Sulphur, LA and spilled 567,000 gallons of crude oil into the Mississippi River. In comparison, the Exxon­Valdez spilled over 11 million gallons into Prince William Sound (Oil spills and disasters, 2007). Most recently, a South Korea‐bound container ship spilled 58,000 gallons of oil into the San Francisco bay after colliding with the San Francisco‐Oakland bridge on November 7, 2007 (“Oil spill,” 2007). 2 The original jury found the ship’s master liable for $5,000 in punitive damages, and the owners (Exxon What Environmentalists Need to Know – (1) Root Causes 5 of issues that need to be addressed, but it is not the case that defining property rights always necessitates private ownership. A lack of clear and enforceable property rights leads to the most pronounced forms of environmental degradation in cases of open access resources, which were made famous by Garret Hardin, who coined the term “the tragedy of the commons.” This is where we now turn. The tragedy of the commons Two of the world’s most important environmental resources are the oceans and the atmosphere. The oceans not only contain huge quantities of fish and sea life that humans consume, but also huge quantities of marine biodiversity, which in turn support additional layers of terrestrial biodiversity. Biochemical interactions in the atmosphere help to regulate climate and temperature, the ozone layer blocks harmful solar radiation from reaching the Earth’s surface, while clean air promotes human and ecosystem health. But most of the world’s oceans and atmosphere are devoid of property rights; 4,5 that is, there is no body, whether groups of individuals, private companies, or governments that can claim ownership over them. They are what are called open access resources, which anyone can use and to whatever extent they wish. From here on I will use this term instead of the term “commons” that Garret Hardin coined, because it is now understood that there are important distinctions between open access resources and those held as commons. 6 Hardin’s insights are truer today than when he first discussed them four decades ago. His essential insight is that open access resources will more often than not be exploited at unsustainable levels because there is a divergence between the private benefits that accrue to the user of the resource and the costs, which are diffused over the entire population. Let’s take the world’s fisheries as an example. When a fishing company decides how much fish to take out of the ocean it is only thinking of the bottom line: how much profit it can make. It will increase fishing as long as it is profitable to do so. Fish are a renewable resource, which is potentially exhaustible if over‐exploited. Every time a fishing boat removes fish it affects the ability of the species to repopulate and survive. From a sustainable use perspective, the problem is that this cost of reducing the viability of the fish population is spread over all the fishing companies in 4 64% of the world’s oceans are international waters, and not under the jurisdiction of a sovereign state (IUCN, 2007). 5 There are a few large national and international emissions trading schemes, as well as several state‐wide and regional schemes that attempt to control the atmosphere. The US as a nation controls SOx emissions (Schmalensee, Joskow, Ellerman, Montero & Bailey, 1998), while several individual states, such as California and the Northeast region, have plans for limiting carbon emissions (Royden‐Bloom, 2007). The European Union Emissions Trading Scheme was created to meet the goals of the Kyoto Protocol and controls carbon emissions through mandatory international carbon emissions trading.9 In Australia, the New South Wales state government has implemented mandatory reductions in carbon emissions for the electricity sector (“Greenhouse gas reduction scheme”, n.d.). 6 Forty years ago Garret Hardin referred to what are now called open access resources as the “commons,” but as many prominent anthropologists, such as Elinor Ostrum have shown, many natural resources that were once thought to be open access entail high levels of management and the number of people who can use them are restricted, as well as the ways they can be used. Therefore, the term “commons” now refers to natural resources that are held and managed by communal organizations, distinguishing them from pure open access resources in which anyone can exploit them. What Environmentalists Need to Know – (1) Root Causes 6 the industry, and therefore will likely seem insignificant to the individual fisherman in an industry of thousands of boats and private firms. In addition, given the open access nature of the world’s fisheries, if one company decides to stop fishing in order to allow the species to recover, there is nothing stopping another company from taking the fish themselves. This produces a very short‐sighted “race to the bottom” mentality that we observe in virtually all of the ocean’s international waters. And it is no surprise that fish stocks are at or near levels of collapse globally as a result. 7 The atmosphere is a much different type of resource, one that is not actively harvested, but the essential logic holds. Because virtually anyone can dump as much greenhouse gases into the atmosphere as they want, there is little incentive for any individual company or nation to restrict their emissions. If they do so it will have only marginal benefits that are unlikely to reduce global warming and which are spread out over all of the world’s people. Poorer nations, particularly island nations or those at or below sea level, who stand to suffer the most from global warming, have no recourse with which to demand that emissions be restricted, because there is no international body that has jurisdiction over the atmosphere. 8 While there are ways to address the issue of global warming short of creating property rights to the atmosphere (to be discussed later), the key point is that it is the open access nature of the atmosphere that has created the problem in the first place. This brings up another essential point. Many critics of economics claim that it is the commoditization of the environment and living things that are the root causes of environmental problems; that it is a world that assigns property rights to the world’s environmental heritage and assigns them price tags, which is the greatest threat to a more livable future. A careful examination, however, of the areas where we see some of the greatest environmental threats leads to the exact opposite conclusion. It is the fact that much of the world’s oceans and the atmosphere are freely open to exploitation that drives the unsustainable levels of both fish harvesting and greenhouse gas emissions. The same is true for many areas of the Amazon rain forest, where property rights are non‐existent, non‐transparent, or not enforced; as a result we observe massive deforestation. 9 collapse, and that by 2050, 100% of international waters fisheries will reach this level. The study defined “level of collapse” at less than 10% of the original population remaining (Worm et al, 2006). 8 In 2002, Tuvalu, Kiribati, and the Maldives threatened to sue major‐polluting nations and corporations for damages in an international court. In 2005, the Inuit Circumpolar Conference published a petition to the Inter‐American Human Rights Commission arguing that the United States in infringing on their livelihood by failing to regulate greenhouse gas emissions (Hsu, forthcoming). 9 Property rights in Brazil are written such that a landowner maintains ownership of his land as long as a certain percentage of land is in production, production referring to farming or ranching. In order for the landowner to avoid having his land seized and redistributed, he must clear the forest in preparation for crops or cattle (Alston, Libecap &Mueller, 1999). By 2004 around 590,000 km2 (more than 14%) of closed forest in the Brazilian Amazon basin had been removed, and continues to be removed at rates of 10,000 km2 to 20,000 km2 per year (Walker, 2004). An empirical study on land use and property rights in Panama, found that less deforestation occurs when effective property rights are in place than in locations without those rights Nelson, Harris & Stone, 2001). 7 A recent study concluded that as of 2003, 29% of international waters fisheries had reached the level of What Environmentalists Need to Know – (1) Root Causes 7 None of this is to suggest that addressing the problem of open access resources will be sufficient to solve major environmental problems. Market failure can still occur in cases when property rights are well‐defined, whether due to the transboundary nature of environmental pollution or imperfect information. In addition, there is another serious reason to believe that environmental quality will be under‐provided in a free‐market system, and require some form of intervention. To discuss this we now turn to public goods. Public Goods Public goods are a specific class of goods that are non‐rival and non‐excludable. Put simply, they are goods where one person’s use of the good does not inhibit another’s use of the good (non‐rival) and where once the good is provided to one it is by definition provided to all (non‐excludable). There are very few “pure” public goods, mostly because there are ways to exclude people from the enjoyment of what otherwise would be considered entirely public resources. The following are examples of environmental public goods, along with the appropriate caveats: — Biodiversity: my enjoyment of biodiversity doesn’t limit your ability to enjoy it, and once biodiversity has been preservedno one can be excluded from enjoying it (at least on the conceptual level; for example, if the blue whale is preserved we all can take pleasure in this achievement, but obviously people’s access to viewing these whales is limited by their income and leisure time) — An intact ozone layer: the protection I get from the ozone layer doesn’t impede anyone else’s protection and once the ozone layer is protected it is protected for all (this is close to a pure public good, but in reality, we do have a situation where the remaining hole in the ozone is still concentrated over Australia and New Zealand, which until it fully heals, means that there are populations that are excluded from the full benefits of protection) — Clean air: my breathing clean air doesn’t prevent anyone else from breathing clean air, and once clean air is provided to my community no one in the community can be denied access to it (but yet again, air quality may differ substantially within a community and it may cost more money to live in areas where the air is the cleanest) — A climate in which the threat of global warming is greatly diminished: this may be the closest we can get to a pure environmental public good; there is no way to exclude anyone from a non‐ warming planet and one person’s benefit from a reduction in the risk of global warming doesn’t conflict with anyone else’s Worldwide increase in demand for soybean meal (used as animal feed in industrial farming) has presented Brazil with the opportunity to export soybeans (Ortega, Cavalett, Bonifacio & Watanabe, 2005). However, the level of production of soybeans in Brazil does not take into account many of the externalities associated with production. The Brazilian savanna is not well suited to growing only soybeans, causing the farmers to clear more and more forest in order to find suitable farming land. If the long‐term results of such deforestation and industrial farming, including soil and nutrient erosion, carbon dioxide, methane, and nitrous oxide emissions, health risks from pesticide use, effluent treatment, and savanna destruction were factored in, the price of soybeans would increase, and demand for Brazilian soybeans would decrease (Lopez & Galinato, 2005). What Environmentalists Need to Know – (1) Root Causes 8 Because of the non‐excludable nature of environmental public goods (however imperfect), we encounter what economists refer to as the “free‐rider” problem. It is often difficult to get people to contribute to the provision of public goods because they know that once they’re provided they can get them for free. For example, if the local people of Hawaii decide to protect their coral reefs all Americans would get the benefit of this enhanced biodiversity protection even if they didn’t contribute. On an international level, if Brazil decided to fully protect the Amazon rainforest all of the countries of the world would get the myriad benefits of rainforest protection for free as well. This is not to suggest that there are not significant reasons for the Hawaiians to protect their marine resources or the Brazilians to protect their forests without outside assistance. There are direct benefits that accrue to the immediate parties and the Hawaiians currently do a lot to protect their reefs and the Brazilians do a lot to protect their forests. Economists only point out that if others who also benefited from the provision of these resources contributed to their protection the extent of the conservation efforts would be much greater. It is not that public goods result in zero provision in the free market, but that they are often underprovided, which is the key insight. Summary While economists have great faith in markets to do many things, they do not believe that they are perfect. In fact, because of the transboundary nature of environmental resources and the great complexity of ecosystems, as well as the complex interactions that contribute to human health, in many instances markets alone cannot be relied upon to promote optimal environmental outcomes. The next issue we must address is if markets alone do not always produce desirable environmental outcomes, then what are the outcomes we as a society (or world community) should aim for? We will begin this discussion by examining the concept of “optimum pollution.” References Alston, L. J., G. D. Libecap, and B. Mueller. (1999). Titles, conflict, and land use: The development of property rights and land reform on the Brazilian Amazon frontier. Ann Arbor: University of Michigan Press. Preview obtained December 12, 2007, from Google Books: http://books.google.com/books?id=IuYrOK3Re04C. Carson, R. T., R. C. Mitchell, M. Hanemann, R. J. Kopp, S. Presser, and P. A. Ruud. (2003). Contingent valuation and lost passive use: Damages from the Exxon Valdez oil spill. Environmental and Resource Economics, 25, 257‐286. Ellerman, D. and B. K. Buchner. (2007, Winter). The European Union emissions trading scheme: Origins, allocation, and early results. Review of Environmental Economics and Policy, 1(1), 68‐87. Exxon Shipping Company, et al., Petitioners v. Grant Baker et al., 128 S. Ct. 2605 (2008). Retrieved September 6, 2008, from LexisNexis Academic database. Greenhouse gas reduction scheme. New South Wales State Government. Retrieved October 13, 2007, from http://greenhousegas.nsw.gov.au/. Hsu, S. (Forthcoming). A realistic evaluation of climate change litigation through the lens of a hypothetical lawsuit. University of Colorado Law Review. Retrieved September 6, 2008, from SSRN: http://ssrn.com/abstract=1014870. What Environmentalists Need to Know – (1) Root Causes 9 International Union for Conservation of Nature (IUCN). (2007, April 18‐20). Countdown 2010 for marine ecosystems. Retrieved October 12, 2007, from www.countdown2010.net/file_download/78. Lopez, R. and G. I. Galinato. (2005). Deforestation and forest‐induced carbon dioxide emissions in tropical countries: how do governance and trade openness affect the forest‐income relationship? The Journal of Environment Development, 14(1), 73‐100. Retrieved October 19, 2007, from SAGE Publications: http://jed.sagepub.com/cgi/reprint/14/1/73.pdf. Medema, S. G. (2004, July). Mill, Sidgwick, and the evolution of the theory of market failure. Online working paper. Retrieved October 12, 2007, from http://www.utilitarian.net/sidgwick/about/2004070102.pdf. Nelson, G.C., V. Harris, and S.W. Stone. (2001). Deforestation, land use, and property rights: Empirical evidence from Darien, Panama. Land Economics, 77(2), 187‐205. Retrieved October 19, 2007, from HW Wilson Web: http://vnweb.hwwilsonweb.com/hww/shared/shared_main.jhtml?_requestid=57820. Oil spill could threaten S.F. Bay wildlife for years. (2007, November 9). CNN.com. Retrieved September 6, 2008, from CNN.com: http://www.cnn.com/2007/US/11/09/bay.spill.ap/. Oil spills and disasters. (2007). Retrieved October 12, 2007, from http://www.factmonster.com/ipka/A0001451.html. Ortega, E., O. Cavalett, R. Bonifacio, and M. Watanabe. (2005). Brazilian soybean production: Emergy analysis with an expanded scope. Bulletin of Science Technology Society, 25(4), 323‐ 334. Retrieved October 19, 2007, from SAGE Publications: http://bst.sagepub.com/cgi/reprint/25/4/323.pdf. Royden‐Bloom. (2007, September 18). State greenhouse gas (GHG) actions. National Association of Clean Air Agencies (NACAA). Retrieved October 12, 2007, from http://www.4cleanair.org/Documents/StateGHGActions‐chart.pdf. Schmalensee, R., P. L. Joskow, A. D. Ellerman, J. P. Montero, and E. M. Bailey. (1998, Summer). An interim evaluation of sulfur dioxide emissions trading. Journal of Economic Perspectives, 12(3), 53‐68. Walker, R. (2004). Theorizing land‐cover and land‐use change: The case of tropical deforestation. International Regional Science Review, 27(3), 247‐270. Retrieved October 19, 2007, from SAGE Publications: http://irx.sagepub.com/cgi/reprint/27/3/247.pdf. Worm, B., E. B. Barbier, N. Beaumont, J. E. Duffy, C. Folke, B. S. Halpern, J. B. C. Jackson, H. K. Lotze, F. Micheli, S. R. Palumbi, E. Sala, K. A. Selkoe, J. J. Stachowicz, and R. Watson. (2006, November 3). Impacts of biodiversity loss on ocean ecosystem services. Science, 314(5800), 787‐790. What Environmentalists Need to Know – (1) Root Causes 10 Chapter 2 Determining the “Optimum” Amount of Pollution At first glance, this concept likely strikes many environmentalists as strange or even heretical; there is an obvious “optimum” for pollution (despite what economists may think): zero. Economists don’t arrive at this conclusion, not because they are callous to environmental concerns, but because pollution is a byproduct of many things that we all value, and therefore, some amount of pollution is warranted. Take the example of electricity. Electrical generation produces pollution; even renewable sources produce some quantity of pollution. All of us benefit greatly from electrical power and would not be willing to give it up in order to decrease this source of pollution to zero. Take another example: agriculture. All forms of agriculture require vast alternations of the natural environment, including various forms of inputs, organic and/or synthetic. In order to eat a varied and healthy diet, significant quantities of pollution are often generated even in the most ecologically‐minded systems. This is especially true when agricultural systems are required to feed large numbers of people who reside far from agricultural centers, and the costs of transportation are included. These are two examples of basic goods that essentially no one would be willing to forego: electricity and farm‐produced food. The list of pollution‐causing goods grows exponentially once we start including the various luxuries that most of us in the developed world now take for granted – airplane travel, computers and other electronic goods, furniture, modern houses – and which most in the developing world are striving to acquire as well. Following this logic, it is easy to see why zero pollution is not feasible, at least given current modes of living and technology (more on this later). What about reducing pollution as much as possible? This sounds like it might be a reasonable second best option. But what does “as much as possible” really mean? In many cases reducing pollution is expensive. How much money should society spend to reduce pollution? And what should it give up in order to achieve these lower levels of pollution? Many people might have opinions on the matter, but how can we judge which views are more reasonable than others? Economists have come up with a way to conceptualize the issue, which while far from perfect, at least allows us to begin with a methodology that can be applied in a variety of situations and has some objective merit. As we will see, it does not completely solve the problem, and also raises a host of other issues, but it’s a start. The idea is relatively straightforward (although putting it into practice isn’t): the optimum level of pollution is the amount where the benefits of abating (getting rid of) additional pollution are worth the added cost, not a bit more or less. 1 1 In pure economic terms, this is the point at which the marginal cost of abating pollution is equal to the marginal benefit of pollution abatement. What Environmentalists Need to Know – (2) Optimum Pollution 11 We can conceive of this from two different angles. First, let’s assume that we were starting in a world with no pollution. There are some things that we would value more than having an environment entirely free from pollution, and we would produce those things up to the point where we decided that additional pollution was no longer worth it. Or more realistically, if we start from a relatively polluted world, we can ask ourselves how much pollution we would like to get rid of before the costs exceed the benefits of a cleaner environment. Since this second perspective more closely mimics the situation we find ourselves in today, we will stick with it for the time being. The task we are presented with is determining how much to reduce various forms of pollution from their current levels. For example, let’s assume that we’re talking about electrical production and the toxic emissions from power plants. Abatement can be achieved in many ways, by adding pollution control equipment (such as scrubbers for sulfur in coal‐fired power plants), switching to cleaner fuels or technologies, or improving output efficiency. These different ways of reducing pollution from power plants have very different costs; some may be relatively cheap while others may be very expensive. This means that we may be able to get some quantity of abatement for a relatively low price, but that if we want more it may cost a lot more. For example, if we have a very dirty power plant with almost no pollution control there are likely to be relatively straight‐forward and accessible options to help reduce some portion of the pollution. But as the plant becomes increasingly cleaner the technology to improve it ever more is likely to become increasingly expensive. The same is true if we think of pollution not at the facility level, but at a regional or national level. The amount that it costs to decrease air pollution in a region becomes increasingly expensive as the area becomes cleaner. For example, reducing the smog in the City of Los Angeles, while expensive, would be less expensive than increasing air purity an additional step, once most of the smog is removed. Often, it is these last units of pollution abatement that are extremely costly. This phenomena is often referred to as the “low‐hanging fruit” theory: there are almost always some pollution reduction options that are relatively easy (they’re ripe for the picking), but once these are used up, pollution abatement options become increasingly difficult (they’re near the top branches). The benefits of reducing pollution exhibit the opposite type of relationship; they usually start out high and ultimately decline. Again, let us take air pollution as an example. The health and other environmental benefits of cleaning up a highly polluted airshed are large; they include significantly reduced mortality, reduced respiratory illness, better visibility, and a healthier environment for animals and plants. But once much of the smog has been removed and the air is reasonably clean, removing the remaining particulate matter, while perhaps beneficial, does not translate into nearly as much benefit as when the air pollution was at much higher levels. Now, let’s take a step back, and think about all of this together. Let the starting point be a city with a serious smog problem. The government wants to reduce pollution due to the myriad health and environmental problems through some form of new regulation (later we will examine the various means of achieving a pollution reduction target, but for now we’re just interested in the target itself). What Environmentalists Need to Know – (2) Optimum Pollution 12 The city makes some estimates of the damages from the smog and the costs of abating it and concludes that reducing smog by 50% costs only $10 million but leads to benefits of $100 million (for net benefits of $90 million: 100‐10). Then it considers whether reducing pollution by 75% is worth the cost. It determines that the additional 25% reduction costs a little more than first 50% reduction (another $12 million), and the additional benefits are not as great (only $65 million this time), but the net investment is still positive ($53 million: 65‐12) for going this extra step. Then the city examines the scenario of reducing the smog by 90%, and here is where the calculus changes dramatically. The additional 15% reduction (from 75%‐90%) turns out to be very expensive ($50 million for this incremental improvement) because it includes major changes to automobiles, while the benefits of this additional 15% reduction don’t yield nearly as many benefits as the last phase of pollution reduction (now only $35 million). The net benefits of this final phase of abatement would actually be negative to the tune of ‐$15 million (35‐50). A case can now be made that 75% smog reduction (or perhaps a little more since we didn’t examine the precise scenarios between 75% and 90%) represents the “optimum” level of smog reduction for this city. We have arrived at this conclusion by quantifying the relative benefits and costs of smog abatement until we reached a point where the costs of additional abatement became greater than the additional benefits. Before addressing the many caveats that accompany this logic, especially when putting it into practice in the real world, I hope that readers can appreciate that there is a logic to this approach that has intellectual merit. In fact, it’s the same logic that all of us employ when choosing the quantity of virtually all other goods. Take strawberries for example. Let’s say the price is three dollars a basket. You go into the store and grab the first basket at the cost of three dollars and then wonder whether you want a second. You decide that you do. Then a third, they are so delicious. A fourth? You think hard about it, but decide that three is enough. What made you stop? Simple, the marginal benefit of the fourth basket was not equal to the marginal cost of three additional dollars. If the additional benefit of that fourth basket was worth more than three dollars to you, you would have bought it. Take‐away point: The theory of optimum pollution is premised on the same logic that economists use to analyze the markets for ordinary goods and services. However clever this logic may (or may not) appear to you, you may already have questions regarding the actual implementation of this concept. To start, how are the benefits and costs calculated for pollution abatement? And perhaps more importantly, how can we translate health and environmental values into dollars, which is what this entails? We will get to these very serious issues shortly. But first I want to make a couple of additional points about the concept of optimal pollution and its implications for real‐world policymaking. Real­World Implications of Optimum Pollution Theory The “optimum” quantity of pollution refers to what is most efficient for society as a whole. This is defined as the point at which society gets every bit of pollution abatement where the benefits exceed the costs. What Environmentalists Need to Know – (2) Optimum Pollution 13 What is important to recognize is that while efficiency may be a valid criteria, it is simply one among many criteria. Efficiency says absolutely nothing about the distributional impacts of a given level of pollution. For example, an efficient solution could be entirely consistent with a situation where the pollution that is not abated is most heavily concentrated in a poor minority community. What is efficient, therefore, may conflict with what people consider “fair,” “just,” or “equitable.” Here I will offer an admission about the economics profession; too little attention is paid to distributional effects and too much emphasis on what is efficient. I am not saying this because efficiency doesn’t matter; it does. But if economists are going to live up to their maxim that they describe the world as it is, it must be recognized that many, if not most, people care a lot about issues of fairness (leaving aside for now how it is precisely defined). This suggests that distributional issues deserve serious attention (later on I will discuss how it might be possible to actually incorporate this into a larger view of efficiency). 2 A second key point (again, which I will return to later; we just have to get some of theory out of the way first) is that when economists discuss costs and benefits and assign monetary values to them they are by default weighting the decision‐making process in favor of those with greater incomes and wealth. For example, as we will see, when health effects are calculated lost productivity is partially determined by the number of sick days; a sick day for an engineer counts more in monetary terms than a sick day for a school teacher. When the benefits of nature viewing are assessed the wealthy traveler who spends thousands of dollars to visit a national park gets counted a lot more than a person without a car who doesn’t have the money to make such a trip. (One way to mitigate problem is to take the average of all people’s values, and use this as a representative of the population.) Bottom line: the classical economic view of pollution doesn’t take into account any notion of environmental goods as rights. For example, many people argue that access to clean air and water are human rights that society has an obligation to provide to all of its citizens. 3 While efficient solutions, as defined by economists, need not conflict with such notions of rights, they may, and sometimes do. There are cases where economists may use the above framework to define pollution strategies that are optimum, but which do not automatically guarantee all members of society some minimum level of environmental quality. As a student of environmental issues for over two decades, I have noticed that when economists and environmentalists discuss a certain topic the economists often talk about efficient solutions while the environmentalists talk about equitable solutions. In many instances there is a great deal 2 Health economists Paul Dolan and Aki Tsuchiya found that the majority of people focus on outcome based equity (a way of viewing typical economics), while a considerable minority of people are focused on gains based equity, or distributional fairness (2006). Corry Azzi and James Cox point out that tax programs should be evaluated for both efficiency and equity impacts (1973). James Cox has also published several articles on the economics of altruism and fairness with various economists including Daniel Friedman, Vjollca Sadirai, and Steven Gjerstad (publications available at http://excen.gsu.edu/jccox/selected.html). On the other side of the argument, Josh Hendrickson discusses in his blog that despite what the people want, there is no place for fairness in economics (2006). 3 The United Nations Universal Declaration of Human Rights named clean air as a fundamental human right in 1948 (UN General Assembly, 1948), and the Committee on Economic, Social and Cultural Rights added clean water to the list in 2002 (UN Committee on Economic, Social and Cultural Rights, 2002). What Environmentalists Need to Know – (2) Optimum Pollution 14 of confusion as the parties essentially talk past each other. Environmental discussions and debates would benefit greatly if all parties could be explicit when they are making arguments based on efficiency concerns and when they are making a case based on the distributional consequences of a policy independent of efficiency. In cases where environmentalists want to argue that an efficient strategy for pollution abatement does not meet certain ethical criteria, it would be helpful if they acknowledged the potential losses in efficiency that these may entail. 4 Economists are used to talking about trade‐offs and are not all cold‐hearted statisticians unable to be swayed by such methods of argumentation. Back to the hypothetical case of a city where the “optimal” reduction in smog was around 75%: What if the remaining 25% was concentrated in a poor minority community where rates of asthma and other respiratory illnesses were significantly higher than the regional average? It would be entirely appropriate to make a case that what is optimum in this scenario from an efficiency standpoint may not be just, and imposes too heavy a burden on economically disenfranchised communities. What is efficient is not the “end all, be all” when determining the ultimate policy outcome. There are other serious limitations of the optimum pollution methodology. When attempts are made to quantify the costs and benefits of pollution reduction, analysts often compare aggregate costs of a given action to improve the environment with aggregate benefits; they usually do not search for the precise pollution level that will be most efficient. And typically, these benefit‐cost analyses do not closely examine the distributional consequences. 5 Here are some suggestions for environmentalists when confronted with these types of studies: – Take a close look at the scope of the benefits and the costs that are being examined. This is often where many assumptions are made, and usually many shortcuts are taken. Almost always, the direct health benefits comprise the bulk of the benefits side of the calculation because politicians are usually swayed by these benefits more than benefits to plant and animal life, 6 which are in some ways more abstract (we will look at this shortly). If this is the case, and there is a compelling reason to suspect that the effects apart from human health are significant, environmentalists may be justified in insisting that the benefits of the proposed policy are underestimated, and lobby for the inclusion of a greater scope of benefits or at least an acknowledgement that the benefit estimates are incomplete. 7 4 In economic terms this translates to a situation where some costs are deemed appropriate to derive benefits 5 I use the term benefit‐cost instead of the more common term cost‐benefit based on the rationale provided 6 A report published by the OECD in 2006 discussing recent developments in cost‐benefit analysis theory (construed in pure economic terms) that are not as great, leading to a net economic loss. by Arrow et al. in their excellent paper (1996). suggests that environmental benefits (goods and services) generally have no market and therefore are given a $0 value. While researching for this report, the authors surveyed European Union cost‐benefit analyses and found that health benefits account for one third to 100% of the benefits used to create a positive CBA outcome. This trend is also seen in the United States (Pearce, Atkinson & Mourato. 2006). For example, the Clean Air Interstate Rule (CAIR) CBA mentions air quality and environmental benefits along with the health benefits, but is only able to monetize the health benefits, effectively discrediting the environmental benefits (US‐China Joint Economic Research Group, 2007). 7 Consistent with the report mentioned in the previous note, an earlier OECD report found that environmental benefits are underestimated when monetary values are applied (Barde & Pearce, 1991). In 2005, in response What Environmentalists Need to Know – (2) Optimum Pollution 15 – With respect to costs, these usually include the direct and indirect costs of actually implementing the regulation. Typically, the bulk of the costs are the costs to industry for altering its production processes. These costs are often estimated based on estimates of the prices given current technology. But there are many examples where the costs of reducing pollution decrease dramatically once incentives for pollution reduction are created by new regulation. This often leads to an over‐estimation of the costs of pollution reduction. 8 Environmentalists should pay close attention to these costs estimates and in cases where no account is made for technological progress, make the case that they need to be included. – Uncertainty is very difficult to include in a benefit‐cost analysis or optimum pollution framework because it is very difficult to put monetary estimates on the unknown. The current state of our scientific knowledge of the adverse effects of many classes of toxic chemicals is poor or in its infancy, which only compounds the problem. 9 It may be reasonable to argue that an additional benefit of reducing pollution is risk reduction. Pollution reduction can be viewed not only as means to achieve verifiable health and environmental benefits, but act as an insurance policy against the many unknowns. – Finally, environmentalists would be best served by prioritizing their environmental goals according to some level of rational calculus. This doesn’t have to come from any central authority that speaks for all environmental organizations, nor does it need to be set in stone. But not all environmental goals are created equal. Figuring out which ones can achieve a high level of benefits to a draft report to Congress on the Costs and Benefits of Federal Regulations, a coalition of health and environmental groups commented that the CBA guidelines in the draft report failed to correct for the fact that environmental benefits tend to be underestimated due to the difficult nature of applying monetary values to the benefits (Warren, 2005). Similarly, the environmental effects of a new electricity‐generating systems in Ontario were underestimated due to several pollutants and classes of effects (including building corrosion and terrestrial ecosystem impacts) being ignored (DSS Management Consultants, Inc., 2005). 8 A 2000 review of regulatory cost estimates compared ex ante cost estimates of twenty‐eight regulations with their respective ex post estimates. These regulations were chosen based on the existence of both an ex ante cost estimate prepared by a regulatory agency experienced in cost analysis and a detailed ex post estimate; twenty‐one of the regulations are federal, four are from California, and three are international. Overall, ex ante estimates over‐estimated the total costs of regulation in 15 cases, and only under‐estimated in 3 relatively small regulations (EPA’s aldicarb (a pesticide) and CDEC regulations and OSHA’s powered platform regulation). Per‐unit costs were over‐estimated slightly less frequently, with 14 cases over‐ estimated and 6 under‐estimated. The quantity of pollution reduced was over‐estimated in 9 cases, and under‐estimated 4 cases. Some of the over‐estimations, such as regulating the pesticide Mancozeb and phase I of SO2 regulation, were due to failing to recognize the presence of a substitute. Other over‐estimations, such as OSHA regulations of asbestos and cotton dust, were related to inaccurate baseline estimates. Other causes of cost over‐estimation include a less than predicted level of compliance (EPA’s regulated gas regulation) and over‐estimated direct costs (OSHA’s Vinyl Chloride regulation), to name a few (Harrington, Morgenstern & Nelson, 2000). 9 In general the EPA determines the safety of a pesticide or other toxic chemicals based on tests of individual chemicals. In reality, we are exposed to many of these chemicals at the same time, and even when the physical exposure occurs at different times, many of these chemicals remain in the body for long periods. We have no knowledge of the synergistic effects of these chemicals in any combinations, but researchers are beginning to see indications that these effects are harmful to our health even in small doses (Washington Toxics Coalition, 2004). In 1996, after many studies (the first in 1957) suggested the existence of synergistic effects, the EPA was required to include cumulative effects of pesticides when setting tolerance levels when the pesticides have the same mechanism of toxicity (i.e., cause liver cancer after being ingested) (Kepner, 2004). What Environmentalists Need to Know – (2) Optimum Pollution 16 relative to the costs is one way to couch them in economic relative to the costs is one way to couch them in economic One last little bit of theory that terms, which often holds a lot of sway in the political process. also has a practical edge to it. Society expends its resources – If we organized society according to this logic we would do financial, social, and political – on things very differently. We would likely spend less money all sorts of things that it deems on maintaining thousands of active nuclear warheads and important, and which hopefully more money on prenatal and infant nutrition and confer significant benefits to education. We would also likely shift environmental various groups of people within regulation more towards reductions in heavy metals such as lead, mercury, and benzene, and perhaps focus a little society and/or society as a whole. less on reducing chemicals that at current levels don’t offer If we had a completely rational much more in the way of benefits, such as dietary exposure manner of distributing these to certain pesticides. 10 resources would it make sense to spend money on a program that Summary cost $1,000,000 for every life saved Economists approach the issue of pollution in much the when another program could save same way as they approach the issue of how markets a life for $1,000? Put another way, allocate other goods and services. Pollution is a bad thing, wouldn’t it make more sense to but many times it is the result of producing a good thing, or shift resources from the $1,000,000 at least a thing that people want. Balancing the good and per life saved program to the one bad from pollution is similar to balancing the satisfaction that cost 1/1000th to save a life? (the good) we get when we consider buying a product or service against the amount of money we have to give up to get it (the bad). However, this framework is an aggregate framework that does not deal with issues of equity and fairness; just as the market does not guarantee everyone three meals a day and shelter, when left to its own devices, the market will not guarantee everyone relatively clean air and water. In addition, there is a lot more to environmentalism than simply determining the proper amount of pollution in society; we have many types of natural resources that we value and strive to protect. For this we now turn to how economists value ecosystems. References Arrow, K. J., M. L. Cropper, G. C. Eads, R. W. Hahn, L. B. Lave, R. G. Noll, P. R. Portney. M. Russell, R. Schmalensee, V. K. Smith, and R. N. Stavins. (1996, April 12). Is there a role for benefit‐cost analysis in environmental, health, and safety regulation? Science, 272, 221‐222. Azzi, C. F. and J. C. Cox. (1973). Equity and efficiency in evaluation of public programs. The Quarterly Journal of Economics, 87(3), 495‐502. Retrieved December 26, 2007, from JSTOR database. Barde, J. and D. Pearce. (1991). Valuing the environment: Six case studies. London: Earthscan. Referenced in Mazurek. Janice V. (1996). The role of health risk assessment and cost‐benefit 10 One opinion is that we should worry less about further reductions from current levels in dietary exposure of pesticides and more about work place exposures, persistent environmental chemical contaminants, and probably synthetic hormones and hormone mimicking chemicals in food and other consumer products. (Hoffmann, Sandy, personal communication, May 2, 2008.) What Environmentalists Need to Know – (2) Optimum Pollution 17 analysis in environmental decision making in selected countries: An initial survey. Resources for the Future Discussion Paper 96­36. Retrieved September 8, 2008, from http://www.rff.org/rff/Documents/RFF‐DP‐96‐36.pdf. DSS Management Consultants Inc., and RWDI Air Inc. (2005). Replacing Ontario’s coal­fired electricity generation. Ontario: Ontario Ministry of Energy. Retrieved September 8, 2008, from http://www.localpower.org/documents/reporto_ome_costofcoal.pdf. Harrington, W., R. D. Morgenstern, and P. Nelson. (2000). On the accuracy of regulatory cost estimates. Journal of Policy Analysis and Management, 19(2), 297‐322. Hendrickson, J. (2006, February 1). The economics of fairness. Message posted to The Everyday Economist Blog: http://everydayecon.wordpress.com/2006/02/01/the‐economics‐of‐ fairness/. Kepner, J. (2004). Synergy: The big unknowns of pesticide exposure. Pesticides and You, 23(4), 17‐ 20. Retrieved September 7, 2008, from Beyond Pesticides: http://www.beyondpesticides.org/infoservices/pesticidesandyou/Winter%2003‐ 04/Synergy.pdf. Pearce, D., G. Atkinson, and S. Mourato. (2006). Cost­benefit analysis and the environment: Recent developments. Paris: OECD Publishing. Preview obtained September 6, 2008, at Google Books: http://books.google.com/books?id=nTPbxgsvBD0C&pg=PA194&lpg=PA194&dq=health+be nefits+dominate+environmental+cost‐ benefit&source=web&ots=fyvqo6G4V9&sig=WJtF3Pbv‐ VFHDX_IyNEFIzvBs7Y&hl=en&sa=X&oi=book_result&resnum=10&ct=result#PPA3,M1. Tsuchiya, A. and P. Dolan. (2006). Equity of what in health? Distinguishing between outcome egalitarianism and gain egalitarianism. University of Sheffield Working Paper. Retrieved December 26, 2007, from http://www.shef.ac.uk/content/1/c6/01/87/47/DP0611.pdf. United Nations Committee on Economic, Social, and Cultural Rights. (2002). The right to water (General Comment No. 15 (arts 11 and 12)). New York: Author. Retrieved October 14, 2007, from http://www.unhchr.ch/html/menu2/6/cescr.htm. United Nations General Assembly. (1948). Universal declaration of human rights (Resolution 217 A (III)). New York: Author. Retrieved October 14, 2007, from http://www.un.org/Overview/rights.html. US‐China Joint Economic Research Group. (2007, December). US­China joint economic study: Economic analyses of energy saving and pollution abatement policies for the electric power sectors of China and the United States, Summary for Policymakers. Retrieved September 6, 2008, from Environmental Protection Agency: http://www.epa.gov/airmarkets/international/china/JES_Summary.pdf. Warren, W. (2005, May 5). Comments on OMB draft report and guidelines. [Letter to the Office of Management and Budget]. United States Congress. Retrieved September 8, 2008, from http://www.whitehouse.gov/omb/inforeg/2003report/334.pdf. Washington Toxics Coalition. (2004). Many U.S. residents carry toxic pesticides above “safe” levels. Press Release. Washington, DC: Author. Retrieved October 14, 2008, from http://www.watoxics.org/pressroom/press‐releases/pr‐2004‐05‐11. What Environmentalists Need to Know – (2) Optimum Pollution 18 Chapter 3 Valuing Ecosystems In addition to addressing issues related to toxic pollution, conserving ecosystems and the species that inhabit them are the most important issues that confront environmentalists. Rarely does a month go by without a major news story concerning ecosystems under strain or species facing extinction. Most people, even those who wouldn’t consider themselves environmentalists, believe that we have a moral obligation to protect our natural heritage. 1 For those who directly rely on ecosystems for their livelihood, it is often an issue of survival. The problem, once again, is that preserving environmental resources is not only very difficult in practice but sometimes also very costly. How do we prioritize what to conserve? What are the criteria we should use? Once we have answered these questions we then must determine who should pay for the desired course of action and how these decisions will be enforced. But first we need to think about what it is we want to conserve before we begin to figure out how to do so. Ecosystems provide a wide range of benefits to society; they provide productive services such as food, fiber, and water, regulating services such as flood and disease control, wildlife services such as recreational and cultural benefits, and supporting services such as nutrient cycling that maintain the conditions for life on Earth. While this broad range of services has been acknowledged by scientists and economists for quite some time, until relatively recently there have been very limited attempts to actually quantify them in a comprehensive manner in order to assign them economic value. 2 Unfortunately, the result has been that these benefits are largely ignored in the public policy process. It is one thing to make note of the flood control potential of a marshlands ecosystem, and another to say that it provides flood control protection on the order of hundreds of millions or billions of dollars each year. 3 The latter is much more likely to get a policymaker’s attention. The absence of specific information on ecosystem services can be thought of as a form of market failure, as discussed in chapter 1. Markets are very likely to undervalue ecosystem services (and therefore not preserve them to the extent that they should) if these services are not in some ways quantified, recorded, and the information disseminated. Only then can actors, whether they are private companies, local or national governments, or international organizations take these values 1 In the next chapter we will examine the notion that species and natural heritage are priceless. beneficial to humans. Marsh described the elements—water, soil, animals, and plants—as gifts from God, and refuted the idea that natural resources are infinite. However, in the context of the high levels of industrial production taking place at the time, Marsh’s ideas received little following. In the 1970s, ecologists and economists began studying ecosystems from various perspectives, and ecosystem services became an important concept (Bao, Wu, Wang & Liu, 2007). 3 In 1999, the 3.5 million acres of wetlands along the Louisiana coast were estimated to have the capacity to prevent $728 million to $3.1 billion worth of storm damage (LaCoast, 1999). A study on restoring the 100‐ year flood zone associated with the Upper Mississippi watershed indicates that restoration to this level will save more than $16 billion in projected flood costs. The Charles River in Massachusetts is estimated to protect the area from an average $17 million of property damage annually (US EPA, 2006). 2 In his 1864 book Man in Nature, George Marsh first brought up the idea that ecosystems perform services What Environmentalists Need to Know – (3) Valuing Ecosystems 19 into account when deciding on alternative uses of ecosystems or the activities that will impact them. In order to fill this void, numerous consultants, non‐governmental organizations, and academics are busy trying to put monetary values on hitherto undocumented ecosystem services. 4 This work is going a long way towards demonstrating the tremendous economic value that ecosystems provide across a wide range of users. Much of this work is uncontroversial, at least conceptually. Ecosystems provide many direct and measurable services, which even if difficult to quantify, are easy to catalog. For example, if a watershed above a city helps to purify the city’s drinking water, which in turn saves the city the money required to build a water filtration plant, it is reasonable to assign the value of water purification services to the watershed ecosystem. If a river provides low‐cost transportation in an area, then the difference between the cost of shipping goods using the river and the cost of using the next best option is one of the ecosystem services that the river provides. In economies that are dependent on extracting natural resources from ecosystems, such as timber, food, and medicinal plants the value of these goods can be calculated in a relatively straight‐forward manner and attributed to ecosystem services. In addition, we can often estimate the value of our recreational use of ecosystems because we leave behavioral traces when making use of these services that can be quantified. Whenever we view wildlife, go hunting, camping, rafting, surfing, scuba diving, or bird watching we spend money along the way, which can be recorded and incorporated into an economic valuation. Revenue from tourist operations, park fees, the supporting services in the area such as restaurants, stores, and hotels, as well as the distance people travel to seek out nature recreation can be used to more precisely estimate the total economic impact of the demand for nature‐based activities. Again, this is relatively uncontroversial, even if the specific techniques are complex, imperfect, and require certain behavioral and statistical assumptions. It is reasonable that places that people spend lots of money to get to and enjoy, such as Yosemite National Park, the surf breaks of California, or the dunes of Cape Cod, have more aggregate recreational value than locations that are rarely visited. Remember, recreational services are but one among many ecosystem services and a far‐removed ecosystem that tourists never visit may still be highly valued for other reasons. Most controversial are the benefits that we derive passively from ecosystems. There are many places in the world that most of us will never visit, and yet, we care about what happens to them because we value their existence independent of whether we actually make direct use of them or not. We are happy to hear that they are being preserved and protected, and saddened when we learn of their destruction. Many of us give charitable contributions to organizations that help protect these distant ecosystems, which we may only ever see in pictures and film. Part of the value may be based on our desire to pass natural heritage off to future generations, and also perhaps, because we want to reserve the option to visit these unique places one day, even if we may not actually get the opportunity. (World Bank, 2004), World Resources Institute, United Nations Environmental Program (UNEP), United Nations Development Program (UNDP) (World Resources Institute, 1998), and the Global Environment Facility (GEF) are all actively attempting to valuate ecosystem services (UNEP, 2006). Also see The Natural Capital Project at http://www.naturalcapital.org. 4 The World Bank’s Environment Department, The World Conservation Union (IUCN), Nature Conservancy What Environmentalists Need to Know – (3) Valuing Ecosystems 20 Regardless of the reasons why we care about those ecosystems that do not directly impact our daily lives, and for which we have no direct experience, these passive‐use (or non‐use) values are real. If we could somehow quantify them they would likely be very large, both because of the depth of many people’s commitment to ecosystem preservation and simply because there are so many people on the planet. Some may suggest that contributions to conservation organizations capture the full extent of people’s existence value for ecosystems, but this is not the case. Many people believe that it is the role of government to protect our natural heritage, not private charity. In addition, since nature conservation is a public good, there are many people who are content to let other people pay for ecosystem preservation while they sit back and derive the benefits. If push came to shove, however, these people would be willing to pay some amount to preserve ecosystems because they do value their existence. So how do we go about estimating these passive‐use values, for which we do not observe behavioral traces in everyday activity? This is a very difficult task. The best economists have come up with is to devise surveys that attempt to elicit these values. They interview people and present them with hypothetical situations having to do with ecosystem protection or preservation. Ultimately, the participants are asked how much they would be willing to pay to support a given action that will lead to improvements in the ecosystem, whether it be the purchase of new land, restoration efforts, or efforts to limit ongoing damage. This survey technique is called contingent valuation; 5 it used throughout the world to estimate the passive‐use value of ecosystems. By posing realistic scenarios that confront people with difficult choices contingent valuation surveys are able to elicit information that can inform us of the magnitude of the non‐use values, even when the ecosystems in question are distant. For example, if the government is considering a program to restore a degraded river, the survey may guide participants through a description of the current state of the river and what the government proposes to do to improve the fish and animal population and water quality. Then the participants might be asked if they would be willing to pay a given amount in extra taxes in order to enact this program. The most important element of the survey is to convince the participants that their answer is consequential; that is, if they answer ‘yes’ that they are willing to pay the given amount for the restoration project, this will influence the government’s decision whether to proceed with the 5 Contingent valuation is sometimes referred to by the letters CV or CVM for contingent valuation method. While the exact number of CV studies is difficult to quantify due to the high volume of papers published by non‐economic journals in recent years, more than 6000 contingent valuation studies have been published since the early 1960s. The number of studies published annually grew exponentially throughout the late 70s, 80s, and early 90s. Since then, the number has remained steady at 400‐500 studies per year. Studies have been produced in all 32 OECD countries, and more than 90 developing countries. As of November 19, 2007, the Environmental Valuation Resource Inventory, an international online project spearheaded by Environment Canada, lists 1178 studies conducted in North America, 849 in Europe, 306 in Asia, 75 in Africa, and 43 in South America. This website is not complete and is continuously updated. Studies are most commonly conducted in order to value air and water safety standards, as well as protecting natural and cultural resources, improving public utilities and schools, transportation issues (Carson, in press). An online database has been designed to allow policy makers, scientists, and economists to match CV study sites with current policy sites to estimate the value of policy changes under consideration (Environmental Valuation Reference Inventory, 2007). What Environmentalists Need to Know – (3) Valuing Ecosystems 21 program and actually enact the tax. If they don’t believe that their answer will have any influence on the final decision, then they may simply answer ‘yes’ to the payment question because it feels like the right thing to do, not believing that they will have to bear any real costs for doing so. The contingent valuation method was famously used to help estimate the damage claims against the Exxon Corporation after the Exxon Valdez oil spill in Prince William Sound, Alaska in 1989. 6 In a precedent‐setting move, a federal court ruled that lost passive‐use values due to the spill needed to be included in the damage estimates. This was the first time that a U.S. court explicitly acknowledged that citizens derive economic value from the mere existence of the ecosystems in the government’s care, even if they do not directly use them and may never do so. The contingent valuation survey estimated lost passive use values of approximately $2.8 billion. The hypothetical scenario posed in the survey—that the government was planning on instituting a system of escort ships to prevent tankers from running aground—was eventually adopted. 7 Summary Increasingly, efforts are underway to assign monetary values to ecosystem services. Some methods are much more straight‐forward than others, both conceptually and in practice, but by using a combination of tools it is possible to capture a wide range of ecosystem benefits. This work is important because identifying both the source of the values and their approximate magnitude is an important first step in determining how to preserve and protect ecosystems. But monetary estimates of ecosystem services are just that: estimates. In many cases they may be extremely imprecise. What these tools at best provide is a reasonable range of values. They allow environmentalists to compare different sources of value, which is often important for figuring out the most effective conservation strategies. For example, if it can be shown that a wetlands ecosystem provides more value for storm protection than duck hunting, a stronger case for conservation may be made working with adjacent landowners than with hunting groups. If both of these services combined provide more value than a proposed development project than these numbers may be used to sway the agencies in charge of approving the project. Of course, there is always the risk that the ecosystem benefits will actually be less than the value that could be generated by a new development project. This underlies one of the inherent risks in assigning monetary values to ecosystems; there is no guarantee that the ecosystems will always win in an economic calculus. This is why some 6 The use of contingent valuation to estimate the lost passive use values from the spill was a major source of controversy, especially given the huge stakes involved. The arguments pitted top economists against each other, some arguing that contingent valuation does not measure what it purports to and is an unreliable tool, with others arguing that the estimates derived are defensible. One of the off‐shoots of these arguments was the convening of a prestigious panel to review the contingent valuation method and make recommendations to the government as to whether it is admissible in courts and under what criteria. The panel found that under strict conditions contingent valuation can provide reasonable estimates of passive use values, although these conditions have been rarely met in practice, and the controversy continues. For a description of the panel’s recommendations see the paper by K.R. Arrow, et al (1993). 7 For more information on how CV was used in the Exxon Valdez case see the paper by Richard Carson, et al (2003). What Environmentalists Need to Know – (3) Valuing Ecosystems 22 environmentalists are deeply suspicious of the race to put monetary values on environmental resources, even if they recognize the powerful economic forces at work that they must contend with. Both the ethical and tactical problems associated with assigning monetary values to the environment arise in almost all economic policy responses to environmental issues, and therefore, we must now address them directly. This is the issue to which we now turn. References Arrow, K., R. Solow, P. R. Portney, E. E. Leamer, R. Radner and H. Schuman. (1993). Report of the NOAA panel on contingent valuation. Federal Register, 58(10), 4601‐4614. Bao, Y., W. Wu, M. Wang, W. Liu. (2007). Disadvantages and future research directions in valuation of ecosystem services in China. International Journal of Sustainable Development and World Ecology, 14(4), 372‐381. Retrieved November 17, 2007, from ProQuest database. Carson, R.T. (in press). Introduction. In Contingent Valuation: A Comprehensive Bibliography and History. Northampton, MA: Edward Elgar Publishing. Carson, R. T., R. C. Mitchell, M. Hanemann, R. J. Kopp, S. Presser, and P. A. Ruud. (2003). Contingent valuation and lost passive use: Damages from the Exxon Valdez oil spill. Environmental and Resource Economics, 25, 257‐286. Environmental Valuation Reference Inventory. (2007). Geographic characteristics. Retrieved November 19, 2007, from Tour EVRI: http://www.evri.ec.gc.ca/. LaCoast. (1999, Summer). Other impacts from coastal wetlands. Retrieved November 19, 2007, from http://www.lacoast.gov/watermarks/1999c‐summer/4other/. U.S. Environmental Protection Agency. (2006). Wetlands: Protecting life and property from flooding. (Office of Water Rep. No. EPA843‐F‐06‐001). Retrieved November 17, 2007, from http://www.epa.gov/owow/wetlands/pdf/Flooding.pdf. United Nations Environment Program / Global Environment Facility. (2006, August). Draft regional guidelines for the fifth meeting of the RTF‐E in Sabah, Malaysia. Sabah, Malaysia: Author. Retrieved October 27, 2007, from http://earthmind.net/marine/docs/draft‐regional‐ guidelines‐valuation.pdf. World Bank, The. (2004). How much is an ecosystem worth? Assessing the economic value of conservation. World Bank Working paper no. 30893. Retrieved October 27, 2007, from http://www‐wds.worldbank.org. World Resources Institute, United Nations Environment Program, United Nations Development Program, and World Bank. (1998). World resources 1998­99: Environmental change and human health. Washington, DC: Author. Retrieved October 27, 2007, from http://pubs.wri.org/pubs_description.cfm?PubID=2889. What Environmentalists Need to Know – (3) Valuing Ecosystems 23 Chapter 4 Putting Monetary Values on the Environment and Living Things In the first three chapters I have outlined the basic conceptual framework of how economists approach environmental problems. Economists do not begin with the assumption that all pollution and environmental degradation should be eliminated; they believe that society must strike a balance between industrial development and environmental quality. Much of the methodology that economists employ in order to help society weigh the trade‐offs between environmental goals and the production of goods and services relies on putting monetary values on the environment and living things. Economists do this for a simple reason: money provides a convenient metric. To the extent that we can translate societal costs and benefits into monetary values we can then easily compare them. This can help us choose priorities and make the most cost‐effective choices. But money is not the only metric we could use. In fact, there is virtually no limit to the number of metrics we could come up with. We could measure things in equivalent amounts of copper or gold, pencils, computers, or children that could be fed. There are many benefits of using money as the metric, as well as some significant drawbacks. The first I have already touched upon; there may be some things that we consider human rights, which should not be decided based on notions of cost‐effectiveness. For example, if access to clean water is considered a human right than we wouldn’t want a government deciding not to build a new water delivery system because the monetary benefits of providing the water (however defined) were found to be less than the costs. Yet even in such a case, it would be reasonable to assess different costs of providing the water and using these to determine the most efficient way to provide this right. The notion that certain levels of environmental quality and access to natural resources should be guaranteed, is also a way of saying that they are priceless. Many reasonable people argue that environmental treasures, such as our National Parks, unique species, and human life are all priceless. But the reality is that they are not; I have proof. Last year I decided to take a vacation to Europe. It cost a few thousands dollars (more than I anticipated since the dollar was so weak). What else could have I done with that money? I could’ve given it to charities that help starving children or AIDS patients, or those like the Nature Conservancy that protect endangered ecosystems. But I didn’t. Therefore, it is clear that I do not think that the environment and living things are priceless; I could have used a relatively small sum of money (small when compared to priceless, which is infinity) to help save people and ecosystems and chose not to. Just about everyone in the world makes decisions similar to mine all the time, which proves that we do not act as if life and the environment are priceless. And for economists it is actions, not words, which matter. Some may think that my example is unfair. Let me be clear; I do care a lot about the disadvantaged and threats to the environment. I give a lot of money away to support these causes. And I am not What Environmentalists Need to Know – (4) Monetary Values 25 alone; there are many more charitable than I. But there is a point at which I stop giving and so do most people. It is at a point well before we reach a simple subsistence lifestyle. We may put a high value on the needs of others and the environment, but not a value that comes close to showing the type of dedication that would constitute a true belief that the well‐being of others and the environment are priceless. Even those who are most charitable still put a premium on a high standard of living for themselves and their families. There are many other ways to demonstrate that virtually no one acts in a way consistent with the view that the environment and human life are priceless. Let’s take the speed limit. In most states in the USA it stands at 65 mph. It used to stand at 55 mph. This 10 mph increase has probably led to thousands of additional fatal accidents per year because the speed limit is highly correlated with fatalities; 1 the faster we go, the greater chance that we die when we crash and that we crash in the first place. And many of those killed in these accidents are completely innocent; they are simply the victims of other people’s mistakes. So why did we increase the speed limit in America? Because we valued the convenience of getting places faster more than we cared about the loss of life, even innocent life. In fact, if we really wanted to treat life as priceless we would make the speed limit very low, probably in the range of 15‐25 mph, but how many people would accept this? Close to zero. We can also see trade‐offs at work even in the most basic environmental activity: nature viewing. Many, if not most, environmentalists are driven to protect ecosystems by a deep desire to commune with nature. But this desire to visit natural habitats and interact with natural systems exacts a price. The roads that we cut through wilderness in order to reach them, the diseases and invasive species we introduce, and the pollution we generate put strains on fragile ecosystems. If we truly wanted to maximize the survivability of these systems, in many cases we would protect them and leave them alone. But we don’t. In fact, those of us who live in rural settings, perhaps in order to feel more in tune with nature and away from the hustle and bustle of modern industrial life, often impose more of a negative impact on just those natural systems that we want to protect. It is extremely inefficient and damaging to ecosystems to dissect them with country roads that serve very few people and which require driving much longer distances to get to work, town, and school. From a pure conservation standpoint, urban living is much more efficient. None of these critiques are meant to suggest that there is anything wrong or immoral about treating the environmental and living things as less than priceless. As economists have noted for a long time, humans are self‐interested beings. We are often generous, compassionate, and charitable, but not in the extreme. We balance our own needs and desires with what we feel are our obligations to others, the environment included. 1 The effects of raising the speed limit by ten miles per hour vary according to who is consulted. Some say that the higher speed limit leads to more deaths on rural highways (“Speed limit and deaths,” 1997), but others suggest that the overall death rate is lower (Koretz, 1997). According to the Insurance Safety Institute, the higher speed limit has led to an approximately 15% increase in deaths between 1995 and 1999 (“Insurance safety institute finds, 1999). What Environmentalists Need to Know – (4) Monetary Values 26 So while there are still problems with putting monetary One of the most dramatic values on the environment and living things, the “these things are priceless critique” is not entirely persuasive. examples in recent memory with respect to damage awards The biggest issue with monetizing the environment and occurred in the decision over how living things is not philosophical or ethical, but practical: to distribute the funds allotted to how do we do it in a defensible way? the families of the victims of 9/11. Kenneth R. Feinberg created a As mentioned in the previous chapter, some methods for detailed method for calculating assigning monetary values to environmental benefits are relatively uncontroversial. For example, if a fishery creates benefits based on victims’ age, the $50 million per year in revenues for the fishing industry and nature of their employment, and the surrounding local economy, then this is a reasonable their projected wealth (Chen, minimum starting point for the total value of the fishery. If 2004b). This created a major smog over a city decreases property values by $100 million controversy since the spouses of then this tells us something significant about the value that investment bankers received a lot people assign to better views and breathing cleaner air. more than spouses of janitors. If The most difficult issue we face is putting a dollar value on he had to do it all over again, human life and suffering, which is often necessary when Feinberg said that he would trying to quantify the benefits of a given pollution reduction simply give everyone an equal policy. For example, if reducing mercury emissions would share (Chen, 2004a). save 50 lives a year, but cost $1 billion to implement is it worth it? Policy‐makers face these type of questions all of the time. Probably the institution with the most experience dealing with monetary values for life is the court system. Damage claims for loss of life and pain and suffering are ubiquitous and juries are often faced with the task of granting monetary awards to those who have lost loved ones or suffered due to someone else’s negligence. 2 Ultimately, there is no completely satisfactory way to place a monetary value on human life. One million dollars, ten million, twenty? There is always some degree of arbitrariness to the exercise. What economists have often done, which has filtered into the legal system, is to take the sum of the total of earnings over a person’s lifetime. One way to make this equitable from a societal standpoint is to take the average across all people in order to determine the average lifetime earnings of the population; this ensures that poor and rich alike are weighted equally in the calculation. This doesn’t address issues of sorrow and pain that a person’s family feels, but there is essentially no satisfactory way to put a dollar value on this. We could begin to approximate pain and suffering damages by measuring the amount of lost time at work, but this only scratches the surface with respect to the true extent of the damages. In the 2 Based on studying the results of negligence trials where the defendant is accused of driving under the influence, juries value the loss of life at $2.3million to $4.9million (net value after subtracting punitive, property, and medical damages. Most states do not allow the value of life to be recovered when the injured party has died; however, since most states allow loss of enjoyment of life awards, this study modeled awards based on a percentage of permanent disability and estimated the value of life as the value for 100% permanent disability (Smith, 2000). What Environmentalists Need to Know – (4) Monetary Values 27 courts the accepted range for pain and suffering compensation is up to several million dollars depending on the extent of the injuries. 3 The problems don’t end here. One of the most interesting aspects of putting monetary values on human life is how dependent it is on the statistical nature of the lives in question. For example, let’s go back to the issue of whether reducing mercury pollution that kills 50 people a year would be worth a cost of $1 billion. It is only when we talk about people in the abstract that we can even begin to make this judgment. What if, on the other hand, we knew exactly which 50 people were going to die? Could we then sit down and reasonably argue over whether it was okay to let these 50 people die instead of making the $1 billion investment? I doubt it. The same goes for our desire for the 65 mph speed limit. It would never be acceptable if we actually knew for sure which thousands of citizens would be mangled in the increased number of accidents. But the randomness that comes with the costs of our actions makes them statistical exercises. We know that some people somewhere at some future time will die because of certain policy choices, but the uncertainty that surrounds the circumstances allows us to distance ourselves from these otherwise unacceptable costs. This paradox raises some profound questions. Is this apparent contradiction actually beneficial? Does it allow us to bypass our sentimentality that might otherwise cripple our material progress? And doesn’t this material progress not also create the conditions for greater life span and prosperity? There are no easy answers to these questions. The bottom line is that putting monetary values on human life will always be problematic, somewhat arbitrary, and subject to valid criticism. For this reason, it is often preferable to think about environmental problems from another angle. What are the most cost‐effective pollution reduction policies that will reduce the loss of life and improve health outcomes? This is often the actual task policy‐makers face; they are given mandates to reduce mortality and illness from pollution and then must figure out the best ways to achieve these results. Where these targets come from is worthy of an entire book unto itself. One of the first things one notices when examining many environmental targets established by government agencies is that they often come in round even numbers; e.g. reductions in pollution of 20% or 50%; it is rare that a government puts forth a plan to cut emissions by 13.7%. 4 Numbers are often chosen that are easily digestible by the public and can demonstrate a clear commitment to pollution reduction. In 1988, a survey of jury awards found that pain and suffering payments are dependent on the total economic loss, and have average awards (in 1988 dollars) of $9000 to $270,000 (Rodgers, 2003). In more recent values, a New York trial lawyer publishes ranges of awards for various injuries by New York juries. These values range from $0 to $2million for injury to appendages, and up to $10 million for head, neck, and back injuries (Hochfelder, 2006). 4 Sulfur dioxide is to be reduced to 50% of 1980 levels (Schmalensee, Joskow, Ellerman, Montero & Bailey, 1998); the Kyoto Protocol mandates a 5% reduction of 1990 levels (“The Kyoto Protocol”, 2007); California is reducing greenhouse gas emissions to 80% of 1990 levels by 2050, Florida is reducing greenhouse gas emissions by 80% of 1990 levels by 2050, and the states involved in the Regional Greenhouse Gas Initiative will reach their first goal by reducing greenhouse gas emissions to 10% of 1990 levels by 2010 (Royden‐ Bloom, 2007); twenty‐eight eastern states are reducing SO2 by 70% and NOx by 50% according to the Clean 3 What Environmentalists Need to Know – (4) Monetary Values 28 However, in most cases there is at least some scientific basis that accompanies the given number. For example, in the 1990 U.S. sulfur dioxide “cap and trade” program the goal was to significantly reduce acid rain and the target chosen was based on an analysis of the reductions required. But even behind this decision there lurked an implicit benefit‐cost analysis and monetary valuations of human lives and the environment. We know that the particulate pollution from sulfur dioxide leads to severe health problems and that even the initial 50% reduction from 1980 levels would not completely eliminate the acid rain problem. Why didn’t the program call for immediate 60% or 70% reductions, which would have resulted in less smog and less environmental degradation? The likely answer is that there wasn’t sufficient political will to push for greater reductions because there were limits to the costs that regulators wanted to impose on the coal industry. In effect, there was a point at which the agencies involved didn’t think it was worth it to push for greater environmental improvements. 5 Many U.S. environmental statues are unique in that they specifically mandate that agencies are not allowed to use benefit‐cost analysis in their decision‐making; the Clean Air Act, the Clean Water Act, and the Environmental Protection Agency’s (EPA) pesticide permitting process are all required by law to be carried out entirely on the basis of serving the public interest irrespective of the costs imposed on industry (and indirectly on consumers, who may face higher costs as a result). 6 But is it possible for regulating agencies to truly divorce themselves from weighing costs and benefits when making important decisions about human health and the environment (putting aside for the moment whether it’s desirable for them not to do so as the laws require)? In a landmark 1992 study of the EPA’s decisions regarding prohibiting the use of pesticides, a team of researchers discovered that while the EPA didn’t carry out an explicit benefit‐cost analysis when deciding which pesticides to ban under which uses, the agency did in fact weigh costs and benefits Air Interstate Rule (“Clean Air Interstate Rule,” 2007); the 33/50 program in the US met and exceeded its goals to reduce 17 chemicals by 33% by 1992, and by 50% by 1995 (US EPA, 1999). 5 Although in fairness the program did call for continual cuts. In the first phase, the original 1995 allocation of 8.7 million tons of emissions allowances were gradually reduced to approximately 7.4 million tons in 1999. During this time, companies banked their unused allowances, creating the overall effect of 16.6 million tons of usable allowances in 1999. In the second phase, the annual allocation jumped to around 10 million tons in 2000 and then remained steady. However, as companies used up their banked allowances, the total allowances available decreased from 21.6 million tons in 2000 to 16.4 million tons in 2005 (US EPA, 2006). Overall, the effect of these emissions allocations is that the level of SO2 emissions in 2005 was 57.9% of the 1980 level (15 million tons emitted in 2005, compared with 25.9 million tons emitted in 1980) (“Air emissions summary through 2005,” 2007). 6 Recently, the US Supreme Court agreed to hear arguments in a case (Entergy Corporation v. Environmental Protection Agency (EPA), No. 07‐588) regarding proposed guidelines (published in 2004) to regulate under the Clean Water Act “cooling water” intake and outflow mechanisms according to best available technology. The issue in question is that the EPA regulations offer individual operators to request a variance if costs would be significantly higher than the environmental benefits. The US Court of Appeals for the Second Circuit ruled in 2007 that the EPA did not have the right to participate in the type of cost‐benefit analysis proposed and that since cost considerations in the proposed guidelines were unclear, the regulation was sent back to the EPA for reconsideration. Entergy Corporation is now challenging this ruling (Greenhouse, 2008). In 2001, the US Supreme Court upheld prior precedent that the EPA was not to consider cost to industry when setting national ambient and air quality standards. The constitutional mandate of the Clean Air Act is that the EPA is to consider human health risks and factor in a margin of safety when setting the standards (EPA v. American Trucking, 2001). What Environmentalists Need to Know – (4) Monetary Values 29 very much as if they had (Evans, Berardi, Ducla‐Soares, & Portney. 1992). Pesticides that posed a greater risk to consumers and pesticide applicators were banned more often than those posed a lesser risk, while at the same time, those which imposed greater costs on farmers were banned less frequently than those which imposed smaller costs. I suspect that if this study were updated today the results would hold. Regulators are faced with a wide variety of often competing interests and they must find some logical way to prioritize their regulatory decisions. Some weighting of the costs of regulation against the benefits to human health and the environment are inevitable. Summary Whether we explicitly assign dollar values to the environment and living things in the public policy arena, there is always an undercurrent of monetary valuation running just below the surface; it is inescapable. Economists contend that it is preferable to make these valuations and the assumptions that accompany them transparent and an integral part of the decision‐making process. This does not mean that any action where costs are greater than benefits is unwarranted; only that good reasons should then be provided for pursuing such a course. It is a misperception that assigning monetary values to the environment and living things automatically cheapens them and renders them mere commodities in the public policy process. In many cases, if attempts are not made to assign monetary values to the environment, the default value is zero or close to zero. As we continue to document the economic values of ecosystems and make them salient in the policy arena it becomes much more difficult to ignore them. There are cases where opponents of environmental regulations or environmental preservation may be able to use economic values to gain the upper hand; not every economic exercise will show environmental goals as the best choice for society as a whole. But environmentalists should not let this dissuade them from embracing environmental valuation. Every day scientists are discovering new ways that ecosystems provide societies with benefits and new ways that industrial pollutions threaten human health. 7 In addition, people all over the world are increasingly seeking nature‐based recreation and enjoyment, putting a premium on environmental quality. Given these trends the dollar value of the environment is poised to grow exponentially, which will help environmentalists make the case for increased preservation and pollution reduction. 7 Ecosystem services are increasingly recognized as essential to human health and well being; these services are divided into four categories by the 2005 Millennium Ecosystem Assessment report: Provisioning (food, fresh water, wood and fiber, fuel), Regulating (climate regulation, flood regulation, water purification, disease regulation), Cultural (spiritual, aesthetic, recreation, education), Supporting (primary production, soil formation, nutrient cycling) (Millennium Ecosystem Assessment, 2005). In terms of the effects of industrial pollutants, one study found that on average, adults in the industrialized nations caries a toxic load of 91 chemicals each, representing 167 different chemicals (Environmental Working Group, 2003). What Environmentalists Need to Know – (4) Monetary Values 30 References Air emissions summary through 2005. (2007). Air Trends. Retrieved November 4, 2007, from Environmental Protection Agency: http://epa.gov/airtrends/2006/emissions_summary_2005.html. Chen, D. W. (2004a, June 16). Special master steered a program through its many curves. The New York Times Online. Retrieved October 28, 2007, from www.nytimes.com: http://query.nytimes.com/gst/fullpage.html?res=9500E5D91E30F935A25755C0A9629C8 B63&n=Top/Reference/Times%20Topics/People/F/Feinberg,%20Kenneth%20R. Chen, D. W. (2004b, November 18). $7 billion for the grief of Sept. 11. The New York Times Online. Retrieved October 28, 2007, from www.nytimes.com: http://www.nytimes.com/2004/11/18/nyregion/18fund.html?_r=1&n=Top/Reference/Ti mes%20Topics/People/F/Feinberg,%20Kenneth%20R.&oref=slogin. Christine Todd Whitman, Administrator of Environmental Protection Agency, et al. v. American Trucking Associations, Inc. et al., 531 U.S. 457 (2001). Retrieved September 15, 2008, from LexisNexis Academic database. Clean Air Interstate Rule. (2007). Retrieved November 4, 2007, from Environmental Protection Agency: http://www.epa.gov/cair/index.html. Environmental Working Group. (2003). BodyBurden: The pollution in people. (Executive summary). Oakland, CA: Author. Retrieved June 1, 2008, from http://archive.ewg.org/reports/bodyburden1/es.php. Evans, W. N., S. J. Berardi, M. M. Ducla‐Soares, and P. R. Portney. (1992). The determinants of pesticide regulation: A statistical analysis of EPA decision making. Journal of Political Economy, 100(1), 175‐197. Greenhouse, L. (2008, April 15). Court sets fall debate on standards of water act. The New York Times Online. Retrieved September 15, 2008, from www.nytimes.com: http://www.nytimes.com/2008/04/15/washington/15scotus.html?_r=1&oref=slogin. Hochfelder, J. (2006‐2007). The Hochfelder Report. Retrieved September 14, 2008, from http://www.newyorkinjurycases.com/personal‐injury‐article.asp?id=19408. Insurance safety institute finds higher speeds lead to increase in mortalities [5 Edition]. (1999, January 19). Journal of Commerce. Retrieved November 2, 2007, from ProQuest. Koretz, G. (1997). Hit the gas‐‐and save lives: The paradox of higher speed limits. Business Week, 3548, 20. Retrieved November 2, 2007, from ProQuest. Millennium Ecosystem Assessment, 2005. Ecosystems and human well­being: Synthesis. Washington, DC: Island Press. Retrieved May 22, 2008, from http://www.millenniumassessment.org/en/synthesis.aspx. Rodgers, G. D. (1993). Estimating jury compensation for pain and suffering in product liability cases involving nonfatal personal injury. Journal of Forensic Economics, 6(3), 251‐262. Retrieved September 14, 2008, from http://www.nafe.net/JFE/j06_3_06.pdf. Royden‐Bloom. (2007, September 18). State greenhouse gas (GHG) actions. National Association of Clean Air Agencies (NACAA). Retrieved October 12, 2007, from http://www.4cleanair.org/Documents/StateGHGActions‐chart.pdf. Schmalensee, R., P. L. Joskow, A. D. Ellerman, J. P. Montero, and E. M. Bailey. (1998, Summer). An interim evaluation of sulfur dioxide emissions trading. Journal of Economic Perspectives, 12(3), 53‐68. Smith, S. V. (2000, March 22). Jury verdicts and dollar value of human life. Journal of Forensic Economics. Retrieved September 14, 2008, from Access my Library: http://www.accessmylibrary.com/coms2/summary_0286‐28755781_ITM. Speed limit and deaths [Letter]. (1997, October 19). New York Times (Late Edition (east Coast)), p. 14. Retrieved November 2, 2007, from ProQuest. What Environmentalists Need to Know – (4) Monetary Values 31 The Kyoto Protocol – A brief summary. (2007). European Commission. Retrieved November 4, 2007, from EUROPA: http://ec.europa.eu/environment/climat/kyoto.htm. U.S. Environmental Protection Agency. (1999). 33/50 Program: The final record. (Office of Pollution Prevention and Taxes Rep. No. EPA‐745‐R‐99‐004). Retrieved November 19, 2007, from http://www.epa.gov/opptintr/3350/3350‐fnl.pdf. U.S. Environmental Protection Agency. (2006). SO2 emissions and the allowance bank, 1995‐2005. Acid rain program: 2005 progress report. (EPA‐430‐R‐06‐015). Washington, DC: Author. Retrieved May 20, 2008, from: http://www.epa.gov/airmarkt/progress/docs/2005report.pdf. What Environmentalists Need to Know – (4) Monetary Values 32 Chapter 5 Valuing Future Generations If valuing current generations and their environmental needs wasn’t difficult enough, policy makers also have to contend with how to value future generations. This is not an abstract issue; the biggest environmental issue of all, climate change, has huge implications for future generations (as well as current generations); 1 and so do other issues, such as the depletion of non‐renewable resources, the degradation of unique and irreplaceable ecosystems, nuclear waste disposal, and the hole in the ozone layer. A few questions naturally arise: How much voice should be given to the needs of the future when making decisions that affect us today? Put another way, if people from the future could influence our decisions what would they ask us to do? And should we listen? For many environmentalists the answers are obvious: future generations want us to dramatically decrease air and water pollution and increase the amount of biodiversity preservation so that they will inherit a cleaner environment rich with life, in which they won’t have to face any catastrophic environmental risks. Are these reasonable assumptions to make? Since we have no way of interviewing future generations in order to elicit their opinions, it may seem impossible to answer this question. But we can look at the actions of generations before us and ask ourselves whether we would have asked the same of them. For example, I think there is no doubt that if Americans could go back in time we would tell the early American settlers not to wipe out most of the buffalo population. 2 We would also inform them of the risks of rampant and unchecked industrialization that made many cities nearly unlivable and exacted a terrible price on the environment that we inherited. But if we compared our lifestyles today with those 100 or 200 years ago we would also likely acknowledge that some of the historical pollution and environmental degradation paved the way for the immense material progress that we now enjoy. As with present‐day environmental decisions, we would still be cognizant of the need to balance the benefits of smaller ecological impacts in the past against the benefits that were derived from them. There is another angle for us to consider. Most of us alive today, especially in the developed world, are much wealthier than our distant ancestors. We enjoy better health, longer life spans, more leisure time, and more choices. Would it be right of us to ask those in the past to cut down fewer trees and pollute the water less if these activities were integral to the modest improvements in their standards of living? Why should they have sacrificed so that we, who are immeasurably richer, could enjoy even greater prosperity today? 1 If worst‐case scenarios come to pass our generation may be dooming future generations to a much lower overall standard of living, including the decimation of many ecosystems and species (Parry, Canziani, Palutikof, van der Linden & Hanson, 2007). 2 And certainly the Native Americans that they killed by the thousands as well. We would also be wise to tell them not to practice slavery. What Environmentalists Need to Know – (5) Future Generations 33 While these questions are somewhat abstract, it is not unreasonable to think along these lines. The future is uncertain and we may very well be passing on a planet in worse shape to the future generations. But we may not; even the best ecological models are imperfect and highly uncertain. What we do know for sure is that in the areas of medicine, transportation, computer technology, and virtually every other field the people of the 22nd century are likely going to inherit vastly superior technologies, which will have the potential to markedly improve their well‐being. Imagine if by the end of the century we eliminate cancer and heart disease or have computers that dramatically improve safety in all aspects of our lives. No doubt new technological improvements will also be made in pollution control technology and renewable energy. To the extent that there is a trade‐off between spending more money on environmental improvements versus other types of investments, we have to be careful before assuming that future generations would automatically choose less pollution and more nature reserves over better medicine or computer technology. How can we be certain what balance of resources the future generations would like us to invest in? Nobel Laureate Robert Solow, in his classic essay, Sustainability: An Economist’s Perspective, points out that we should be willing to sacrifice at least as much for present generations as we would be willing to sacrifice for future generations (1991). In other words, it would be odd to incur costs today that would benefit people a hundred years from now and not make the same sacrifices for those who are living in squalor and misery today, which according to the latest United Nation statistics stand at 980 million. 3 All of this raises a central question for economists, environmentalists, and policy‐makers: to what extent do environmental improvements actually require us to sacrifice resources that could be used to promote other goals? In other words, could we be at a point where current technology and know‐how is sophisticated enough that improving the environment can be a win‐win situation with positive economic returns? For example, would a massive effort to combat global warming actually lead to the development of new technologies that would help grow our economies and increase employment? If this were the case, then we could both be better off today and help secure a better environment for future generations; there would be no inherent conflict between the two and in many ways the whole above discussion would be moot (I will return to this issue later). The consensus view among economists, however, is that we are not yet at this point; promoting many of our environmental goals does require incurring societal costs. For example, the Stern Review, which represents probably the most comprehensive analysis to date on the economics of climate change, estimates the costs of sufficiently reducing the risks of climate change at $1.35 trillion per year by 2050. 4 If it is indeed the case that environmental goals require us to sacrifice resources, and hence some percentage of economic growth, we are back to where we started, confronted with the issue of how to weigh costs today against benefits in the future. In 2004, 980 million people worldwide lived on less than $1/day (Millennium development goals 2007 report, 2007). 4 The Stern Report estimates the costs of sufficiently reducing the risks of climate change at 1% of annual global GDP by 2050 (Stern, 2006). The World Bank estimates global GDP in 2050 at $135 trillion (World Bank, 2006), 1% of which is $1.35 trillion. 3 What Environmentalists Need to Know – (5) Future Generations 34 This is also the issue that the authors of the Stern Review had to deal with when it came to policy recommendations. Once they calculated the costs of greenhouse gas reductions they needed to see how these compared to the benefits of the reduced risk of climate change many decades, even centuries, out into the future. How do we best do this? Should a dollar spent today to prevent climate change weigh equally against a dollar in benefits 100 years from now? Enter the highly contentious world of economic discounting. Discount rates appear in many discussions of environmental policy, particularly in the context of benefit‐cost analyses and long‐range environmental planning. They are expressed in percentage terms; the higher the discount rate the more we value a dollar in hand today over one in the future (e.g. a discount rate of 10% makes benefits of climate change prevention 100 years from nowworth much less than if the discount rate were set at 5%). In order to compare costs today with benefits in the future the authors of the Stern Review had to choose a discount rate that reflected the degree to which we as a society (or world community) value a dollar in hand today over a dollar in the hands of future generations. Many environmentalists argue that the discount rate should be zero because it is immoral to value our well‐being over those in the future. But a zero discount rate implies behavior that we don’t exhibit anywhere in the world: saving virtually all of our money in order to pass it on to our children and grandchildren. 5 If we really believed that a dollar in the hands of those in the distant future was just as important as a dollar in our hands today, we could put most of our money in the bank, let it earn interest, and make those in the future much better off. Why would we spend so much money on frivolous things when that money could grow and provide much greater happiness to others 100 years from now? We do, however, save some amount of our income for future generations and make investments that require us to sacrifice in order to make them better off. But not at levels that would justify a zero discount rate. We still spend a lot today on things purely for our own benefit that are clearly luxuries. If a zero discount rate is not consistent with how we actually behave (at least the overwhelming majority of the time) then what discount rate should be chosen? The answer has serious implications. Discount rates are applied exponentially per year; if we value something at 5% less next year than we value it today, we value it at 10.25% less two years from now (0.052), 21.55% less four years from now (0.054), and so on. Put more concretely, if we estimated the benefits of climate change mitigation at approximately $1 trillion 100 years from now and we used a discount rate of 5% that $1 trillion would be only worth only $7.6 billion today. If instead we choose a near zero rate of 0.1% then that same $1 trillion 100 years from now would be worth over $900 billion today, more than 100 times the amount! 5 See Sir Partha Dasgupta and William Nordhaus for critiques on the discount rate used in the Stern Review (Dasgupta, 2006 and Norhaus, 2007). What Environmentalists Need to Know – (5) Future Generations 35 Before I proceed with a discussion of what an appropriate discount rate might be, and examine the choice made in the Stern Review, let me state bluntly that there is no absolutely correct answer. For decades there has been a lot of serious discussion and intense debate about what the right discount rate should be for environmental projects and there is still no consensus. There is, however, a relatively high degree of agreement on what constitutes a reasonable range for a discount rate, which I will now outline. The upper range for the discount rate should be the average real long‐term return on private investment, which has historically been in the range of 5‐12% per year for developed countries. 6 This discount rate forces environmental investments to earn a rate of return greater than or equal to the return of private investment in order to pass a benefit‐cost test. Those who propose this discount rate argue that environmental investments must compete on an equal playing field with all other types of investments that society makes; if an environmental project can’t match normal private rates of return, then society’s resources would be better invested somewhere else. Others point out that the average return on private investment includes a premium for risk. Some business returns are zero or negative (because they fail), while some are much greater than 12%, resulting in the average of 5‐12%. If an environmental investment is very likely to yield positive societal benefits, then the rate of return required to pass a benefit‐cost analysis should be lower than the average private return, which factors in this risk premium (reward for taking the extra risk). In this case, advocates of this view argue, the rate of return on government bonds, which are essentially guaranteed, makes more sense. Over the past decade the average long‐term bond rate has been in the range of 5‐7%. 7 This discount rate forces environmental investments to earn a rate of return of equal to or greater than the essentially riskless option of government treasuries. Others argue that even this rate is too high. They advocate a discount rate of 2‐3% because many environmental resources are irreplaceable; once they are severely degraded or damaged this damage cannot be reversed. They believe that the special nature of environmental resources should tilt society more towards saving them for future generations. Unlike a new road, school, or factory, there is no substitute for a unique ecosystem, a stable climate, or an intact ozone layer; the more unique the resource is the lower the discount rate should be. Environmentalists that find themselves in the position of having to argue in support of a particular discount rate almost always fall into this last category. Even those who in principle support a zero discount rate often concede that it not practical nor does it best reflect actual human behavior. But this group recently found a surprising ally for a close to zero discount rate in the authors of the Stern Review, which used 0.1% per year to calculate the present value of the benefits of climate change mitigation for future generations. The report concludes by advocating an aggressive investment to prevent global warming precisely because of this very low discount rate, which makes future benefits appear relatively attractive when compared to the costs of reducing greenhouse gas emissions in the present. 6 Based on S&P 500 raw data (adjusted for inflation), the arithmetic average rates of return for stocks and 10 year bonds are as follows (geometric means in parentheses) (Damodaran, 2008): 1928‐2007: stocks=11.69% (9.81%), bonds=5.26% (5.01%) 1967‐2007: stocks=11.98% (10.77%), bonds=7.66% (8.81%) 1997‐2007: stocks=9.39% (8.81%), bonds=6.71% (6.47%) 7 According to the UN, the risk‐free rate of return from 1997‐2006 ranged between 4‐6.35%, averaging 5.02% (UN Statistics, n.d.). What Environmentalists Need to Know – (5) Future Generations 36 The use of this near‐zero discount rate has led to the accusation by many economists that the authors of the Stern Review “cooked the books;” a discount rate even in the low range of 2‐3% would not have led to the reports’ favorable conclusions for immediate action. Many of those who otherwise view the report favorably have focused on the very low discount rate as the report’s greatest weakness. And yet, a few notable economists, including Martin Weitzman of Harvard, have concluded that the Stern Review’s conclusions might be “right for the wrong reasons” (2007). This leads to a couple of final points on uncertainty and catastrophic risk that complicate thinking about far‐off environmental problems and whether discounting them in the conventional manner makes sense. Even though the science now confirms that human activity is contributing to global warming and that this warming is likely to continue if we do not dramatically reduce our greenhouse gas emissions, we are still highly uncertain as to what the end results of this warming will be (Parry et al, 2007). We can be sure about a few things—less Arctic ice, more storms, sea level rise—but the range of possibilities still includes some not‐so‐catastrophic outcomes along with some potentially cataclysmic scenarios; e.g. major new storm activity, sever draught, major species extinction, and the major inundation of coastal areas. Weitzman argues that a small probability of catastrophic damage may be enough to force us to err on the side of action over inaction, even if the most likely average future benefits of action do not merit such a response. Putting a high premium on worst‐case scenarios tilts us in the direction of a zero discount rate not because we actually value benefits to people 100 years from now as much as we value benefits today (as many environmentalists and the authors of the Stern Review would like us to believe), but because when our actions pose a reasonably significant risk of making the world much less livable in the future then we have an obligation to go out of our way to reduce that risk. This rationale is not operative when assessing the benefits of most types of environmental investments because they do not pose such dire scenarios. For example, cleaning up a waterway or expanding open space, while perhaps in society’s interests, will not greatly impact humanity’s chance for survival or greatly affect overall living standards to anywhere near the degree that climate change might. When posed with these more common scenarios we should revert back to the basic arguments for choosing the proper discount rate. Summary Environment planning almost always entails taking into account the well‐being of future generations. All situations that require examining a stream of costs and benefits over time must confront the issue of choosing a proper discount rate, because a dollar in the future is not worth a dollar today (even after counting for inflation). Many environmental investments can be very sensitive to the choice of the discount rate; higher discount rates make investments less attractive, while lower discount rates make them appear more attractive. To complicate matters, there is no correct discount rate. The key for environmentalists is to understand the rationale for discount rates that are used in different environmental analysis and to craft an argument as to whether it is defensible. When What Environmentalists Need to Know – (5) Future Generations 37 dealing with especially unique and irreplaceable environmental resources or in situations when future generations may be subjected to severe environmental risks a very low discount rate, even possibly approaching zero, may be warranted. The upper bound should always be the average private rate of return, which is the bar that private business investments must meet. Another thing to always look for when assessing a study that makes use of a discount rate is whether alternative scenarios are presented using different discount rates, to see whether they alter the basic conclusions. This is often referred to as “sensitivity analysis,” presenting results under a variety of assumptions in order to show how sensitive the conclusions are to the different rates that are chosen. References Damodaran, A. (2008). Historical returns on stocks, bonds, and bills – United States. The Data Page. Retrieved January 23, 2008, from http://pages.stern.nyu.edu/~adamodar/New_Home_Page/data.html. Dasgupta, P.. (2006). Comments on the Stern review’s economics of climate change. University of Cambridge. Retrieved November 4, 2007, from http://www.econ.cam.ac.uk/faculty/dasgupta/STERN.pdf. Millennium development goals report 2007, The. (2007). New York: United Nations. Retrieved November 4, 2007, from http://mdgs.un.org/unsd/mdg/Resources/Static/Products/Progress2007/UNSD_MDG_Rep ort_2007e.pdf. Nordhaus, W. D. (2007). Critical assumptions in the Stern review on climate change. Science, 317(5835), 201‐202. Retrieved January 21, 2008, from http://nordhaus.econ.yale.edu/recent_stuff.html. Parry, M.L., O.F. Canziani, J.P. Palutikof, P.J. van der Linden, and C.E. Hanson, (Eds.). (2007). Climate change 2007: Impacts, adaptation and vulnerability. Contribution of working group II to the fourth assessment report of the Intergovernmental Panel on Climate Change. Cambridge, UK: Cambridge University Press. Retrieved January 21, 2008, from IPCC: http://www.ipcc.ch/pdf/assessment‐report/ar4/wg2/ar4‐wg2‐intro.pdf. Solow, R. M. (1991). Sustainability: An economist's perspective. In R. Dorfman and N. S. Dorfman (Eds.), Economics of the environment: Selected readings (3rd ed.) (pp. 179‐187). New York: W. W. Norton. Stern, N. (2006). Stern review report on the economics of climate change (Pre‐publication version). Retrieved November 4, 2007, from HM Treasury: http://www.hm‐ treasury.gov.uk/independent_reviews/stern_review_economics_climate_change/stern_revi ew_report.cfm. United Nations Statistics Division. (n.d.). United States. Interest rate, government long­term bond yields, per cent per annum, period average. Retrieved November 4, 2007, from United Nations Statistics Division: http://unstats.un.org/unsd/cdb/cdb_series_xrxx.asp?series_code=6310. Weitzman, M. L. (2007). A review of the Stern review on the economics of climate change. Journal of Economic Literature, 45(3), 703‐724. World Bank, The. (2006). The road to 2050: Sustainable development for the 21st century. (Report no. 36021). Washington, DC: Author. Retrieved May 22, 2008, from World Bank Documents and Reports: http://www.worldbank.org/reference/. What Environmentalists Need to Know – (5) Future Generations 38 Chapter 6 Tools to Address Environmental Problems: Taxes, Property Rights, Information, and Psychological Insights Economists are not satisfied merely to examine environmental problems on a theoretical level; they are interested in the policies that can actually solve them. This chapter provides an overview of the different types of policy options and the areas where they can be most effective. This discussion will form the basis for much of the discussion in the second part of the book, where we examine a range of current environmental issues and the specific policies needed to address them. Environmental Taxes As discussed earlier, when the production of a good or service leads to damages that are borne by parties besides the producer and consumer of the good or service this is called an external cost; environmental degradation is the classic example. In virtually all industries there is some amount of pollution or environmental harm that is imposed on those in the region or the greater society who neither produced nor consumed the good. If we can calculate the damage from these external costs we can partially correct for this market failure by levying an equivalent tax on the offending industries. 1 This is often referred to as the “polluter pays principle,” although this is a somewhat misleading phrase. In reality, it is highly unlikely that the price of the newly taxed good will rise by the precise amount of the tax. Depending on the relative slopes of the supply and demand curves for the good, the producers and consumers will share the tax burden in different proportions. For example, if the good is something that consumers desperately need (or want) and has few substitutes, and hence their demand is not very sensitive to price, much of the environmental tax will be passed on to them in the form of higher retail prices. 2 For other goods that have more substitutes and which consumers can more easily do without, an environmental tax will be absorbed mostly by producers; here the polluter pays principle is a more apt description. 1 Pigou discovered that by implementing a per‐unit tax equal to the external costs on the source of an environmental problem, the level of supply will shift upward, bringing the equilibrium point to the socially optimum point (Pigou, 1932). 2 Elasticity is the absolute value of percent change in quantity divided by the percent change in price: E = % ΔQ % ΔP . For a good with inelastic demand, such as gasoline, food, water, or medicine, E<1; the demand for the good is not sensitive to price, meaning that consumers will purchase the good regardless of the price. When demand is inelastic, the quantity of reduced demand and amount of raised price are practically irrelevant of supply elasticity. What Environmentalists Need to Know – (6) Tools 39 Not only do environmental taxes generate the revenue needed to compensate those who are harmed by the pollution and/or mitigate the negative impacts, but they raise the price of the good or service in question, thereby decreasing the quantity demanded. This is exactly the result that environmentalists should favor: a shift away from environmentally harmful goods once their prices reflect the true costs imposed on society. Putting aside for the time being the political issues associated with raising taxes (especially in the United States), there are significant problems with this policy choice. While environmental taxes will reduce the production of environmentally harmful goods and encourage the production of alternatives, they may not reduce them significantly in the short‐term if the demand is not very sensitive to price. Perhaps more importantly, environmental taxes do not address distributional issues. Over time they may lead to environmentally favorable shifts in patterns of production and consumption, but they are unlikely to effectively address situations where particular groups or resources are under immediate environmental strain and bear a disproportionate toxic burden. Also, environmental taxes have to be thought out very carefully; if they are not applied to the root cause of environmental problem they may actually make matters worse. For example, let’s examine the case for a gasoline tax in order to reduce greenhouse gas emissions. At face value it appears like a sensible idea. Driving is the number one cause of greenhouse gas emissions in the transportation sector; 3 raising the price of gas (by the incremental damage of each gallon’s emissions) would decrease emissions both by reducing driving and creating incentives for more fuel efficient cars and gasoline alternatives. The tax would also raise revenue that could be used to fund research and development in clean energy technologies and carbon sequestration. The problem is that gasoline is not the only type of fuel that produces greenhouse gas emissions, and focusing only on gasoline (not the root source of the problem) could actually lead to a greater reliance on fuels that are even worse for climate change. There already is a push towards plug‐in hybrids as an alternative to gas‐powered vehicles. But where will the electricity come from? If gasoline became more expensive through a gas tax, while the price of coal remained the same, what would stop increased coal generation as the source of the electricity for the plug‐ins? A carbon tax might be more appropriate because this would raise both the price of gasoline and coal accordingly; otherwise the tax would shift the economy to favor coal as an energy source, which could easily lead to a net increase in greenhouse gas emissions. However, this still might not be sufficient. Carbon dioxide is not the only greenhouse gas emission, even if it is the most ubiquitous. Methane and other gases used for fuel are orders of magnitude more damaging for the climate than carbon dioxide. 4 If the ultimate goal of the environmental tax is to reduce the likelihood of catastrophic climate change then it should focus on some weighted 3 Approximately 61% of transportation greenhouse gas emissions in the US are from passenger cars and light‐duty trucks. The transportation sector as a whole is responsible for about a third of all US greenhouse gas emissions (U.S. Environmental Protection Agency, 2007). 4 Global Warming Potentials are standardized comparisons of greenhouse gasses to carbon dioxide, based on the ability of the gas to absorb heat and the rate of decay of the gas. According to the IPCC’s third assessment report, carbon dioxide is the least damaging greenhouse gas; for example, methane is 23 times worse than carbon dioxide, and nitrous oxide is 296 times worse (Energy Information Administration, 2002). What Environmentalists Need to Know – (6) Tools 40 average of the total greenhouse gas impact for all types of fuels. This way new methane farms would face higher costs, not just gas and goal. This example exemplifies why focusing on root causes of environmental problems is of the utmost importance in crafting environmental policy, especially when considering environmental taxes. If this is not done new distortions are created that may actually lead to a shift towards even more polluting industries and technologies. This is one of the greatest insights that economics can provide to environmentalists. There is a growing movement, especially within Europe, to move towards a tax base that derives a greater proportion of revenue from environmental taxes and less from labor income. 5 From an efficiency standpoint there is a strong argument in favor of shifting society’s tax burden towards environmental taxes instead of the taxation of labor. Putting aside the proper size of government, no one denies that governments need to generate significant tax revenue in order to operate and provide the services that have been promised to the electorate. Taxes by their very nature discourage the activity that they are levied upon because they raise its price. The higher the tax rates for labor income (all else equal) the less people will be willing to work. After all, if you are able to take home 80 cents of every dollar you earn you will be willing to work more than if you can only take home 60 cents. Taxing labor income is the predominant manner in which governments generate revenue throughout the world.6 The problem is that discouraging work is not good for society since it is the lifeblood of the economy. An optimal tax policy would have very low or zero taxes on labor income so as to encourage labor productivity and innovation. Environmental taxes, on the other hand, discourage exactly what society should be discouraging: environmentally degrading activity. The challenge is figuring out what level of environmental taxes could provide the same revenue stream as taxing labor. Since no country has completely shifted to environmental taxes as its primary source of revenue we don’t yet have an answer, but we do know that they would be high. A society that went down this path would face much higher energy and food prices and costs for heavily manufactured goods, but would pay little to no income tax. The question arises, how would the poor and middle class fare under such a scheme? The middle class would likely do reasonably well; their overall level of taxation would likely stay about the same since they would be relieved of a major tax burden on labor but pay significantly higher prices for consumer goods. Unfortunately, the poor would probably fare worse. and the United Kingdom—have implemented environmental tax reform (ETR), and others— Austria and Belgium—have implemented elements of ETR. These countries are taxing environmentally damaging activities and explicitly folding the revenues back into society through reductions in other taxes such as labor taxes and non‐tax labor costs such as social security. Through ETR, European countries are successfully internalizing the negative externalities by charging the full cost for environmental resources, as well as encouraging economic growth by reducing taxes on useful activities such as employment and investment (Hoerner & Bosquet, 2001). Greg Mankiw’s blog includes many postings about the benefits of Pigouvian taxes (ETR is an example of a Pigouvian tax). In one post, he points out that no taxation is favorable, but if the government has to implement them, it is best to select the taxes that do the least harm, or the most good. Pigouvian taxes are good because they correct the market failures associated with the negative externalities of environmental resources (Mankiw, 2006). 5 As of 2001, eight European nations—Denmark, Finland, Germany, Italy, the Netherlands, Norway, Sweden, What Environmentalists Need to Know – (6) Tools 41 Currently, they don’t pay very much in income taxes, and hence they wouldn’t benefit greatly from lower labor income tax rates, while they would face much higher prices across a wide range of goods. The rich would likely be better off because they would be relieved of a huge tax burden; while they consume a lot more than most people, as a percentage of their income they actually save and invest more. 6 This leads to a major conundrum that plagues environmental policy. Many times what is most efficient is also regressive; is hurts the poor disproportionately. Some might argue that the poor would be the greatest beneficiaries of a cleaner environment (which would result from much higher environmental taxes) since they bear a disproportionate toxic burden in society. This may be true and should be considered; however, this would likely not be sufficient to make up for having a much harder time buying sufficient food and heating their homes. One potentially simple solution would be to use some of the tax revenue levied from environmental taxes to help subsidize the poor who would be hurt by this policy; perhaps in the form of tax credits or a minimum income. This would allow society to maintain a sense of equity and fairness, while also benefiting from a shift in the tax structure that favors labor over consumption, and creates significant incentives to produce environmentally‐sensitive products and technologies. Property Rights: Cap and Trade Systems The lack of transparent and enforceable property rights for fisheries, forests, and atmospheric resources has, in many cases, led to the classic “tragedy of the commons” scenario. On a theoretical level the solution to this problem is relatively simple: governments need to assign property rights to these resources, figure out a way to distribute them, and make sure that people don’t use more of these resources than they are entitled based on their property rights. These government‐created environmental property right schemes are usually referred to as “cap and trade” systems. After the government determines the maximum allowable use of the resource 6 Chart of Taxes on Income, Profits, & Capital Gains as a Percentage of Revenue (International Monetary Fund, 2006): General Government‡ Country Denmark* New Zealand* Australia Canada* PR China: Hong Kong United States* Norway* Iceland Mexico † United Kingdom Ireland* Switzerland Sweden* Belgium* Finland* India*† Luxembourg Italy* Data Income tax as % Year of Revenue 2004 52.28 2005 50.71 2005 48.54 2005 39.08 2004 38.76 2005 38.41 2005 37.90 2002 36.96 2000 34.15 2005 34.10 2005 34.01 2002 33.87 2005 32.97 2005 32.74 2005 32.03 2003 31.06 2005 30.59 2005 29.37 Country Korea*† Germany Austria* Czech Republic Russian Federation* Japan Netherlands* Greece* Brazil † Hungary* France Poland Slovak Republic* Data Income tax as % Year of Revenue 2005 28.87 2005 25.86 2005 25.23 2005 24.47 2005 23.86 2004 23.81 2005 22.30 2005 21.09 1998 20.79 2005 20.58 2005 20.57 2005 15.89 2005 14.71 ‡ General Government is the average of local, state, and central governments * Data are preliminary or provisional † Data are for Central Government only What Environmentalists Need to Know – (6) Tools 42 (the cap) it allows actors to freely trade the rights to this utilization (usually in the form of permits), which in most cases greatly improves efficiency over a standard regulatory mandate (i.e. command and control regulation). Efficiency gains are greatest in industries in which firms have very different cost structures; for example, industries where there are a mix of old and new, small and large companies, and which compete with foreign firms. A flexible system that allows pollution allowance trading, instead of a government mandate, allows the cleaner firms to gain an advantage over dirtier firms and earn money in the process. The first issue that needs to be addressed when considering a cap and trade system is the appropriate level for the cap. For example: –How much sulfur dioxide should be allowed in the atmosphere if greatly minimizing acid rain is the goal? –How much greenhouse gas emissions should be allowed if we are to reduce the chance of catastrophic climate change? –How much fishing should be allowed to maintain a fishery’s sustainability? –How much logging should be allowed to maintain optimal forest biodiversity and ecosystem services? This is where the natural and physical sciences must play a huge role. Fisheries biologists can help determine sustainable levels of fishing, ecologists can calculate with relative precision the optimal forest cover for habitat preservation and the provision of ecosystem services, while climate specialists have a pretty good sense of the maximum concentrations of greenhouse gases in the atmosphere that can insure us against major climate catastrophe. There are many uncertainties in all of these fields, which is why the caps should be subject to periodic review based on scientific updates and the best available information. Fortunately, our scientific understanding will only improve over time and the scientific community can at this time provide defensible baseline estimates to be used in cap and trade systems in a wide variety of contexts. Economic considerations come into play as well, typically in some form of a benefit‐cost analysis or other weighting of interests. Scientists can provide what they believe are the optimal levels of resource use from an ecological perspective, but to the extent that these recommendations require sacrifice in other realms of the economy it is the job of policy‐makers to balance these with the economic interests at stake. The distributional impacts and the ethical implications of different courses of action must be addressed as well. It is the job of citizens and environmental organizations to make their voices heard (and elect leaders who reflect those voices). One of the primary arguments of this book is that these voices will be most persuasive if environmentalists are able to substantively critique economic analyses, especially if they believe that they are biased against environmental interests. Cap and trade policies have become very popular because they allow for maximum flexibility in achieving their targets; once the cap is set businesses and other actors can meet their obligations What Environmentalists Need to Know – (6) Tools 43 anyway they choose. This creates room for innovation and adaptation that otherwise would be reduced if the government mandated certain technologies or practices. Similar to environmental taxes, cap and trade systems create incentives to move towards the development of environmentally‐friendly technologies because polluting or extracting a resource becomes more expensive; business are required to own a permit in order to exercise this right. Some environmentalists criticize the basis of these programs because they create rights to pollute (or in the case of fisheries and forests rights to exploit). 7 While this instinct is understandable, the appropriate question to ask is whether in the absence of explicitly recognizing these rights firms were limited in their ability to pollute or extract resources in the first place? In almost all cases the answer is no; the atmosphere and the open oceans are treated like free goods that everyone can pollute and degrade if they so choose; it is the establishment of the cap which actually limits what was otherwise an unlimited right. Once a cap is chosen how the rights to the resource are allocated raises important political and ethical issues, which can have significant efficiency and revenue impacts. Economists typically favor the auctioning of resource permits; in this manner no actors are privileged and all must bid based on their valuation of the permits. This is equitable in that no firms are immediately favored over others and future entrants aren’t put at a disadvantage over existing businesses. In reality, however, most of the time permits are allocated to existing businesses based on past performance; this is called “grandfathering.” 8 This usually happens because it is politically the easiest way to get cap and trade systems passed in the legislative process. By freely giving out the permits to existing actors these players gain a valuable resource, even if the caps ultimately end up constraining their activity. This has been crucial in generating the necessary support from industry for both sulfur cap and trade systems in the U.S. and the CO2 trading scheme in the EU. Allocating permits freely to existing industry raises serious issues because in some way those with the worst environmental records are rewarded for their past bad behavior. In the example of the U.S. sulfur dioxide trading program, the dirtiest plants were given the most permits while the cleanest plants given significantly less. The owners of the dirty plants could reasonably respond that their environmental performance was tied to the age of their facilities, which they shouldn’t be 7 Many environmentalists compare pollution permits to the indulgences offered by the Catholic Church in the Middle Ages. The Church allowed believers to purchase indulgences in exchange for reduced penance for their sins (“Indulgence,” 2008). Transnational Institute’s report, the carbon neutral myth (Smith, 2007), and George Monbiot’s article in the Guardian are two examples of environmentalists comparing offsets to indulgences (2006). Similarly, Michael Sandel of Harvard argues that tradable permits are immoral because they remove the negative stigma associated with pollution (1997). 8 Most of the initial sulfur dioxide permits were distributed to industry firms based on historical data. Every year, a small percentage of permits are auctioned to new entrants and anybody needing extra permits (Joint Economic Committee Study, 1997). In the European Union Emissions Trading System (EU ETS), each country was allowed to auction up to 5% of all permits in phase I and up to 10% in phase 2, the rest were given away without charge; the European Commission has proposed that in phase III, beginning in 2014, 100% power sector allocations will be auctioned (Point Carbon, 2008). Absent Federal carbon dioxide legislation, several Northeast states joined together to develop a trading system known as the Regional Greenhouse Gas Initiative (RGGI); each state determines the percentage of their permits to auction, and most have committed to eventual 100% auction systems (Regional Greenhouse Gas Initiative, 2007). The first auction took place on September 25, 2008, where 100% of the 12,565,387 permits offered were sold for $3.07 (Regional Greenhouse Gas Initiative, n.d.). What Environmentalists Need to Know – (6) Tools 44 penalized for, but many of them resisted making environmental improvements, thereby weakening this argument. Not only does freely allocating permits create equity issues, but the government loses a major source of revenue. With sulfur dioxide permits initially trading at approximately $170(1993/4 dollars) per ton, these 226,384 permits were worth $38,485,280, which the U.S. government was unable to collect. 9 This money could have been used for any number of research projects such as cleaner coal technology, coal alternatives, or ecological restoration projects. One of the benefits of permits is that since they are freely traded environmental groups can participate in the market. Environmental groups that want to reduce sulfur dioxide by even greater amounts than the cap can purchase permits and not exercise them, thereby decreasing total sulfur dioxide emitted. (There are examples of environmental groups purchasing hunting permits and retiring these in order to decrease hunting below the maximum amount allowed. 10 ) There is also nothing stopping environmental groups from purchasing CO2 permits on the European trading market and retiring those in order to reduce carbon emissions at a rate greater than the EU has initially called for. 11 This takes money, but the mechanism exists. Cap and trade systems only work in situations where the resource in question can be relatively easily monitored. For example, in the case of sulfur dioxide, there are a set number of coal power plants and these all are equipped with instruments that monitor emissions levels. With respect to CO2 emissions, firms must report the fuel they use, which can be converted into carbon equivalents. The key is making sure that there are sufficient penalties for non‐compliance with the permit allowances. If it’s cheaper to pay a fine than to limit pollution or resource extraction then a cap and trade system will break down almost immediately. Typically, the penalties have to be at least an order of magnitude greater than the benefits of non‐compliance in order to truly deter cheating, since there is always a chance of not being caught. 12 Adding criminal penalties to non‐compliance costs, especially those that may result in jail time, can also be very effective; it is one thing to pay a fine and another to do hard time behind bars. 13 9 226,384 allowances were sold on the private market between April 1993 and March 1994. A single market value of these trades is difficult to quantify due to companies not sharing the price of the transaction and due to reported prices varying widely. The Emission Exchange Corporation (EX) began reporting sale values in July 1993, and the trade price remained at approximately $170 until May 1994; this number is a conservative estimate of the private trading value. At least one sale of unknown size took place in November 1993 for $205/tonne (Joskow, Schmalensee, & Bailey, 1998). 10 A few examples of this are an environmental group in Canada buying out a whole outfitting company in 2005 (“Environmentalists buy out Bella,” 2005), and supporters of Friends of the McNeil River (Alaska) won and purchased six of the eight brown bear permits offered in 1995 (About Friends of McNeil River, n.d.). 11 Any interested party can register with EUETS and participate in the carbon exchange market (Szabo, G., 2006). A British company, Carbon Retirement, sells EU permits to private individuals wishing to offset their carbon emissions. Each EUA sold reduces the amount of industry‐allowed carbon dioxide emissions by one tonne (Szabo, M., 2008). 12 The expected penalty for non‐compliance of a regulatory statue is the probability of being caught times the penalty. This means that the government has two ways to maximize compliance; either by increasing the likelihood of being caught or the fine. High probabilities and high penalties are obviously the most effective. However, since monitoring is very expensive and time‐consuming a relative low chance of being caught can be compensated for by a very high penalty. 13 The Clean Air Act and the Clean Water Act are examples of environmental legislation that include the possibility of serving time in prison for non‐compliance. For example, a US District Court sentenced Derrik Hagerman to sixty months in jail for altering documents required by the Clean Water Act (Untied States v. What Environmentalists Need to Know – (6) Tools 45 Information Provision: Right­to­know Programs, Ecolabels, and R&D Imperfect information is one of the primary causes of market failure; it is impossible for firms, policy‐makers, NGOs, and individuals to make well‐informed decisions when the information at their disposal is limited and incomplete. For example, if there is a factory on the outskirts of a town and the mayor and the citizenry are contemplating whether the existing regulatory requirements are sufficient, they need to know what toxins the factory is emitting into the environment before they can evaluate the factory’s impact. In many parts of the world a company’s emissions are considered proprietary information that is not available to the public. This was the case in the United States until 1987, when the U.S. Congress passed the Emergency Planning and Community Right‐to‐Know Act, which mandated that virtually all manufacturing facilities in the U.S. make public their emissions of hundreds of toxic chemicals. 14 This act led to the establishment of the Toxic Release Inventory (TRI), which the Environmental Protection Agency manages and disseminates to the public every year with updated emissions figures for more than 20,000 manufacturing facilities. This right‐to‐know program was a revolutionary development in the environmental movement; 15 it has been heralded as a great success by many for its low cost, the breadth of information it provides, and its overall influence on how both the public and firms view environmental information. Although drawing a casual link between the establishment of the TRI and the subsequent drop in virtually all of the chemicals reported in the database (many by as much as two‐ thirds) is extremely difficult, there is a general consensus that the program has had an impact (Hamilton, 2005). Possibly the most powerful effect has been the ability to “shame” firms by directing media scrutiny to their poor environmental performance, which is often followed by political pressure to improve their management and reduce emissions. Since the creation of the TRI numerous countries have followed suit and established their own right‐to‐know programs, including the European Union and Canada, 16 and to a limited extent Mexico, Chile, China, Australia, India, and Indonesia. 17 Derrik Hagerman, 2007), and Sheon DiMaio was sentenced to 42 months in jail for acts violating the Clean Air Act (United States v. Sheon DiMaio (2007). 14 For more information on this act visit the EPA at http://www.epa.gov/lawsregs/laws/epcra.html. 15 Noted environmental economist Tom Titenberg has called the establishment of right‐to‐know programs the “third wave of environmentalism”; command and control policies and market based instruments are considered waves one and two (1998). 16 In 2000, the European Union’s EPER was the first to report CO2 emissions at the facility level; more information about the program is at: http://www.eper.cec.eu.int/. 17 More information about these and other right to know programs: • Global Right‐to‐Know Resource http://www.mapcruzin.com/globalchem.htm • Canada: National Pollutant Release Inventory (1999) http://www.ec.gc.ca/pdb/npri/ • Chile: Registro de Emisiones y Transferencia de Contaminantes (RETC). (2002). http://www.conama.cl/especiales/1305/propertyvalue‐14774.html • Mexico: Registro de Emisiones y Transferencia de Contaminantes (2004). http://www.semarnat.gob.mx/gestionambiental/calidaddelaire/Pages/retc.aspx • Australia: National Pollutant Inventory (1998). http://www.npi.gov.au/index.html • China: Emergency Response Law (2007). http://www.china‐embassy.org/eng/xw/t357027.htm What Environmentalists Need to Know – (6) Tools 46 What is particularly fascinating about the experience of the TRI in the U.S. is that the emissions of many of the listed chemicals have dropped to levels much lower than those mandated by existing regulations (Roe, 2002). Some of these reductions may have occurred even if they TRI had never been established, but it is unlikely that they would have been so dramatic. The maxim in politics that transparency is a critical first step in minimizing corruption may have an analogous interpretation with respect to toxic emissions: transparency is the necessary first step to make firms take responsibility for their toxic emissions; or put another way, being able to hide behind a wall of incomplete information may forestall greater improvements in emissions reductions. Right‐to‐know programs are not without their critics, and they do suffer from a number of significant flaws. They are only as good as the quality of information they provide, which in many cases, especially in developing countries, is poor. In addition, while the provision of the information is often mandatory, the reports are provided by the firms with very little oversight as to their accuracy. This can lead to cheating or mistakes, which then weaken the effectiveness of the information. Perhaps most importantly, emissions vary a tremendous deal in terms of their toxicity; this requires skilled people to translate the raw data into information that accurately measures the health and environmental impacts of the various chemicals that are covered. One of the best examples of an organization that takes the TRI data and puts it into a user‐friendly form can be found at the Scorecard website. 18 Users can examine all sorts of geospatial aspects of the TRI database, including emissions to low income and minority communities, and across a wide range of important categories, from reproductive toxins to ozone‐depleting chemicals to cancer risks. While right‐to‐know programs will continue to provide an amazing array of useful information to environmental groups, there is also a growing movement to offer more information directly to consumers at the retail level. This has led to the proliferation of dozens of “ecolabels,” such as sustainably certified wood, dolphin‐safe tuna, energy efficient appliances, environmentally friendly cleaning supplies, etc. 19 These labels help to provide some of the missing environmental information in markets by highlighting a product’s use of non‐toxic chemicals, energy efficiency, recycled content, or other more sustainable practices. This then affords consumers the opportunity India: Freedom of Information Bill (2002). http://timesofindia.indiatimes.com/cms.dll/html/uncomp/articleshow?artid=31500188&sType=1 18 www.scorecard.org 19 Important Eco‐labeling programs include • Forest Stewardship Council: http://www.fsc.org • Marine Stewardship Council: http://www.msc.org • Dolphin Safe Tuna: http://www.earthisland.org/dolphinSafeTuna/consumer/ • Green Seal: http://www.greenseal.org/index.cfm • EU Flower: http://ec.europa.eu/environment/ecolabel/index_en.htm o Ex‐factory sales in 2005 estimated just under 800 million euro • US: Energy Star: http://www.energystar.gov/ • Germany’s Blue Angel: http://www.blauer‐engel.de/index.php (English site under construction) • The Nordic Swan: http://www.svanen.nu/Default.aspx?tabName=StartPage • Japan’s Eco Mark: http://www.ecomark.jp/english/ o Up to 98% market share for news ink with eco‐label in 2003 and 2004. • What Environmentalists Need to Know – (6) Tools 47 to put their “money where there values are” by supporting products with a better environmental footprint. The rise of ecolabels speaks to one of the larger ongoing issues in environmental policy: to what extent should individuals be allowed, through the marketplace, to choose the level of environmental quality they want versus the degree to which certain practices or standards should be mandated across the board by the government. While most environmentalists favor the latter course of action (and in many cases rightly so), they still recognize the tremendous potential for ecolabels to reshape industries. The key for an effective ecolabel is to provide truthful and meaningful information to the consumer. Since eco‐friendly products usually carry a price premium, there is a great incentive for producers to exaggerate their claims, or make outright false ones. 20 This then requires some type of oversight, which can be governmental or by a credible third‐party. 21 Modern technology is likely to play a greater role in both increasing the legitimacy of ecolabels and providing more informational power at the individual level. For example, the Forest Stewardship Council, which certifies sustainably harvested wood products, makes use of satellite technology to monitor forests and uses bar codes to ensure that they can trace all of the logs they certify. 22 With the growing power of handheld devices, such as cell phones, iPods, and Blackberries, it is likely that consumers will soon be able to scan barcodes in retail stores using these personal devices in order to ascertain detailed environmental data on the products. In the near future at the touch of a button we may be able to program our devices to “red‐flag” products that don’t meet certain environmental and social standards that we deem important. 23 This would truly revolutionize shopping, and industrial processes as a result, since this would take ecolabels to a new level with explosive informational potential. But the power of information to influence consumer demand is tempered by the fact that there is only so much information that individuals can reasonably be expected to process; there is a point where individuals experience informational overload and stop paying attention. Where this threshold lies should be of great interest to environmentalists; surprisingly, however, there has been little research to date on this topic. 24 20 In 2005, organic and Alaskan wild salmon labels were found to be false in surveys of NYC fish markets (Burros, 2005; Consumer Reports, 2006). Examples of government oversight include the USDA overseeing the organic label (http://www.sciencedaily.com/releases/2005/06/050607005738.htm), and the USEPA overseeing the Energy Star label (http://www.epa.gov/oig/reports/2007/20070801‐2007‐P‐00028_glance.pdf). 22 In 2007, FSC partnered with the European Space Agency to study the applicability of using remote sensing technology to monitor forest management (“Satellite imagery to be used,” 2006). The Nature Conservancy and Surnalindo Lestari Jaya, an Indonesian corporation have been experimenting with using barcodes to track wood from forest to US customer in order to meet the qualifications for FSC certification (Colchester, 2006). 23 A group of academic and technology experts has recently launched the website: http://GoodGuide.com, where consumers can learn how common products measure up against health, environmental, and social metrics. In fall 2008, an iPhone app and text messaging service will launch allowing the consumer to check the rating of products in the store. (O’Rourke, D., personal communication, September 28, 2008.) 24 Over the years, there have been several attempts at quantifying the level of information that triggers overload reactions in the consumer. A recent study of online product information found that the overload threshold is dependent on the number of alternatives, number of attributes for each alternative and the 21 What Environmentalists Need to Know – (6) Tools 48 Not only do consumers shut down when faced with too great an array of competing information and labels, but an even more pressing question arises: given the limited window to provide environmental information to consumers what is the most important to present? Put another way, if we could influence consumer choices in only a couple key dimensions what would these be? Carbon footprint, toxic materials, unsustainable logging, food choices? Since the rise of ecolabels has been largely a bottom‐up movement with no overarching strategy or public interest objective (aside from general environmental improvement), this question has never been addressed, but it should be. It can take years or even decades to cultivate consumer consciousness around a particular label or issue. The environmental movement would likely benefit if the major environmental organizations and institutions could agree on a limited set of issues to prioritize for information campaigns, and then stick to them, continually reinforcing them in the public consciousness. We have seen this happen with recycling and to a lesser extent organic agriculture, but the question still arises whether these are the most effective areas for channeling individual action towards environmental improvements. Finally, on the informational front there is probably nothing more pressing than the need for dramatic increases in basic research and development in all aspects of environmental science. Of the more than 42 billion pounds of chemicals entering the American market every day, we have little to no information about the effects of more than 95% of these substances. 25 In addition, even the chemicals that we have studied we have only studied in isolation; we have almost no knowledge of the synergistic effects of the varied combinations of these chemicals in the environment and our bodies. Valuing ecosystem services can only be as good as our knowledge of the basic functions of these systems, which is in its infancy. More research dollars for understanding the roles of wetlands, savannahs, tidal zones, forests, and the interactions within the climate system will only help us make better policy decisions. What is also needed is increased research in alternatives to toxic substances and energy efficiency improvements across all sectors of society, from power plants to building to manufacturing. While private enterprises already have incentives to decrease their environmental footprint in order to save money, since they don’t reap all of the benefits of a healthier global environment they are almost assured to under‐invest in these improvements. The government has a major role to play in providing research money that can lead to developments, which then become part of the public domain and benefit all of society. distribution of attribute levels, and that over a certain level of information, 10‐25 alternatives, the effects of overload do not vary (Lee & Lee, 2004). 25 The first U.S. governmental effort to monitor and control the chemicals being introduced to the marketplace was the Toxic Substances Control Act (TSCA), which was passed by Congress in 1976. The TSCA, however, exempted all 62,000 chemicals already on the market from toxicity review. In 2006, the equivalent of about 623,000 tanker truck loads of chemicals entered the American market daily. Of these chemicals, fewer than 200 have undergone testing by the EPA (Schapiro, 2007). What Environmentalists Need to Know – (6) Tools 49 In the 21st century we are going to witness massive economic shifts that we have barely begun to recognize; the economies of 2100 will be radically different in ways that we can only begin to imagine. One thing is for sure: whoever can lead the way in the development of green technologies is likely to have an advantage since this will be one of the biggest growth markets of the century. 26 Psychological Insights Over the past decades a group of prominent economists and psychologists have been studying the various ways that people think and act that are not in accordance with rationality as classically defined by economists. This has led to development of the field of “behavioral economics,” which is becoming an increasingly influential school of thought within the discipline. 27 While this growing sub‐field is too extensive to cover broadly in this chapter, environmentalists can get a sense for its potential for shaping environmental policy by examining the conundrums currently faced when trying to get residential customers to switch from dirty power to green power. In the green power industry there is an anomaly that continues to attract attention: when people are surveyed and asked whether they would be willing to pay a small amount more for green power (typically 5‐10%) overwhelming majorities say that they would; however, when these programs are made available only a very small percentage of people actually do make the switch to green power. 28 Why the discrepancy? Is it that people just tell interviewers what they want to hear? Are people really not willing to pay more for green power? Perhaps, but there is a more plausible explanation that comes from behavioral economics: status quo bias. In a landmark paper by Madrian and Shea, the authors show (using the example of 401(k) plans in a large corporation where enrollment was extremely low) that people tend to stick with default options and not switch even when it's in their economic interest; that is, inertia dramatically dictates a person’s course of action (Madrian & Shea, 2000). 26 Venture capital is going to clean technology at a very high rate – The Cleantech Venture Network invested 52.9% more in clean technology in 2006 than in 2005. Cleantech Capital Group invested approximately $8.8 billion between 1999 and 2006, and expects to invest another $8.7 billion between 2006 and 2009 (Worrell, 2006). Kleiner Perkins (of which Al Gore is a partner) recently announced a $700 million fund to invest in green‐tech startup companies over the next three years and a $500 million Green Growth fund to invest in later‐stage companies (Gage, 2008). Overall, venture capital investments in clean‐tech firms quadrupled between 2000 and 2007; during the same time frame, clean‐tech investments increased 0.6% of all venture capital investments in 2000 to 9.1% in 2007 (Gage, 2008). 27 For more information about behavioral economics, visit the Cambridge Center for Behavioral Studies at http://www.behavior.org/econ/, the Russel Sage Foundation at http://www.russellsage.org/programs/other/behavioral/, or peruse the work of the several professors at the University of California, Berkeley who specialize in behavioral economics in both the economics and business departments: http://www.berkeley.edu. 28 In California, 1.9% of eligible residential customers had switched providers by April 2000, mostly to green providers. Through March 2000, approximately 1.6% of eligible customers in Pennsylvania had chosen a new green provider. Massachusetts and Rhode Island report negligible customer switching to green power, and Maine and New Jersey had not been open to retail competition very long. Overall, by 2000, approximately 1.2% of eligible customers nationwide had switched to green power (Wiser, Bolinger, & Holt, 2000). By 2005, the country average had improved to 1.5% participation, with 4.6%‐13.6% participation in the top ten programs (Bird & Swezey, 2006). What Environmentalists Need to Know – (6) Tools 50 In their example, when they switched the default option to automatically "enrolled" in the 401(k) plan they got much greater participation in the plan than when the default was "not enrolled" and people had to opt in by calling the human resource department. This result was so striking because retirement decisions are one of the most important we ever face, and yet inertia and procrastination prevented people from taking the time to sift through the information and make a simple phone call. This was even the case in instances where the company would match dollars one for one; an immediate 100% return on the investment in the 401(k) plan. Needless to say, this is completely inconsistent with any conception of rationality that classical economics relies on; it very likely that status quo bias is also at work in electricity markets in a big way. What if the default option when people moved into new homes was green power and they had to call up the electric company to switch to "brown" power if they didn’t want to pay a premium? Not only would we almost certainly see much higher rates approaching those found in the surveys, but the psychology would be vastly different as well. When one is faced with the option of choosing green power it is not hard to see how one can procrastinate; one has the good intention of switching but never gets around to it. Once the default position is switched to green power people would have to actively choose to switch to dirty power. How many people would really call up the electric company to request dirty power in order to save a few bucks? Some for sure, but this switch would make the issue much more salient because it would force us to focus on the ill effects of conventional electricity generation. It is likely that status quo bias is ubiquitous throughout many sectors of the economy; once we realize this it will force us to fundamentally rethink many of our policies in a variety of areas, including the environment. Another area where psychological insights can help guide policy is with respect to energy efficiency. Numerous studies have been done that demonstrate that both individuals and companies often overlook large energy saving investments, even when they are in their financial interest. 29 In the case of companies, the reasons for this oversight are likely bureaucratic inertia and the fact that many companies simply aren’t accustomed to thinking about detailed energy efficiency decisions in their business plans. On the individual level, the reasons have more to do with a bias against energy costs over long time horizons versus the initial purchase price of appliances and other consumer durables. People tend to buy lower‐priced goods that are less energy efficient even when the cost savings over the lifetime of the product would make a slightly more expensive energy efficient model actually cheaper when the energy savings are factored in. For this reason, governments may need to provide additional incentives or mandates to both businesses and individuals that favor energy efficient purchases. For example, creating minimum 29 Throughout the 1990s, Professors Stephen DeCanio and Richard B. Howarth each published several papers on barriers to energy efficiency in corporations. Citations for theses papers can be found on their website at: http://www.stephendecanio.com/Stephen_DeCanio_Site/published_works.html, and CV: http://www.dartmouth.edu/~rhowarth/files/Howarth‐CV.pdf, respectively. What Environmentalists Need to Know – (6) Tools 51 efficiency standards for classes of appliances or electronic goods may actually benefit the environment and help people save money too. While classical economics predicts that people will always choose to save money without government interference, the reality is that most people simply don’t pay attention to small savings over long periods, even if they add up to relatively large sums. Summary The types of policies that have been described do not represent an exhaustive list, but they do offer multiple avenues for creating workable solutions to a wide variety of environmental problems. As we will see in Part II, sometimes it is best to combine these policies. One of the main take‐away points from this discussion is that there are many avenues with which to pursue effective solutions to environmental issues. It is not the dearth of ideas in environmental policy that represent the greatest impediments to a more livable future; it is the lack of political will in the face of deeply entrenched special interests, as well as timidity in the face of uncertainty. We have the tools; we just need to put them into practice. References About Friends of McNeil River. (n.d.). Retrieved September 27, 2008, from http://www.mcneilbears.org/index.cfm?section=About. Bird, L. and B. Swezey. (2006.) Green power marketing in the United States: A status report (Ninth Edition) (NREL/TP‐620‐40904). Golden, CO: National Renewable Energy Laboratory. Retrieved March 29, 2008, from http://www.eere.energy.gov/greenpower/resources/pub_chrono.shtml. Burros, M. (2005, April 10). Stores say wild salmon, but tests say farm bred. The New York Times. Retrieved January 29, 2008, from New York Times online: http://www.nytimes.com/2005/04/10/dining/10salmon.html Colchester, M. (2006, April). FSC dilemmas in the heart of Borneo: Step‐wise sand bag or sell out? World Rainforest Movement bulletin, 105. Retrieved September 27, 2008, from http://www.wrm.org.uy/bulletin/105/Borneo.html. Consumer Reports. (2006). The salmon scam: ‘Wild’ often isn’t. Consumer Reports.org. Retrieved January 29, 2008, from http://www.consumerreports.org/cro/food/food‐shopping/meats‐ fish‐protein‐foods/mislabeled‐salmon/salmon‐8‐06/overview/0608_salmon_ov.htm. Energy Information Administration. (2002). Comparison of global warming potentials from the second and third assessment reports of the Intergovernmental Panel on Climate Change (IPCC). IPCC Global Warming Potential. Retrieved November 23, 2007, from http://www.eia.doe.gov/oiaf/1605/gwp.html. Environmentalists buy out Bella Coola Outfitters in BC. (2005). The Hunting Report. Retrieved January 28, 2008, from HuntingReport.com: http://www.huntingreport.com/worldupdate.cfm?articleid=239. Gage, D. (2008, May 2). Kleiner Perkins bets big on green tech firms. San Francisco Chronicle. Retrieved May 25, 2008, from SFGate: http://www.sfgate.com/cgi‐ bin/article.cgi?f=/c/a/2008/05/01/BUTH10F8I3.DTL. Hamilton, J P. (2005). Regulation through revelation: The origin, politics, and impacts of the toxics release inventory program. New York: Cambridge University Press. Preview obtained January 29, 2008, from http://www.amazon.com/Regulation‐through‐Revelation‐Politics‐ Inventory/dp/0521855306. What Environmentalists Need to Know – (6) Tools 52 Hoerner, J. A. and B. Bosquet. (2001). Environmental tax reform: The European experience. Washington, DC: Center for a Sustainable Economy. Retrieved November 20, 2007, from http://www.rprogress.org/publications/2001/eurosurvey_2001.pdf. Indulgence. (2008). Wikipedia. Retrieved May 24, 2008, from Wikipedia: http://en.wikipedia.org/wiki/Indulgences. International Monetary Fund. (2006). Government finance statistics yearbook, pp. 12‐23. Joint Economic Committee Study. (1997). Tradable emissions. United States Congress. Retrieved November 24, 2007, from http://www.house.gov/jec/cost‐gov/regs/cost/emission.htm. Joskow, P. L., R. Schmalensee, and E. M. Bailey. (1998). The market for sulfur dioxide emissions. The American Economic Review, 88(4), 669‐685. Retrieved November 24, 2007, from EbscoHost: http://web.ebscohost.com/ehost/pdf?vid=3&hid=22&sid=999b41f2‐26ee‐46fa‐9051‐ 84176932d6a6%40SRCSM1. Lee, B. and W. Lee. (2004). The effect of information overload on consumer choice quality in an on‐ line environment. Psychology & Marketing, 21(3), 159‐183. Retrieved September 28, 2008, from ABI/INFORM Global database. (Document ID: 573032131). Madrian, B. C. and D. F. Shea. (2000). The power of suggestion: Inertia in 401(K) participation and savings behavior. Working Paper 7682, National Bureau of Economic Research. Retrieved January 31, 2008, from http://ideas.repec.org/p/nbr/nberwo/7682.html. Mankiw, G. (2006, December 9). Pigouvian questions. Message posted to http://gregmankiw.blogspot.com/. Monbiot, G. (2006, October 18). Selling indulgences. The Guardian. Retrieved May 24, 2008, from Monbiot.com: http://www.monbiot.com/archives/2006/10/19/selling‐indulgences/. Pigou, A. C. (1932). The Economics of welfare (4th ed.). London: Macmillan and Co. Retrieved November 20, 2007, from http://www.econlib.org/Library/NPDBooks/Pigou/pgEW.html. Point Carbon. (2008, March). EU ETS phase II – The potential and scale of windfall profits in the power sector. Godalming, Surrey, UK: World Wildlife Fund. Retrieved May 25, 2008, from http://www.wwf.org.uk/filelibrary/pdf/ets_windfall_report_0408.pdf. Regional Greenhouse Gas Initiative. (2007, October). Overview of RGGI CO2 budget trading program. New York: Author. Retrieved May 25, 2008, from http://www.rggi.org/docs/program_summary_10_07.pdf. Regional Greenhouse Gas Initiative. (n.d.) Regional Greenhouse Gas Initiative auction results. Retrieved October 4, 2008, from http://www.rggi.org/co2‐auctions/results. Roe, D. (2002). Toxic chemical control policy: Three unabsorbed facts. ELR News & Analysis 32. Sandel, M.J. (1997, December 15). It's immoral to buy the right to pollute [editorial]. New York Times, A19. Reprinted in Hoffman, Andrew J. (2000). Competitive environmental strategy: A guide to the changing business landscape (pp. 40‐42). Washington, D.C.: Island Press. Preview obtained September 20, 2008, from Google Books: http://books.google.com/books?id=6gxwmh6JTIsC&printsec=frontcover. Satellite imagery to be used to detect illegal logging, determine sustainability. (2006, December 21). Mongabay.com. Retrieved September 27, 2008, from http://news.mongabay.com/2006/1221‐fsc.html. Schapiro, M. (2007). Exposed: The toxic chemistry of everyday products and what’s at stake for American power. White River Junction, VT: Chelsea Green Publishing. Smith, K. (2007). The carbon neutral myth: Offset indulgences for your climate sins. Amsterdam: Transnational Institute. Retrieved May 24, 2008, from Carbon Trade Watch: http://www.carbontradewatch.org/pubs/carbon_neutral_myth.pdf. Szabo, G. (2006). EU ETS – Action 2006. Retrieved September 21, 2008, from http://www.euets.com/index.php?page=75&l=1. What Environmentalists Need to Know – (6) Tools 53 Szabo, M. (2008, July 23). Don’t offset your CO2 emissions, retire them. Planet Ark. Retrieved September 21, 2008, from http://www.planetark.org/dailynewsstory.cfm/newsid/494 57/story.htm. Tietenberg, T. 1998. Disclosure strategies for pollution control. Environmental and Resource Economics 11, 587‐602, Citation retrieved January 29, 2008, from Sand, Peter H. (2002). The right to know: Environmental information disclosure by government and industry. Munich: University of Munich, Institute of International Law: http://www.inece.org/forumspublicaccess_sand.pdf. U.S. Environmental Protection Agency. (2007). Trends in greenhouse gas emissions. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990­2005. Public Review Draft. Retrieved November 20, 2007, from http://epa.gov/climatechange/emissions/downloads07/07Trends.pdf. United States of America v. Derrik Hagerman and Wabash Environmental Technologies, LLC, 525 F. Supp. 2d 1058 (2007). Retrieved September 21, 2008, from LexisNexis Academic database. United States of America v. Sheon DiMaio, 255 Fed. Appx. 537 (2007). Retrieved September 21, 2008, from LexisNexis Academic database. Wiser, R., M. Bolinger, and E. Holt. (2000, August). Customer choice and green power marketing: A critical review and analysis of experience to date. Prepared for the ACEEE Summer Study on Energy Efficiency in Buildings. Retrieved March 29, 2008, from http://www.eere.energy.gov/greenpower/resources/pub_chrono.shtml. Worrell, D. (2006, September). Venture capitalists see potential in green businesses. Entrepreneur Magazine. Retrieved January 31, 2008, from Entrepreneur.com: http://www.entrepreneur.com/money/financing/venturecapital/article165820.html. What Environmentalists Need to Know – (6) Tools 54 Part II Putting Economic Analysis to Work Chapter 7 Climate Change Climate change is the most daunting issue the environmental community has ever faced; it is fraught with huge uncertainties, requires intense international cooperation, and portends a major transition in almost all aspects of the global economy. The closest the international community has come to taking on an environmental issue of this magnitude was the effort to stop ozone depletion, which resulted in the one of the most effective international treaties ever enacted: the Montreal Protocol. 1 Unlike the problem of ozone depletion, however, which could be traced to a relatively narrow group of chemicals with relatively minor global importance, addressing climate change will require reorienting our entire energy supply and making major improvements in efficiency throughout vast sectors of the economy. It is a much more complex and demanding task. The problem is also compounded because the potential effects of climate change are more uncertain than the increased risk of skin cancer linked to the destruction of the ozone layer. Given the greenhouse gases currently in the atmosphere some amount of global warming is almost assured (and happening already); 2 the issue before us is at what concentrations could we significantly reduce the probability of severe and catastrophic climate change to acceptable levels. Once again we are faced with a trade‐off; every incremental reduction in greenhouse gas emissions reduces the probability of catastrophic change, but also requires a greater societal transformation and more intrusive policies, which are costly, both in dollars (at least in the short to medium run) and perhaps more significantly, in political capital. With the myriad problems facing the world—AIDs and dozens of other infectious diseases, the proliferation of weapons of mass destruction, terrorism, and global poverty—it will take a very courageous and determined leader to put climate change at or near the top of the list and make the demands on society that are required to tackle it. While global leadership is not necessarily a zero‐ sum game, in which focusing on one problem automatically detracts from another, the environment still ranks relatively low in the public consciousness; 3 therefore significant political leadership is required in order to mobilize the public for dramatic action. 1 For an outstanding paper on the economics and politics of the Montreal Protocol see DeCanio (2003). 2 According to the 4th IPCC report, if all greenhouse gas and aerosol emissions had remained at their 2000 levels, the best estimate for average global temperature change is a rise of 0.1oC per decade until 2030, and a total increase of 0.6oC by the end of the 21st century (IPCC, 2007). 3 A USA Today/Gallup Poll from February 8‐10, 2008 found that while the environment, including global warming, ranks as extremely or very important for 62% of Americans, it falls at the bottom of a long list of priorities including the economy, Iraq, education, health care, energy and gas prices, terrorism, social security, etc. An NBC News/Wall Street Journal Poll conducted January 20‐22, 2008 found that when asked to identify (from a list) the top governmental priority, only 6% of respondents chose the environment and global warming. A CNN/Opinion Research Corporation Poll from mid‐January, 2008 found that respondents consider global warming extremely or very important in the 2008 Presidential election only 48% of the time, compared to over 75% for the economy, Iraq, terrorism, and health care (Polling Report, 2008b). The 2006 CCFR report surveyed residents of Australia, South Korea, India, China, and the United States about critical threats facing their country. Global warming ranked 3rd out of 12 in Australia, 1st out of 16 in South Korea, 6th out of 13 in India, 3rd out of 11 in China, and 6th out of 13 in the United States (Bouton et al, 2006). What Environmentalists Need to Know – (7) Climate Change 57 And dramatic action is what is needed according to the International Panel on Climate Change (IPCC)—the largest scientific body ever assembled. The IPCC’s most recent report states that in order to limit CO2 concentrations to 350ppm, the number suggested by NASA scientist James Hansen to prevent catastrophic climate change, 4 an 85% reduction in global greenhouse gas emissions is required with respect to 2000 levels (Barker et al, 2007). Keep in mind, that the world economy is expected to grow at an average rate of approximately 2.5‐ 3.5% over the coming decades, 5 which means that these reductions will be much more difficult to achieve. If left unchecked greenhouse gas emissions would likely grow by hundreds of percent by mid‐century. 6 The remaining goal of this chapter is to outline the two main types of policies that are currently being discussed in academic and government circles (and in some limited cases already in action) to address climate change—an international carbon (or greenhouse gas) tax and an international greenhouse gas cap and trade system. International Carbon Tax This is one of the most widely discussed proposals for tackling climate change. The logic behind it is relatively simple: carbon is currently under‐priced in the market because the price does not account for the costs associated with climate change. By adding to all carbon‐based fuels a tax that reflects the potential damage inflicted by each ton of carbon on the international community, users of these fuels will finally face the true cost of their actions. This will force them to shift to climate‐ friendly types of fuel or reduce energy consumption altogether. As mentioned in Chapter 6, in order to be most effective a tax should focus on the full range of greenhouse gas emissions, not just CO2. While carbon dioxide is the most ubiquitous greenhouse gas, the last thing we want to do is distort the economy in favor of even more damaging gases. This could be accomplished by using carbon as the baseline for the tax and ratcheting up the taxes proportionally based on greater warming potential; for example, gases that had twice the warming potential would be taxed at twice the rate as carbon. (Therefore, while the term “carbon tax” is the most widely discussed in political circles it is more appropriate to conceive of this policy as a “greenhouse gas” tax.) However, according to the 2007 Pew Report, pollution and the environment, as well as global warming are big deals (Pew Research Center, 2007). 4 Hansen suggests that since significant changes are occurring at the current atmospheric CO level of 383, we 2 have already overshot a safe pollution level and should aim to reduce concentrations to 350ppm (McKibben, 2007). 5 The OECD Environmental Outlook Baseline projects global annual GDP growth at 3.4% for 2005‐10, 2.7% for 2010‐20, 2.5% for 2020‐30, and 2.8% overall for 2005‐30 (2008). Cisco’s Foresight 2020 projects annual global GDP growth for the period 2006‐20 at 3.5% (2006), and Global Insight projects global annual GDP growth of 3.1% between 2005 and 2025 (2005). 6 The IPCC SRES scenario with peak global population of 9 billion around mid‐century and with continuing fossil‐heavy energy sources estimates approximately 125Gt CO2‐equivalent emissions in 2050. This represents an approximate increase of 400% from 1990 levels (Barker et al, 2007). What Environmentalists Need to Know – (7) Climate Change 58 Since the demand for fuel is relatively insensitive to price (inelastic) (at least in the short to medium term) the tax would need to be high to get significant reductions in fuel use. 7 This means that the prices of all forms of fossil fuel based energy would have to increase significantly. At a time when oil prices have already risen dramatically, the price would rise even further, making driving as well as home‐heating and the cost of food more expensive. But while taxes have this negative and regressive component, they also contain the source of the resolution: the tax revenue collected. A carbon tax could be refunded to consumers in the form of tax rebates or lower income taxes. Under most scenarios the revenue collected by the government could more than offset the higher costs of fuel for the lower and middle classes, even with the bureaucratic costs that accompany such a plan. 8 Other proposals call for using the revenue generated to invest in research and development into alternative energy sources and energy efficiency, or the retrofitting of existing infrastructure. A combination of tax rebates for lower income groups and R&D would be an attractive mix. A significant advantage of a tax system is that it makes the cost of greenhouse gas emissions immediately salient to consumers and businesses in the form of higher prices. The best tax policy would be one that begins with a high enough tax to get people’s attention and then steadily increases over time until reaching its peak. This sends the signal to individuals and businesses that they had better make a transition to cleaner fuels or less energy use, and it gives them the time to do so, while also sending a clear signal that the pressure to reduce greenhouse gas emissions will only be accelerating in the future. One of the greatest advantages of a tax‐based approach is that it is transparent; it would be relatively easy to verify that nations were imposing this tax. In addition, this approach doesn’t rely on having to verify the quantities of greenhouse gases emitted, only the quantities of energy bought and sold, which is already readily available in most nations, or could be relatively easy to obtain. From an outcome‐based standpoint, however, this benefit represents the biggest downside to a greenhouse gas tax because we wouldn’t be able to guarantee a precise drop in greenhouse gas emissions. For example, a tax might be aimed at reducing emissions by 10% within the first five years, but actually lead to reductions of only 5% or 8%. This weakness could be remedied by annual adjustments based on what we actually observe once the tax is instituted. Some flexibility of this nature would definitely be optimal, if not required. It could work the other way as well; if demand turned out to be more sensitive to price than predicted, future tax hikes could be slightly curbed. From a political standpoint, the biggest weakness of a tax is that taxes are highly unpopular. Making a greenhouse gas tax revenue neutral, or at least refunding some of the money to consumers, could help to overcome this aversion to taxes, but it would still be a difficult sell in many countries. 7 The Carbon Tax Center recommends beginning with a $37/ton carbon ($0.10/gallon gasoline) tax and increasing the tax annually at a rate equal to 5‐10% of the baseline cost of fossil fuels. They assume that these increases will decrease CO2 emissions by 4% each year (Carbon Tax Center, 2008). 8 A paper analyzing the set of carbon tax bills under consideration by the United States Congress in spring 2008 concludes that the regressive nature of a carbon tax can be offset with carefully structured rebate programs (Metcalf, Paltsev, Reilly, Jacoby, & Holak, 2008). Economist William Nordhaus, in a paper comparing alternative methods for controlling greenhouse gas emissions, concludes that a pricing method such as taxation is preferred to cap and trade (2001). One reason for this preference is because of the ability to rebate the taxed funds to the consumer and avoid any changes in the efficiency losses from taxation. What Environmentalists Need to Know – (7) Climate Change 59 There also exists the potential for some countries to gain an Perhaps the best example of immediate economic advantage by opting out of such a tax system, since to be effective it would need to be truly nations pursuing stricter international in scope (even major reductions in the U.S. environmental standards and and Europe are not sufficient to curb greenhouse gas gaining from this move can be concentrations to the levels that are required). Any country found in the European Union, that refuses to enact the tax would lower the cost of doing which is increasingly becoming business in the home country relative to those nations, the world leader in a wide range which could increase foreign direct investment or give of environmental issues (Schapiro, domestic industry a competitive edge. 2007). Not only has Europe not This same logic applies to a cap and trade system suffered economically as a result, (discussed below), and explains in no small part why the but many nations are shifting United States has so far refused to sign the Kyoto Protocol their processes towards European or enter into any binding agreements with respect to standards now that Europe has greenhouse gases. 9 Out of fear that American industry will surpassed the U.S in its total suffer unfairly, America’s leaders for the most part have economic might.11 refused to sign on to any international agreements that mandate reductions unless the major developing countries, such as India and China, do so as well. There is already a widespread perception among the American public that American industry is at an unfair disadvantage with respect to India and China because of currency manipulation (China) and weak labor and environmental laws (China & India), which drive down the price of labor. 10 In addition, if only a subset of countries take serious efforts to reduce emissions this may simply shift the emissions to other parts of the world and not result in net reductions (this is commonly referred to as “carbon leakage”). This potential for competitive advantage by opting out of costly climate change measures, while possible, may not be as significant as some might suspect. Nations that impose serious measures on greenhouse gas emissions are likely to gain an advantage in the green technologies that will ultimately define the 21st century. While taxes can be viewed as penalties levied on business activity, they also provide strong incentives for change and innovation, and nations that take the lead on climate change may in fact gain the upper hand in developing new industries. In addition, there are many local benefits of decreasing greenhouse gas emissions since fossil fuels, which are the dominant source of emissions, have many negative effects on air quality and human global greenhouse gas legislation (S. 1132, 1997). Cass Sunstein published an article in the Harvard Environmental Law Review providing more general background to the United State’s feelings of unfair treatment in the Kyoto Protocol (Sunstein, 2007). 10 A CNN/USA Today poll in September 2003 found that 51% of respondents felt that China was an unfair trade partner because of “unfair tactics, such as the Chinese government’s manipulation of its currency.” A Chicago Council on Foreign Relations (CCFR) poll in 2004 found that 51% of respondents felt that China trades unfairly; only 36% felt that China trades fairly (Americans and the World, n.d.). In February 2004, a Newsweek poll found that other countries’ lower environmental and worker health standards is a reason Americans lose jobs to foreign countries 81% of the time, compared to 11% who disagree (Polling Report, 2008a). The 2006 CCFR poll found that 49%, 47%, and 58% of Americans think that Mexico, India, and China, respectively, trade unfairly (Bouton et al, 2006). 9 A bill submitted to the South Carolina State Senate reflects the feelings of the national government regarding What Environmentalists Need to Know – (7) Climate Change 60 health; any reductions in these fuels for the purpose of decreasing the likelihood of catastrophic climate change will also have many secondary environmental benefits. From America’s standpoint, our oil dependency also creates a major foreign policy challenge since we are dependent on many hostile regimes for our energy needs, and thus a strong case could be made that independent of climate change America should be raising the cost of at least imported oil. 11 International Cap and Trade System Due mainly to the political aversion to new taxes, especially in the U.S., there is a growing call for an international cap and trade system for greenhouse gases as the preferred policy option. Such a system would require not only coming up with a maximum annual greenhouse gas emissions target for the world as a whole, but also an agreement on how these allotments would be distributed among nations. If all nations were equally responsible for the loading of the atmosphere with greenhouse gases and were at relatively equal stages of development, each nation could simply set their cap at a level that corresponded with an equal percentage reduction in emissions. For example, if the global cap required a 2% annual reduction each nation would set the cap at 2% less than the baseline level from each previous period. But the reality is that the industrialized western countries are responsible for the overwhelming majority of greenhouse gases that fill the atmosphere, 12 and the majority of the world’s countries are still vastly underdeveloped, with large shares of their populace living in poverty. This is particularly true in the large developing countries such as India, China, Brazil, and Nigeria, which are home to almost half the world’s people. 11 Economic growth rates of the European Union and United States as represented by annual percentage growth in GDP (International Monetary Fund, 2007): G ro s s D o m e s tic P ro d u c t, c o n s ta n t p ric e s 4 3 .5 E u ro a re a (1 5 ) U n i t e d S ta te s E u ro a re a e s tim a te d Annual Percent Change 3 2 .5 2 1 .5 1 0 .5 0 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 00 20 U n i t e d S ta te s e s tim a te d *2007 and 2008 data are estimated and projected, respectively. These two data sets were updated in January 2008 (International Monetary Fund, 2008). 12 In 2004, industrialized countries produced 40% of the global greenhouse gas emissions and accounted for only 20% of the population; they produced 16 tons CO2‐eq per person compared to the 4 tons CO2‐eq per person produced by the developing countries (Union of Concerned Scientists, 2007). Y e a r* What Environmentalists Need to Know – (7) Climate Change 61 Any international cap and trade system will need to recognize these disparities in historic greenhouse gas loading and acknowledge that developed countries must bear a greater share of carbon reductions. 13 Arriving at consensus on distribution will likely be very difficult. If it is achieved, a cap and trade system’s most obvious benefit (at least on the surface) is that it can deliver a set target in reductions, unlike the international tax, which is less precise. This precision is perhaps the main reason that environmental groups seem to prefer a cap and trade system to a greenhouse gas tax. 14 When in operation, there are potentially large efficiency gains from a cap and trade system since the ability to trade permits provides those with the lowest costs of greenhouse gas reduction the incentive to do so; they can then profit by selling their permits to those with higher abatement costs. Once again, environmentalists could also choose to buy permits from the market and retire them, thereby reducing greenhouse emissions beyond the global cap. Theoretically, a cap and trade system and a tax should have almost exactly the same effect on prices since they both raise the cost of emissions to the same degree. So far politicians have largely been able to publically discuss a cap and trade system as if it were costless, but if we get closer to enacting a truly global cap and trade regime look for this to change. While many of the features of a cap and trade system are rightly attractive, there are some potential problems with the cap and trade system that merit mention: 1. Monitoring an international cap and trade system is a lot harder than monitoring an international tax. Once a greenhouse gas tax is instituted, it would be relatively easy to see if countries were uniformly imposing it since it would immediately be reflected in prices. A cap and trade system requires a much more comprehensive set of political and bureaucratic institutions to operate, and while the price effects should ultimately be commensurable with a tax, it would be much more difficult to see whether firms were actually being held to the limits imposed by their permit allowances. 2. A cap and trade system would also require much more stringent monitoring if “carbon offsets” were allowed into the system. Carbon offsets would allow companies to claim emissions reductions by paying others to sequester carbon (or reduce their own emissions), 15 which requires another level of monitoring and enforcement and also brings with it a host of serious challenges. The science on carbon sequestration is still relatively imprecise, especially with respect to forest and agricultural systems, and to truly count as an offset companies would need to prove that any sequestration that occurs would not have occurred without the purchase of the offset. 16 For example, paying someone to not cut down trees can’t count as an offset if those trees weren’t slated for removal in the first place. While issues revolving around sequestration will show up under a tax 13 For more information on issues relating to climate change equity see: http://www.ecoequity.org/. 14 Environmental Defense, The Nature Conservancy, National Wildlife Federation, Natural Resources Defense Council, Pew Center on Global Climate Change, and World Resources Institute are members of the United States Climate Action Partnership, which promotes cap and trade policies as essential to mitigating global climate change (United States Climate Action Partnership, 2007). 15 In a truly international cap and trade system the act of paying people to reduce their own emissions would be subsumed within the permitting system since all nations would face greenhouse gas caps; i.e. there would be no entities outside of the permit system that companies could contract with to offset emissions. 16 The process of ensuring net carbon offsets is referred to as “additionality”; for more information on this issue see the Clean Development Mechanism Rulebook at: http://cdmrulebook.org/pageid/84. What Environmentalists Need to Know – (7) Climate Change 62 system as well (since a tax alone will likely not be sufficient to completely mitigate climate change), under a cap and trade system poorly administered offset programs would have the potential to completely undermine the system. 3. How the permits from a cap and trade system are allocated can have large distributional consequences and also serious ramifications for the other types of policy interventions that are needed for a comprehensive climate change strategy. There is a consensus among economists that greenhouse gas permits should be auctioned off to firms since this doesn’t reward firms for past bad behavior or create barriers to entry for firms that enter after the permits have been allotted, and allows governments to generate revenue from the sale. This revenue can be used in the same manner as under the tax scheme. The problem is that politically there is tremendous pressure to allocate permits freely to existing firms that is hard for governments to resist. To date, more than 95% of permits allocatedunder the EU cap and trade system have been given away for free (though this is supposed to change in the future) 17 and most current U.S. proposals (aside from those currently put forth by Presidential Candidate Barack Obama) also call for free allocation of the overwhelming majority of permits. In summary, despite the benefit of setting a precise target for greenhouse gas reductions, there are serious issues with a cap and trade system for greenhouse gases that have yet to be fully addressed. For these reasons (and a couple other technical issues) William Nordhaus, one of the leading experts on the economics of climate change, recommends the tax system over the cap and trade (2007). Additional Thoughts With an issue as massive and complex as climate change there will likely be no silver bullet; an effective solution will likely make use of multiple policies and technologies, many of which have yet to be invented (which in and of itself has major policy implications; see Chapter 13 for more on this). One particularly intriguing possibility for addressing climate change involves massive geoengineering projects. For decades people have floated ideas about how to tackle climate change that range from the absurd—filling the oceans with Styrofoam to reflect sun back into the atmosphere—to the less implausible—seeding the oceans with iron in order to spur algae blooms that absorb carbon. Recently, there has been a lot of discussion over the possibility of injecting carbon underground, perhaps in empty coal mines or oil fields, as a way to render fossil fuels carbon neutral. None of these technologies are currently economically feasible but they offer promise and will no doubt continue to be investigated. On the energy front, there is still the hope that hydrogen fuel cell technology or cold fusion may one day deliver on the promise of virtually unlimited sources of clean energy. Ironically, one of the more promising energy futures may rest with solar thermal technology, which is essentially 18th century technology, but magnified to a massive scale. One recent study estimates that for a little over $400 17 In the European Union Emissions Trading System (EU ETS), each country was allowed to auction up to 5% of all permits in phase I and up to 10% in phase 2, while the rest were given away without charge; the European Commission has proposed that in phase III, beginning in 2014, 100% power sector allocations will be auctioned (Point Carbon, 2008). What Environmentalists Need to Know – (7) Climate Change 63 billion all of U.S. power (for both electricity and transportation) could be generated in the desert by solar thermal and distributed around the nation with large transmission lines (Zweibel, Mason, & Fthenakis, 2008). This would require massive government coordination, especially with the siting of thousands of miles of massive new transmission systems, but it is not entirely far‐fetched. Whatever the solutions to climate change, one thing is for sure; they all require a significant degree of government intervention in the marketplace and a serious and sustained commitment by the entire world community. References Americans and the World. (n.d.). Trade with China. World Public Opinion.org. Retrieved February 19, 2008, from http://www.americans‐world.org/digest/regional_issues/china/china5.cfm. Barker T., I. Bashmakov, L. Bernstein, J. E. Bogner, P. R. Bosch, R. Dave, O. R. Davidson, B. S. Fisher, S. Gupta, K. Halsnæs, G.J. Heij, S. Kahn Ribeiro, S. Kobayashi, M. D. Levine, D. L. Martino, O. Masera, B. Metz, L. A. Meyer, G.‐J. Nabuurs, A. Najam, N. Nakicenovic, H. ‐H. Rogner, J. Roy, J. Sathaye, R. Schock, P. Shukla, R. E. H. Sims, P. Smith, D. A. Tirpak, D. Urge‐Vorsatz, D. Zhou. (2007). Technical summary. In: Climate change 2007: Mitigation. Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change [B. Metz, O. R. Davidson, P. R. Bosch, R. Dave, L. A. Meyer (eds)], Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA. Bouton, M. M., C. Hug, S. Kull, M. Kulma, B. I. Page, T. C. Schaffer, S. Veltcheva, C. B. Whitney, and D. Yang. (2006). The United States and rise of China and India. The Chicago Council on Global Affairs. Retrieved on February 19, 2008, from http://www.thechicagocouncil.org/curr_pos.php. Carbon Tax Center. (2008, February 26). FAQs. Retrieved May 25, 2008, from http://www.carbontax.org/faq/. Cisco. (2006, June 22). China to contribute 27% to global economic growth by 2020. Press Release. Hong Kong: Author. Retrieved September 28, 2008, from http://newsroom.cisco.com/dlls/global/asiapac/news/2006/pr_06‐22.html. DeCanio, S. J. (2003). Economic analysis, environmental policy, and intergenerational justice in the Reagan administration: The case of the Montreal Protocol. International Environmental Agreement: Politics, law and economics, 3(4), 299‐321. Retrieved February 6, 2008, from ABI/INFORM Global database. Global Insight, Inc. (2005, August). Global macroeconomic scenarios and world trade statistics and forecast. (Contract No. 146531). Retrieved September 28, 2008, from http://www.pancanal.com/esp/plan/estudios/0303‐exec.pdf. International Monetary Fund. (2007, October). World economic and financial surveys. World Economic Outlook Database. Retrieved February 18, 2008, from http://www.imf.org/external/pubs/ft/weo/2007/02/weodata/index.aspx. International Monetary Fund. (2008, January 29). An update of the key WEO projections. World Economic Outlook. Retrieved February 20, 2008, from http://www.imf.org/external/pubs/ft/weo/2008/update/01/index.htm. IPCC. (2007). Summary for policymakers. In: Climate change 2007: The physical science basis. Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change [Solomon, S., D. Qin, M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M.Tignor and H.L. Miller (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA. What Environmentalists Need to Know – (7) Climate Change 64 McKibben, B. (2007, December 28). Remember this: 350 parts per million. Washington Post. Retrieved May 9, 2008, from http://www.washingtonpost.com. Metcalf, G. E., S. Paltsev, J. Reilly, H. Jacoby, J. F. Holak. (2008, May). Analysis of U.S. greenhouse gas tax proposals. NBER Working paper no. 13980. Abstract retrieved September 28, 2008, from http://www.nber.org/papers/w13980. Nordhaus, W. D. (2001, January 4). After Kyoto: Alternative mechanisms to control global warming. Joint session of the American Economic Association and the Association of Environmental and Resource Economists, Atlanta, Georgia. Retrieved September 28, 2008, from http://www.angelfire.com/co4/macroeconomics302/c.pdf. Nordhaus, W. D. (2007, Winter). To tax or not to tax: Alternative approaches to slowing global warming. Review of Environmental Economics, 1(1), 26‐44. Retrieved September 30, 2008, from http://nordhaus.econ.yale.edu/nordhaus_carbontax_reep.pdf. Organization for Economic Cooperation and Development. (2008). OECD environmental outlook to 2030. Danvers, MA: Author. Preview obtained September 28, 2008, from Google Books: http://books.google.com/books?id=8YSB8LMpLaYC&pg=PA82&lpg=PA82&dq=global+gdp +growth+2030&source=web&ots=e2yxcM7ym‐ &sig=uuSKowx1Z5lMCFzKugzvyTIJUew&hl=en&sa=X&oi=book_result&resnum=10&ct=res ult#PPA82,M1. Pew Research Center. (2007). Pew Global Attitudes Project. Retrieved February 16, 2008, from http://pewglobal.org/reports/display.php?ReportID=256. Point Carbon. (2008, March). EU ETS phase II – The potential and scale of windfall profits in the power sector. Godalming, Surrey, UK: World Wildlife Fund. Retrieved May 25, 2008, from http://www.wwf.org.uk/filelibrary/pdf/ets_windfall_report_0408.pdf. Polling Report, Inc. (2008a). International trade / Global economy. Polling Report.com. Retrieved February 19, 2008, from http://www.pollingreport.com/trade.htm. Polling Report, Inc. (2008b). Problems and priorities. Polling Report.com. Retrieved February 18, 2008, from http://www.pollingreport.com/prioriti.htm. S. Res. 1132, 112th Sess. (S.C. 1997‐98). Retrieved May 25, 2008, from http://www.scstatehouse.net/sess112_1997‐1998/bills/1132.htm. Schapiro, M. (2007). Exposed: The toxic chemistry of everyday products and what’s at stake for American power. White River Junction, VT: Chelsea Green Publishing. Sunstein, C. (2007). Of Montreal and Kyoto: A tale of two protocols. Harvard Environmental Law Review 32. Retrieved February 19, 2008, from http://www.law.harvard.edu/students/orgs/elr/vol31_1/sunstein.pdf. Union of Concerned Scientists. (2007, June 29). Findings of the IPCC Fourth Assessment Report: Climate change mitigation. Global Warming. Retrieved September 29, 2008, from http://www.ucsusa.org/global_warming/science_and_impacts/science/findings‐of‐the‐ ipcc‐fourth‐1.html#3. United States Climate Action Partnership. (2007). A call for action. Washington, DC: Author. Retrieved September 29, 2008, from http://us‐cap.org/index.asp. Zweibel, K., J. Mason, and V. Fthenakis. (2008, January). A solar grand plan. Scientific American. Retrieved September 30, 2008, from http://www.sciam.com/article.cfm?id=a‐solar‐grand‐ plan. What Environmentalists Need to Know – (7) Climate Change 65 Chapter 8 Conservation and Biodiversity Preservation For many, preserving wildlife is the signature goal of environmentalism; along with pollution control it has defined the movement since its inception. But preserving biodiversity is one of the most difficult challenges, which raises very complicated moral and philosophical questions, especially for economists. Economics is a discipline whose moral foundation rests on the utilitarian goal of maximizing society’s welfare. 1 For economists, intrinsic value rests with humans and humans only; non‐ humans have no intrinsic value whatsoever. From the economic perspective non‐humans only have value to the extent that humans value them directly or if they help provide services that humans value; apart from these sources their default value is zero. For example, whales have value because people derive pleasure from watching them and knowing that they exist out in the oceans. Wetlands have value because they provide storm protection and help to purify water, in addition to providing habitat for many birds that people value. Understandably, this strong form of anthropocentrism rattles many environmentalists. For most environmentalists, the great problems in the world stem from putting human values above else at the expense of the natural world. The notion that all of Nature’s creation has no intrinsic value is anathema to the core environmental ethic that all of life has essential value and is sacred. On the first day of class in my Environmental and Natural Resource Economics course I present this conundrum to my students and pose the following question: Is it possible to avoid anthropocentrism while making decisions about the environment? It turns out that it’s not as easy as many environmentalists make it seem. After all, if we decide that all life has intrinsic value it is we who have decided it; that is, humans deciding to assign values to non‐humans. In essence the anthropomorphism question is sort of a Catch‐22. Putting aside the philosophical angle, it is very difficult to operationalize an environmental ethic that automatically assumes that all life has intrinsic value. Does this mean that we should protect all species from extinction, even the ones that would go extinct through entirely natural processes (after all, 99.9% of all species that have ever existed are now extinct)? Does the intrinsic value of life apply equally to viruses and pathogens and parasites? Is it right to favor native species over invasive species? How do we prioritize what to preserve and protect if all life has intrinsic value? This last question is particularly important for the environmentalist. Saying that all life has intrinsic value or is sacred is in some sense a way of saying that all life is priceless. The problem with such a view is that it is impossible to compare the relative worth of one form of life with another if they are both priceless. 1 For background information on the utilitarian doctrine, read the original thesis by John Stuart Mill (1879), and visit the Encyclopedia Britannica online (West, 2008). What Environmentalists Need to Know – (8) Conservation and Biodiversity 67 For example, if a subspecies of snail is priceless than there is no way to say that saving the humpback whale is more important. If a rare subspecies of weed is priceless there is no way of saying that saving a tropical forest ecosystem is more important. The strongest form of environmental ethic, while perhaps intuitively appealing to our moral sensibility, can actually paralyze the policy process; this at a time when more than ever we need to focus resources and make hard choices about where to expend our energies. Fortunately, environmentalists and environmental organizations are pragmatic and want to get things done now. There is a growing recognition that time is not on our side and that we need to make great efforts to preserve the biodiversity that we value most, which is essentially a concession to the economists’ view of the world (even if not explicit). Along with top natural scientists, many groups have identified “biodiversity hotspots” that they are targeting for preservation based on their ecosystem uniqueness and standing biodiversity, both on land and sea. 2 Figure 1: Map of hotspots The majority of these areas are in the tropics, which are some of the poorest regions in the world. This poses a particularly difficult challenge for conservationists since not only do these areas lack sufficient funds for conservation, but there is immense pressure to exploit these resources and little institutional capability to prevent illegal resource extraction even when efforts are made to protect them. hotspot must contain at least 1,500 endemic species of vascular plants (>0.5% of the world’s total), and have lost at least 70% of the original habitat (Conservation International, 2008). World Wildlife Fund has identified 238 ecoregions in order to conserve the most comprehensive selection of the world’s flora and fauna. These regions were selected to represent the 26 habitat types and 7 biogeographic realms, and where further selections were necessary, ecoregions were compared and selected based on species richness, endemism, higher taxonomic uniqueness, extraordinary ecological or evolutionary phenomena, and global rarity of the dominant habitat type (2006). BirdLife International targets areas termed Endemic Bird Areas. These areas are identified as the locations where the restricted habitats (<50,000km2) of two or more endemic species overlap (2008). 2 Conservation International identifies 25 hotspots utilizing the definition put forth by Myers, et al (2000). A What Environmentalists Need to Know – (8) Conservation and Biodiversity 68 Economists tend to approach this challenge in a relatively straight‐forward manner: mechanisms should be developed to help those who most value biodiversity to pay those who are charged with stewardship over these resources to preserve them. The willingness and capability to devote significant monetary resources to biodiversity preservation is much greater among the richer nations of the world than the poorer, both because of the higher overall levels of wealth in the former and that biodiversity preservation is in many respects a luxury good (that is, the richer one becomes the greater percentage of one’s income one is willing to devote to this cause). 3 For example, it is almost certain that the people of the United States and Europe have devoted more money to rain forest preservation in the Amazon than the people of South America. This is not because the people of South America don’t care about the fate of the Amazon, but because the richer countries have much more disposable income and because in developed countries people spend a disproportionate amount of attention on environmental issues relative to issues of survival. For decades, organizations like the Nature Conservancy, Conservation International, and the World Wildlife Fund have been channeling donations from primarily wealthy donors in the developed world to conservation projects throughout both the developed and developing world. Not only is funding for conservation from rich countries to poorer countries efficient—matching demand with supply—but it is also equitable. After all, if the rain forests are truly the “worlds lungs,” which provide environmental services to billions of people outside of the countries where they are situated, then it is only right that the rest of the world should contribute to their preservation. This can be viewed as a corollary to the “polluter pays principle,” i.e. the beneficiary pays principle. In addition, many of the world’s biodiversity hotspots are under strain from climate change and the huge demand for natural resources, both of which have been fueled for centuries primarily by the industrialization of the developed world. Now that the wealthy countries have achieved very high standards of living it is only right that they devote a growing share of their resources to preserving the pristine areas of the natural world that are now threatened by global economic growth and reducing the concentration of greenhouse gases in the atmosphere. A significant amount of time at the recent Climate Change meeting in Bali, Indonesia was devoted to the issue of whether developing countries can receive carbon credits for not cutting down their forests, and hence preventing the release of the CO2 stored in them into the atmosphere. The poorer nations rightly view this as both a way to recognize the global value of their forests and to secure outside funding to ensure their preservation. 4 Without such funding it is more difficult for them to make the case that the best use of the forests is to leave them standing. 3 Using 145 Willingness to Pay estimates from 46 contingent valuation studies on six continents, Jacobsen and Hanley found that demand for biodiversity conservation increases with rising income (2008). 4 David Fogarty provides background information about the debate in his article published by Reuters (2007). Delegates at the Bali convention agreed to include the Reducing Emissions from Deforestation and Degradation (REDD) program in future talks on the post‐Kyoto global warming treaty. By the end of the Bali talks, they had agreed that the REDD program is important and should be strengthened, but left it at voluntary action (“Bali delegates,” 2007). At about the same time, the World Bank announced the formation of the Forest Carbon Partnership Facility as a fund to pay countries to not cut down their forests as proposed in the REDD program. As of December 11, 2007, developed countries (not including the United States) and one NGO had already pledged US$160 million (“World Bank fund,” 2007). What Environmentalists Need to Know – (8) Conservation and Biodiversity 69 In order to dramatically increase worldwide conservation to the levels that many scientists believe is necessary to stave off a major reduction in global biodiversity, rich countries would need to transfer a significant amount of wealth to poorer nations over the coming decades—on the order of hundreds of billions of dollars. To put things in perspective, in the post‐WWII era the richer countries have already transferred (in the form of foreign aid) in excess of two trillion dollars to poorer nations, often with little to show for it (Easterly, 2006). If even a fraction of the hundreds of billions of dollars a year that the rich countries spend subsidizing their farmers (often at the expense of the environment and many poor nation farmers) was devoted to greater global biodiversity preservation efforts, momentous progress could be made. In addition, “debt‐for‐nature” swaps, which so far only operate on a relatively small scale, represent a viable model in which governments or environmental organizations buy up low‐cost debt from developing countries in exchange for commitments to increase preservation efforts in the host country. 5 These types of transfers were popular in the 1980s and are beginning to make a resurgence. But money alone is not sufficient to ensure that biodiversity is preserved. Billions of people currently live in the areas that have been identified as biodiversity‐rich areas. 6 The old‐style belief that somehow we could cordon off the world’s natural treasures is giving way to a more balanced and nuanced approach that takes into account continued human presence in these areas and the needs of local populations, 7 which requires much more than simply buying up areas and designating them as natural parks or wilderness areas. Conservation plans now must provide serious alternatives to natural resource extraction and incentives for local groups to take an active role in preserving the surrounding areas over the long‐term, both of which require significant investment of both money and capacity building for effective monitoring and enforcement. There are also many conservation challenges that are much more local in nature and do not require large scale wealth transfers across countries. At the national, state, provincial, and city and town levels there are pitched battles for conservation and biodiversity preservation occurring every day. These conflicts sometimes pit farmers against developers, commercial fishermen against recreational fishermen, energy, mining, and timber companies versus local landowners, and almost always environmentalists are on the side of those favoring more conservation and less exploitation Debt‐for‐nature swaps generally fall in two major categories: bilateral debt‐for‐environment swaps by creditor (one country buys back the debt of a lesser developed country), and commercial debt‐for‐nature swaps (a private organization buys the debt of a lesser developed country). In both cases, the debt is purchased at a discount and then converted to the local currency and used to fund environmental programs or set aside protected areas (World Wildlife Fund, 2008). Between 1998 and 2002, more than $1.1 billion had been generated in conservation funds in more than 13 countries (WWF Center for Conservation Finance, 2003b; 2003a). The largest swap occurred in 2007 when the US government, Nature Conservancy and Conservation International came together to purchase $26 million of Costa Rica’s foreign debt at a discounted price of $12.6 million (“Costa Rica,” 2007). 6 Conservation International estimates the human population within biodiversity hotspots at approximately 2 billion (n.d.). 7 In fact, there has been much criticism of the environmental movement by those who believe that local people and indigenous groups have been treated unfairly. For examples, see Mathews (2005) and Melosi (2000). 5 What Environmentalists Need to Know – (8) Conservation and Biodiversity 70 of the natural world. As with virtually all public policy decisions, these conflicts entail inherent trade‐offs that result in winners and losers. Oftentimes environmentalists are at a disadvantage in the public policy process because the benefits to resource exploitation are easier to quantify than the benefits of preservation. For example, the economic gains from fisheries can be captured by valuing the amount of fish harvested and applying a multiplier factor that captures the overall economic impact to the local community, but the benefits of less fishing or a greater sea otter population are more difficult to quantify. The same goes for agriculture versus development; developers have an array of market prices with which to assign values to agricultural land conversion, which will almost always exceed the value of the crops currently grown on the land, while the value to the community of having a viable agricultural sector is hard to put a monetary value on. With extractive industries such as mining, energy, and logging, the current price of these commodities is transparent and provides a clear signal of the value of removing these natural resources, while the value of maintaining pristine ecosystems and open space is not something for which there is a readily apparent market price. Sometimes these non‐market uses of natural resources are referred to “non‐consumptive” uses since they do not rely on significantly altering the resources and the activities in question leave the resources essentially intact. As discussed in Chapter 3, economists have developed many techniques for what is referred to as “non‐market” valuation, which attempts to assign monetary values to the environmental goods and services that are not readily accessible in the market place. These techniques can help provide a fuller and more accurate account of the wide range of values that people derive from the natural environment. For example, most of us derive considerable value from viewing wildlife and pay significant sums of money to partake in this recreational activity. In instances where we pay to go on tours (or full‐ scale safaris or scuba trips for those of us that are lucky enough) there are readily available market prices with which to gauge the direct economic value from visitors. But what about those of us who simply visit public parks or drive down the coast stopping along the way to take in the views and watch the animals? There is no simple way to gauge our economic value for these excursions, but economists have come up with ways to estimate them. One of the most common and well‐respected methods is called the “travel‐cost method.” It originated in 1947 when economist Harold Hotelling was tasked with trying to estimate the public value of the U.S. national park system. 8 What Hotelling figured out was that although entrance fees couldn’t provide an accurate valuation of the parks (since they are set by the government and not subject to supply and demand forces, and only capture one dimension of the cost of visiting the parks), the amount of money people spend trying to get to them can provide a reasonable estimate of their direct value to citizens. By collecting information on how far people drive to get to the parks, economists can estimate a “virtual” demand curve for park recreation, and thereby estimate the public’s total benefit. Thousands of travel cost studies have been done over the years and since they rely on actual behavior that is easily quantifiable the results are taken quite seriously. These 8 Mr. Hotelling found that by dividing the area around a park into concentric zones and then comparing the cost of traveling from a particular zone to the percentage of inhabitants of a particular zone who actually travel to the park, the park officials could plot a point for each zone on a demand curve for the service of the park, and thus determine the economic value of a visit to the national park (1947). What Environmentalists Need to Know – (8) Conservation and Biodiversity 71 results can not only help environmentalists determine values for environmental resources that are not available from market data, but they can help to prioritize efforts by highlighting the types of things that people value the most. Travel‐cost studies can be used to estimate environmental values for a variety of resources, both terrestrial and marine. Another interesting and well‐tested method for determining non‐market values is called “hedonic estimation.” It is based on the principle that when consumers buy goods what they are really buying is bundles of attributes. For example, when someone buys a house they are buying a collection of things, such as the number of rooms, the view, the safety of the neighborhood, the quality of the schools, and the proximity to other resources they value. What if one of those attributes is open space, how could we determine how much of the home price can be attributed to being near a park or forest? In principle, if we could somehow find two identical houses in every way except that one was in the middle of a residential area and the other bordered the open space, the difference in price would tell us how much the open space contributed to the value of the house (if at all). Since in practice this is not possible to do, what economists have developed is a method by which large samples of data, which differ on many dimensions, can be used to “tease out” the distinct contributions each attribute makes to the final price of the good. This has proven particularly effective in determining the value of cleaner air, the absence of traffic noise, or proximity to a landfill. Once again, the key message for environmentalists to take from these examples is that economics, while on the one hand it may threaten to reduce environmental resources to monetary values, it can at the same time help assign monetary values to resources that usually are considered secondary in public decision‐making. Environmentalists should take heart that in many instances (though not always) the non‐market and non‐consumptive values for natural resources are actually much greater than the market values based on extraction and exploitation. 9 It is often the case that a full accounting of the values that society derives from natural resources favors their preservation over exploitation. One of the primary challenges for environmentalists is to make sure this full spectrum of values is taken into account in the public policy process, and not just the interests of the extractive industries. One of the more promising avenues for promoting economic development and environmental conservation at the same time is nature‐based tourism. Though not without its critics, ecotourism is an attempt to directly link conservation to economic benefits, which does not necessarily require elaborate funding mechanisms or transfers of wealth, but instead relies on tried and true business principles. Ecotourism matches the growing demand for nature‐based tourism with the desire by local inhabitants to find alternative ways to promote economic development that provides incentives for biodiversity conservation. For many years I was somewhat of a skeptic as to the potential and efficacy of ecotourism as a preservation model until I heard a lecture by a famous National Geographic photographer. 9 Two examples of highly valued natural resources are Polish forests and the Hawaiian coral reefs. Using the travel cost methodology, the annual recreational value of Polish forests in 2005 was approximately 5‐8.5 billion Euros, or 570‐970 Euros per hectare (Bartczak, Lindhjem, Navrudm, Zandersen, & Zylicz, 2008). Hawaii’s coral reefs are estimated to contribute $360 million annually to the Hawaiian economy and have an overall asset value of approximately $10 billion (Cesar & van Beukering, 2004). What Environmentalists Need to Know – (8) Conservation and Biodiversity 72 During his talk he retold the story of one of his trips to the Pantanal in Brazil (the world’s largest freshwater ecosystem that is home to an amazing array of South American biodiversity) in which he pointed to a rare and endangered bird and asked the local guide about it. The guide’s response was that it tasted good. Aghast that people were eating this endangered animal, the photographer told the guide that he would pay $100 if he could help him get a good photo of the bird. This was an incredible amount of money for the guide and he proudly helped the photographer get some close‐ up shots. The photographer then told his friends about the guide and promised him future business, premised on the guide’s ability to ensure future visitors such great access for viewing. Immediately, the guide’s view of this endangered bird changed. No longer did he view it as a source of food, but as something to cherish and protect, both because of the tremendous revenue he could generate by protecting it as well as the pride he took in knowing that people from the outside valued his local wildlife. This anecdote, while just that, impressed upon me the power of economic incentives at the grassroots level. Most people want to preserve the natural world, but their economic circumstances often force them to exploit it for short‐term gain if they are struggling to survive and improve the lives of their families. The poor often do not have long‐term time horizons because they do not know if they will even be around in the distant future. By creating direct economic values for local conservation, nature‐based tourism is filling a crucial need in the environmentalists’ toolbox. This leads to a larger point that is often overlooked by economists: people only can value things that they are aware of. For example, people who don’t know about the environmental benefits of forests or that a rare type of fresh water dolphin just went extinct in China cannot attribute values to these things (Lovgren, 2006). For this reason environmental education is extremely important in providing a foundation for promoting the values of biodiversity preservation. Every time a person experiences the majesty of nature or learns to appreciate human dependence on ecosystem services it is very likely that their valuation of a whole host of environmental resources will increase. Another anecdote is in order. From 1995‐2000 Mitsubishi had plans to open a major salt works operation in Baja, Mexico near one of the most pristine and largest lagoons where grey whales congregate every year. The Natural Resource Defense Council (NRDC) worked tirelessly to fight this development, and just when it seemed like they were going to lose an interesting thing happened. Mexican Minister of Natural Resources Julia Carabias convinced then Mexican President Ernesto Zedillo to come out with them to the lagoon and see the whales firsthand before making the final decision on the project. President Zedillo took along his young children on the small dingy boats into the lagoon. Once on the water, they were soon surrounded by the grey whales with one of them coming close enough to touch. 10 Needless to say, the President and his son were deeply moved by this experience. The next day the President rejected Mitsubishi’s plans for the salt works. It’s not possible to attribute this decision solely to the experience on the boat trip, but from all accounts this intimate encounter with the whales was a deciding factor (Smith, 2001). Personal experience and direct contact with nature’s bounty is one of the best ways to instill a conservation ethic. Before concluding this discussion of the channels through which economic analysis may play a role in conservation and biodiversity preservation, there are some additional issues worth considering. 10 This area is famous for close encounters with whales. For photos go here: http://www.nrdc.org/wildlife/marine/baja/bajainx.asp. What Environmentalists Need to Know – (8) Conservation and Biodiversity 73 1. The relative failure of “bioprospecting” Whereas nature‐based tourism holds great promise for future conservation efforts, it is instructive to examine the widely held belief during the 1980s and into the 90s that the potential for great pharmaceutical discoveries in the natural world would provide significant incentives to halt deforestation and species extinction. The essential logic behind “bioprospecting” was that companies and local communities would do better economically scouring the forests for new medicines than cutting down the trees. While a few joint agreements in Costa Rica and Belize between western pharmaceutical companies and local governments produced economic development opportunities, conservation victories, and some minor discoveries with economic value, overall the bioprospecting movement has been a great disappointment. 11 The reality is that many plants contain the same elements as others, thereby making conservation of large tracts redundant, and synthetic chemicals have been replacing naturally‐derived medicines, further limiting the economic potential of new discoveries of plant‐based compounds (Simpson, Sedjo, & Reid, 1996). 2. The “bush meat” and exotic wildlife trade The demand for “bush meat”—animals caught in the wild and sold for food—in many parts of the world, along with the demand for exotic pets and animals, and plants for jewelry and medicines is exacting a terrible toll on the world’s biodiversity. In particular, the demand for shark fins is devastating many marine ecosystems and entire shark populations, while the demand for wild meat throughout Africa is leading to massive depopulation of numerous threatened species of primate. 12 In the past the demand for ivory decimated the world’s elephant population and the current demand for tiger bone has led to dangerously low levels of these majestic animals. The trade in virtually all of these commodities is driven not by the desperate poor struggling to survive (although they are often the ones engaged at the supply side), but by the middle class and the wealthy in both the developed and developing world who are willing to pay high prices for these products. Much of the trade in these wildlife products is illegal, but as visitors to open‐air markets throughout Asia and Africa can attest, in many places enforcement is lax or non‐existent. million up front for the right to sample plant, animal, and insect species from within protected areas of Costa Rica. The Costa Rican government agreed to invest 10% of the upfront fee and 50% of the royalties back into conservation and biodiversity protection. (Agreement between Merck and Costa Rica, n.d.). Initial funding for the 2,400 hectare Terra Nova Rainforest Reserve in Belize came from Shaman Pharmaceuticals (Spiro, 1998). The park was deeded to the Belize Association of Traditional Healers in June 1993 for four purposes: extraction of traditional medicinal plants, a location for traditional healing education and apprenticeship, ethnobotanical and ecological research, and ecological tourism (Balick, Arvigo, & Romero, 1994). Shaman Pharmaceuticals formed and funded the Healing Forest Conservancy as a non‐profit organization through which they could send product profits back to the indigenous communities in the form of specific programs (King & Carlson, 1995). 12 Beyond the over 800,000 metric tons of shark that were harvested for meat, up to an additional 260,000 metric tons were slaughtered for their fins and thrown back into the ocean. Many shark populations are currently at around 80% of their pre‐industrial fishing population levels. Without the top predator, many ecosystems become unbalanced and cannot survive (WildAid, 2007). In addition to the large quantities of African bushmeat hunted for subsistence, 13,000lbs of bushmeat are exported to Western countries annually (Newsweek, 2007). Surveys conducted between 1998 and 2000 found that due to hunting and disease, ape populations had more than halved since 1983 (Weiss, 2003). 11 In the 90s, Merck entered an agreement with Costa Rica’s National Biodiversity Institute (INBio) to pay $1.1 What Environmentalists Need to Know – (8) Conservation and Biodiversity 74 As with the illegal drug trade, the only way to stop the supply is to decrease demand at the source. Organizations like WildAid have been very effective at airing commercials using famous celebrities imploring people to stop buying things such as shark fin soup. 13 Effective education campaigns that shame people may be one of the most effective ways to combat what has been a growing phenomenon. On a side note, the development of Viagra has supposedly decreased the demand for some rare animal parts known for their aphrodisiac properties (Kindest cut of all, 2002). 3. Too much attention on “charismatic megafauna”? Within the environmental movement there has always been a tension between the popular demand for the preservation of “charismatic megafauna” such as whales, dolphins, polar bears, bald eagles, and seals, and the conservation of other strata of species, such as reptiles, amphibians, and small plants and animals that may play just as important a role in ecosystem functioning, but not capture the public’s imagination to the same extent. 14 In some sense, this problem can be viewed as one of education: people simply need to be informed as to the greater value of the less “sexy” animals and plants and be made to appreciate a wider spectrum of environmental resources. Some argue that since the megafauna are often dependent on a whole host of lower species that support the ecosystem making this leap shouldn’t be too hard. There is counterargument that says there is nothing wrong with people valuing animals like whales more than salamanders, since it is we who have to decide what to prioritize and we should be able to choose to focus on the things that give us the most pleasure. This may seem short‐sighted to some conservation purists, but we are likely all susceptible to this logic to some extent; after all, if we had the choice how many of us would choose saving a salamander over a whale? But clearly, economic criteria are not the only criteria for determining value, and it may well be the case that the public’s infatuation with “sexy” animals has channeled money and resources into some areas that do not represent the best conservation options or “bang for the buck.” Working on establishing a greater role for purely science‐based measures of conversation priorities in the public‐policy process may be a fruitful strategy for environmentalists to pursue, along with greater educational efforts. References Agreement between Merck and Costa Rica’s National Biodiversity Institute, The. (n.d.). Intellectual property right and the environment. Retrieved October 12, 2008, from http://www.american.edu/TED/hpages/ipr/misa.htm. Bali delegates agree to support forests‐for‐climate (REDD) plan. (2007, December 16). Mongabay.com. Retrieved February 21, 2008, from http://news.mongabay.com/2007/1215‐redd.html. Balick, M. J., R. Arvigo, and L. Romero. (1994). The development of an ethnobiomedical forest reserve in Belize: Its role in the preservation of biological and cultural diversity. Conservation Biology, 8(1), 316‐317. Retrieved March 23, 2008, from Jstor. 13 More than 80 celebrities have filmed public service announcements that have reached more than 1 billion viewers globally per week. These PSAs can be viewed on the WildAid website at: http://www.wildaid.org/index.asp?CID=7&PID=507 14 For a great paper on this see Metrick and Weitzman (1998). What Environmentalists Need to Know – (8) Conservation and Biodiversity 75 Bartczak, A., H. Lindhjem, S. Navrud, M. Zandersen, and T. Zylicz. (2008). Valuing forest recreation on the national level in a transition economy: The case of Poland. Forest Policy and Economics, 10(7‐8), 467‐472. Retrieved November 18, 2008, from http://mpra.ub.uni‐ muenchen.de/11483/. BirdLife International. (2008). EBA Programme. BirdLife International Data Zone. Retrieved February 20, 2008, from http://www.birdlife.org/datazone/ebas/eba_programme.html. Cesar, H. S. J. and P. J. H. van Beukering. (2004). Economic valuation of the coral reefs of Hawaii. Pacific Science, 58(2), 231‐242. Abstract retrieved December 9, 2008, from http://www.cababstractsplus.org/google/abstract.asp?AcNo=20043090540. Conservation International. (2005). Map of Hotspots. Biodiversity Hotspots. Retrieved February 20, 2008, from http://biodiversityhotspots.org/xp/hotspots/resources/Pages/maps.aspx. Conservation International. (2008). Hotspots Defined. Hotspots Science. Retrieved February 20, 2008, from http://www.biodiversityhotspots.org/xp/hotspots/hotspotsscience/Pages/hotspots_defin ed.aspx. Conservation International. (n.d.). Human Population. Biodiversity Hotspots. Retrieved February 27, 2008, from http://www.biodiversityhotspots.org/xp/hotspots/hotspotsscience/hotspots_in_peril/Pag es/human_population.aspx. Costa Rica gets largest debt‐for‐nature swap. (2007, October 17). World News – World Environment. Retrieved February 27, 2008, from http://www.msnbc.msn.com/id/21345405/. Easterly, W. (2006). The white man’s burden: Why the West’s efforts to aid the rest have done so much ill and so little good. New York: Penguin Press. Citation retrieved May 26, 2008, from http://www.amazon.com. Fogarty, D. (2007, December 5). Saving rainforests a thorny issue at Bali talks. Reuters. Retrieved February 21, 2008, from http://www.reuters.com/article/environmentNews/idUSSP15328520071205?sp=true. Hotelling, H. (1947). Letter to the National Park Service. Published in Prewitt. (1949). The Economics of Public Recreation. The Prewitt Report. Washinton DC: Department of the Interior. Retrieved February 27, 2008, from http://selene.uab.es/prieram/carta.htm. Jacobsen, J. B. and N. Hanley. (2008, August 8). Are there income effects on global willingness to pay for biodiversity conservation? [Electronic version]. Environmental and Natural Resource Economics. Abstract retrieved October 12, 2008, from SpringerLink: http://www.springerlink.com/content/mn20014x2473736u/. Submitted manuscript available at http://www.economics.stir.ac.uk/People/staff/Hanley/jacobsen%20and%20hanley%20re vised.pdf. Kindest cut of all, The. (2002, November 16). The Economist. Retrieved March 2, 2008, from Lexis‐ Nexis. King, S. R. and T. J. Carlson. (1995). Biocultural diversity, biomedicine, and ethnobotony: The experience of Shaman Pharmaceuticals. Interciencia, 19(3), 134‐139. Retrieved November 11, 2008, from http://interciencia.org/v20_03/art03/index.html. Lovgren, S. (2006, December 14). China’s rare river dolphin now extinct, experts announce. National Geographic News. Retrieved February 27, 2008, from http://news.nationalgeographic.com/news/2006/12/061214‐dolphin‐extinct.html. Mathews, S. (2005). Imperial imperatives: Ecodevelopment andthe resistance of Adivasis of Nagarhole National Park, India. Law, Social Justice, and Global Development Journal (LGD), 1. Retrieved October 12, 2008, from http://www2.warwick.ac.uk/fac/soc/law/elj/lgd/2005_1/mathews/. What Environmentalists Need to Know – (8) Conservation and Biodiversity 76 Melosi, M. V. (2000). Environmental justice, political agenda setting, and the myths of history. Journal of Policy History, 12(1), 43‐71. Abstract retrieved October 12, 2008, from Project MUSE: http://muse.jhu.edu/login?uri=/journals/journal_of_policy_history/v012/12.1melosi.html. Metrick, A. and M. L. Weitzman. (1998, Summer). Conflicts and choices in biodiversity prerservation. The Journal of Economic Perspectives, 12(3), 21‐34. Retrieved March 2, 2008, from Jstor. Mill, J. S. (1879). Utilitarianism. London: Longmans, Green, and Co. In The Project Gutenberg. (2004). Retrieved February 20, 2008, from http://www.gutenberg.org/ebooks/11224. Myers, N., R. A. Mittermeier, C. G. Mittermeier, G. A. B. da Fonseca, and J. Kent. (2000, February 24). Biodiversity hotspots for conservation priorities. Nature, 403, pp 853‐858. Retrieved February 20, 2008, from http://www.ithaca.edu/faculty/rborgella/environment/biodiversity_hotspot.pdf. Newsweek. (2007, July 29). Slaughter in the jungle: Chief threat to world's endangered species no longer habitat destruction. PR Newswire. Retrieved March 2, 2008, from ABI/INFORM Dateline database. (Document ID: 1311780681). Simpson, R. D., R. A. Sedjo, and J. W. Reid. (1996, February). Valuing biodiversity for use in pharmaceutical research. The Journal of Political Economy, 104(1), 163‐185. Smith, M. (2001, November). The unlikely environmentalists. Phoenix New Times News. Retrieved March 2, 2008, from http://www.phoenixnewtimes.com/2001‐11‐22/news/the‐unlikely‐ environmentalists/full. Spiro, G. (1998, May). What’s Rosita Arvigo up to now? An update. The Monthly Aspectarian: The magazine for the New Age (online edition). Retrieved November 11, 2008, from http://www.lightworks.com/MonthlyAspectarian/1998/May/0598‐07.htm. Weiss, R. (2003, April 7). Africa's apes are imperiled, researchers warn [FINAL Edition]. The Washington Post, p. A.07. Retrieved March 2, 2008, from National Newspapers Core database. (Document ID: 321804241). West, H. R. (2008). Utilitarianism. As contributed to Encyclopedia Britannica. Retrieved February 20, 2008, from http://www.utilitarianism.com/utilitarianism.html. WildAid. (2007). The end of the line?(2nd edition). San Francisco: WildAid. Retrieved March 2, 2008, from http://www.oceana.org/sharks/shark‐report. World Bank fund will pay to leave forests standing. (2007, December 11). Environmental News Service. Retrieved February 21, 2008, from http://www.ens‐ newswire.com/ens/dec2007/2007‐12‐11‐01.asp. World Wildlife Fund. (2006). Role of the Global Ecoregions and how they are selected. World Wildlife Fund Where we Work. Retrieved February 20, 2008, from http://www.panda.org/about_wwf/where_we_work/ecoregions/about/role/index.cfm. World Wildlife Fund. (2008). Debt‐for‐nature swaps. Conservation Finance. Retrieved February 27, 2008, from http://www.worldwildlife.org/conservationfinance/swaps.cfm. WWF Center for Conservation Finance. (2003a). Bilateral debt‐for‐nature swaps by creditor. Debt­ for­nature swaps. Retrieved February 27, 2008, from http://www.worldwildlife.org/conservationfinance/pubs/bilateral_swaps_summary.pdf. WWF Center for Conservation Finance. (2003b). Commercial debt‐for‐nature swaps summary table. Debt­for­nature swaps. Retrieved February 27, 2008, from http://www.worldwildlife.org/conservationfinance/pubs/commercial_swaps_summary.pd f. What Environmentalists Need to Know – (8) Conservation and Biodiversity 77 Chapter 9 Agriculture Agriculture is the greatest human alteration of the natural world; currently more than 38% of the world’s land has been converted to agricultural production (Food and Agriculture Organization, 2004). In most cases the conversion to agriculture causes a dramatic decrease in biodiversity, since it is often forests that are cleared to make way for crops. In addition to losses in biodiversity, agricultural production is rife with externalities caused by pesticide use, soil erosion, and water and energy use. Given agriculture’s scope and its dramatic impacts on the environment it is surprising that agricultural policy usually does not garner the attention from the environmental community that it deserves. Agricultural issues are by no means ignored by the major environment organizations, but as their monthly periodicals and newsletters can attest, issues such as oil drilling, whaling, and regulations for power plants receive a disproportionate amount of attention. I am not exactly sure why this is the case, but it likely has something to do with the romantic notion of farming that still persists, ironically, in the developed countries where so few people actually farm. There are no doubt tens of thousands of farmers who live up to the ideals of proper land stewardship, but agriculture is big business, where profits often trump environmental concerns; even many “family farmers” are not immune to practices that are severely damaging to the environment. The negative environmental costs of agriculture must be weighed against the tremendous benefits that agriculture has brought us. 1 The agricultural productivity gains of the last century were the foundation for much of the economic growth that propelled the United States and Europe and helped to free up resources for other aspects of industrial development. These gains were not just relegated to the developed world. The “Green Revolution” technologies that dramatically increased yields are estimated to have saved the lives of hundreds of millions of people around the globe; for this reason Dr. Norman Borlaug received a Nobel Peace Prize for his work in the area of plant genetics. 2 When dealing with something as pervasive and fundamental for society as the production of food, it is difficult to accurately quantify all of the myriad benefits that come from a strong agricultural sector and low‐cost nutrition. It is much easier to identify specific aspects of the agricultural system that are clearly counter‐productive in that they promote negative environmental outcomes without any counterbalancing benefits. We now turn to two main examples, production and water subsidies, followed by a discussion of other environmental impacts of agriculture that warrant policy interventions. 1 For a contrarian view see Jared Diamond’s "The Invention of Agriculture: The Worst Mistake in the History of the Human Race” (1987). yields three times as large as previous strains. Exporting these strains to India in the late 1960s increased India’s food production such that the country shifted from the brink of starvation to food self‐sufficiency (“Ears of plenty,” 2005). In 2005, Dr. Borlaug and Former President Jimmy Carter defended the use of genetically modified crops to improve crop yields and alleviate hunger in areas where the farmers must cultivate marginal lands (Borlaug & Carter, 2005). 2 Through selective breeding of mutant wheat strains in Mexico, Dr. Borlaug developed strains of wheat with What Environmentalists Need to Know – (9) Agriculture 79 Agricultural Production Subsidies The agricultural production subsidies that persist in the United States, Europe, Japan, South Korea and other countries 3 to the total of over $200 billion a year result in huge environmental damage (Organization for Economic Co‐operation and Development, 2004b). Most of these subsidies were born in the early 20th Century, around the time of the Great Depression, when large segments of the population worked in agriculture and agricultural production in many regions had come to a standstill. They were used as a way to sustain farming and rural livelihoods and have stayed with us ever since. Unfortunately, not only have they greatly outlived their usefulness, they contribute to massive over‐production, besides being a colossal waste of money. Production subsidies pay farmers a per unit amount to produce certain crops—mostly commodities such as wheat, rice, soy, corn, and cotton—usually based on the difference between the current market price and a predetermined price floor. 4 Faced with subsidy payments farmers produce much more than they would in a free market system. Not only do they expand acreage, but much of this expansion occurs on marginal lands, since the best lands are always used first. These marginal crops require even more fertilizers and pesticides, and are grown on soils that are prone to erosion. All of this leads to unnecessary environmental harm. In addition, most of the subsidies go to larger farmers who own the most land; in a process called “land capitalization” the subsidies result in higher land prices since owners of the land get guaranteed payments from the government. This creates a barrier to entry to those who want to enter the farming sector and directly harms those who lease their land, while benefiting the land owners. The obvious solution is to eliminate agricultural production subsidies by slowly phasing them out over a decade or so to give farmers sufficient time to adjust. This would not only yield tremendous environmental benefits, but save taxpayers billions of dollars a year that could be devoted to dozens of other causes that merit greater investment. 3 Countries with agriculture production subsidies: Producer Support Estimate per cent of Gross Farm Receipts: 2003-2005** Iceland Norway Switzerland Korea Japan EU OECD Romania Turkey 27% 24% 2004-2006* 66% 66% 66% 63% 55% 34% 29% Russia US Mexico Bulgaria China South Africa Australia Brazil Ukraine 5% 3% 8% 8% 8% 5% 2003-2005** 17% 14% 14% 2004-2006* Canada 22% New Zealand 1% *(Organization for Economic Co‐operation and Development, 2007b) **(Organization for Economic Co‐operation and Development, 2007a) 4 Globally, the top 10 subsidized crops, from most to least heavily subsidized, are: milk, beef and veal, rice, wheat, pig meat, maize, other grains, oilseeds, poultry, and sugar (Organization for Economic Co‐operation and Development, 2004a). What Environmentalists Need to Know – (9) Agriculture 80 Unfortunately, due to both the disproportionate political power that agribusiness maintains throughout the world, and a lack of knowledge on the part of the public, there is little indication that there is the political will to diminish the role of production subsidies in the agricultural sector in most countries. The U.S. situation is particularly difficult since the main agricultural states have disproportionate representation in the U.S. Senate and are also some of the major “swing” states in national elections, which politicians must pander to for votes. 5 The inability to reduce agricultural subsidies is one of the main reasons that the most recent Doha round of multilateral trade talks has reached an impasse. Many developing countries rightly contend that the over‐production caused by production subsidies decreases the world price of agricultural commodities, which then harms their producers who do not have the benefit of wealthy governments to subsidize them. It is estimated that food‐exporting nations are harmed to the tune of tens of billions of dollars a year because of artificially depressed world prices for their crops. 6 While the multilateral process has stalled, there have been some positive developments coming out of the World Trade Organization (WTO) judicial body. Since agricultural production (and export) subsidies greatly distort world trade in agricultural goods, the WTO has repeatedly ruled against the U.S. in cases brought by developing countries harmed by U.S. agricultural policy. 7 While the U.S. has been slow to heed the WTO rulings, as evidenced by new farm legislation that maintains most of the current subsidies, 8 the EU has made some great strides in moving away from production subsidies over the past decade. Even though the EU still greatly subsidizes its farmers, the types of payments are now largely “decoupled” from production; that is they are not linked to how much farmers produce and therefore do not encourage as much over‐production. The EU has largely shifted to a system where farmers are paid lump‐sum payments, as a form of minimum income insurance, as well as payments to engage in specific agricultural practices that are more environmentally benign. 9 This is certainly an improvement over the production subsidy system and may present a model for other countries to follow. Large agribusiness interests who stand to lose tens of millions in direct payments will still resist it, but at least it presents a compromise that many parties have already accepted. 5 Each state is allowed two senators; however on a per capita basis, the main agricultural state senators (except California) represent fewer people than many non‐agricultural‐state senators. 6 Even the developed countries suffer from artificially depressed food prices. In 1991, it was estimated that the developed market economies would gain $35 billion annually by the removal of agricultural subsidies (above and beyond the savings in government revenue) (Council of Economic Advisers, 1991). 7 For example, see the US – Florida Excise Tax case and the US – Upland Cotton case (World Trade Organization, 2008a and 2008b). 8 In May 2008, Congress finally passed the 2007 Farm Bill legislation, which was immediately vetoed by President George W. Bush. Both houses then voted to override the veto and enact the Farm Bill (Walsh & Barrett, 2008). The USDA page with information about the bill is found at http://www.usda.gov/wps/portal/usdafarmbill?navtype=SU&navid=FARM_BILL_FORUMS 9 Like the Europeans, the proposed U.S. Farm Bill includes provisions such as the Conservation Reserve Program (CRP) and the Environmental Quality Improvement Program (EQIP) that pay farmers for environmental measures, but the overwhelming bulk of U.S. farm payments remain in the form of direct production subsidy payments. Approximately 14% of the $290 billion Farm Bill is marked for crop subsidies; more than 65% of the bill goes toward food stamps and emergency food aid programs, and 1% is for foreign food aid (Woodruff, 2008). What Environmentalists Need to Know – (9) Agriculture 81 Most economists would agree that farmers should receive no subsidies, since workers in many industries face uncertainties and risks just as great as in agriculture. Farmers can purchase crop insurance on the private market, just as other businesses buy insurance for all sorts of potential losses. New Zealand was one of the first developed countries to scrap its entire agricultural subsidy system back in 1984‐1985. 10 Today New Zealand’s agricultural sector is thriving, with farmers competing on global markets through innovation and efficiency, and free from government support (Birrell, 2007; Sayre, 2003). Not all New Zealand farmers are still in business, but turnover exists in every industry and overall New Zealand’s agricultural sector is strong. There is one last point regarding agricultural subsidies that has important global ramifications, especially for the poor. It has been noted that by depressing the global prices of agricultural commodities, production subsidies harm agricultural exporting nations in the developing world. But those developing countries that are net food importers actually benefit from cheaper food on world markets; at least, the urban consumers benefit. Any change in the global subsidy system that led to a further increase in world food prices could hurt these poor food‐importing countries. Two important things to keep in mind: the poorest of the poor in most of these countries are in the rural areas and the extent to which their income could be boosted by higher prices for their crops would be a plus; the money saved by wealthy countries by eliminating the subsidies would be more than enough to make up for the increased food prices in the poorer countries. A multilateral agreement that combined a reduction or the elimination of agricultural production subsidies in the developed world with increased assistance to the developing world would likely be a win‐win scenario for the environment and the world’s poor. Subsidized Water Water scarcity is becoming an increasingly important issue. Already there is talk that water is becoming the new “black gold” (a reference to the dominant role that oil plays in the world economy, along with the strife that accompanies it). There are no doubt many regions of the world where water shortages are severe enough that there is literally not enough water to maintain a reasonable standard of living for the populace, in addition to water for other economic purposes, let alone to support local biodiversity. But, in fact, in most parts of the world, even those regions where fresh water supplies are decreasing, the primary issue is not one of absolute water scarcity, but how the water is distributed. And in many regions and countries the bulk of fresh water resources go to agriculture, often at highly subsidized rates, which again, is both environmentally damaging and a waste of public resources. 11 My home state of California is a perfect example. 12 Here 80% of all of the states’ water goes to agriculture (Office of Water Use Efficiency, 2008), at prices that are a fraction of its true value, both 10 For more information about the program, read articles published by the Frontier Center for Public Policy 11 According to the most recent Food and Agriculture Organization of the United Nations data (2000‐2006, (Federated Farmers of New Zealand, 2002) and the UN Environmental Program (1999). depending on the country) approximately 70% of global water use is by the agricultural sector (Food and Agriculture Organization, 2008). 12 The history of how California farmers were able to establish rights to such vast quantities of water at such highly subsidized rates is extremely complicated and the subject of many articles and books. The legendary battles over California rights have been popularized in such movies as Chinatown and the highly entertaining book Cadillac Desert. What Environmentalists Need to Know – (9) Agriculture 82 with respect to what others are willing to pay for it and the costs of capturing and transporting it. The result is that in California a huge amount of water wasted; hundreds of thousands of acre‐feet of fresh water are used for relatively low‐value crops in areas that could never naturally support such production. Not only does this lead to much less water for residential use, but the environment has been one of the biggest losers in the state’s water wars. For decades many rivers have been deprived of sufficient water to maintain healthy levels of fish and other biodiversity, leading to large areas that are essentially devoid of sustainable biological populations; this in a state where river recreation and wildlife tourism is extremely popular and lucrative. This practice is technically illegal in California, but this has not stopped many water districts from taking more than their share of the state’s water for their agricultural interests for many decades. One of the state’s longest‐running lawsuits pitted the Friant County Water District against the Natural Resources Defense Council (NRDC, which represented the people of California). The NRDC claimed that the Friant County Water District was legally obligated to leave sufficient water in the San Joaquin River to maintain the historic salmon populations, when in fact the district for decades had removed so much water that large stretches of the river were rendered virtually lifeless. After numerous appeals and decades of legal action the NRDC won its lawsuit in September 2006 (“Water to flow,” 2006; U.S. Bureau of Reclamation, 2006). California is not alone in having a highly inefficient system of water distribution in which the environment and consumers are the net losers. The question is how to move to a more equitable and efficient distribution system. It is often the case that changes in water policy are precipitated by legal challenges such as the one described above, given the entrenched nature of water interests and the huge stakes. The legal process is costly, both in time and money, and water rights issues routinely elicit some of the strongest emotions; they are renowned for the inability of the parties involved to reach a compromise settlement. Since water is a public resource the state is the principle arbiter of establishing a baseline of rights and distribution. Ironically, the fact that in so many parts of the world so much water is being wasted is good news; it means that there is sufficient water available for both human and environmental needs. One of the policy recommendations most popular among economists is to create water markets, which allow users to buy water rights from farmers and for farmers to trade amongst each other. This can go a long way to dealing with the efficiency issue; farmers that grow low‐value crops will have an incentive to sell to higher‐value users, including other farmers, residential users, industry, and environmental groups. It is estimated that if we had a fully‐functioning water market in California the agricultural sector would shift considerably; we would still have large scale production of high‐value crops such as nuts, tree fruits, and avocados, but little to no alfalfa or rice production. This shift would free up water for many of the states beleaguered rivers as well as for increased residential uses to meet the needs of the growing population. Creating water markets requires first and foremost the clarification of the property rights over water so that traders can be confident that they are obtaining rights that are legally binding. In addition, a trading system has to be established along with methods of transporting water from one What Environmentalists Need to Know – (9) Agriculture 83 user to another, which requires significant infrastructure. Water markets do not address the equity issue as to whether the existing rights to water are fair or not. But they do at least allow for water to be used in high‐value activities instead of being wasted. Pollution from Pesticides, Fertilizer, and Animal Waste When environmentalists get engaged in agricultural issues it is often the air and water pollution from agriculture that captures the most attention, pesticides being the most obvious; this is unsurprising given the health impacts of pesticide residues in our food and the immediate harm suffered by farm workers. Before discussing pesticide policy, it is worth noting two other very serious pollution issues associated with agriculture that tend to garner less attention. The first is fertilizer use, which results in massive damage to underground aquifers, and perhaps more importantly, to rivers and coastal areas. The nitrogen content of fertilizers, in particular, can starve water systems of oxygen, leading to huge algae blooms and choke off all other forms of life. This phenomenon has resulted in large “dead zones” in coastal regions throughout the world. 13 One of the largest dead zones is off of the Gulf Coast of the United States, fueled by the massive quantities of fertilizers used in fields of the Midwest, which makes its way down the rivers and empties into the sea. On its way many river systems are also damaged and groundwater is polluted. No one suggests banning these types of fertilizers since they are essential to industrial agricultural production. However, it is clear that too much is entering the environment. As is typical, economists have two approaches to the issue. The first is to tax fertilizers based on their capacity to pollute, with the most water soluble forms being taxed the most. Faced with a significant cost for highly polluting nitrogen fertilizers, farmers would have the option of switching to less damaging methods of fertilization, such as the use of nitrogen‐fixing cover crops, developing new seed varieties that require less fertilizer, or switching to less nitrogen‐demanding crops. With a high enough tax it is likely that nitrogen pollution could be curtailed. The other policy option is set a nation, region, or state‐wide cap on the use of nitrogen fertilizer and let farmers buy and sell permits. This policy is already at work in Connecticut. 14 Monitoring and enforcement is costly because analyses have to be conducted routinely in the waterways near farms in order to gauge individual runoff rates. This is technically feasible, but not only requires significant capital investment but a new bureaucracy to administer the program effectively. Farmers must also be penalized severely for noncompliance or the system breaks down. Unfortunately, until now there have been only mild attempts to deal with agricultural dead zones, and they continue to expand year after year. Again, the power of the agricultural industry has hampered serious efforts, and it is not for lack of options that the problem remains unaddressed. 13 In 2003, UNEP identified 146 dead zones. Major dead zones include the Gulf of Mexico, the Baltic Sea, the northern Adriatic Sea, the Gulf of Thailand, the Yellow Sea, and Chesapeake Bay. A map of all dead zones and more information can be found in the UNEP Global Environment Outlook Yearbook 2003 (United Nations Environment Program, 2003). 14 A Nitrogen Credit Exchange was developed in Connecticut in 2002 to reduce the state’s total maximum daily emissions of nitrogen into Long Island Sound (Connecticut Department of Environmental Protection, 2007). What Environmentalists Need to Know – (9) Agriculture 84 The same can be said for the growing problem of animal waste. As livestock production continues to become industrialized and concentrated, it is not uncommon for operations to boast 100,000 plus animals in a single gigantic lot. 15 While there are no doubt efficiencies gained from containing so many animals in one place (aside from the serious ethical implications of doing so), this also greatly concentrates the animal waste. In fact, waste from factory farms is now orders of magnitude greater than all of the waste generated by the human population. Most of it ends up being piled on in gigantic mountains or in artificial lagoons. 16 The problem is that it’s virtually impossible to keep all of this waste from seeping into the environment, especially during periods of rain and storms. In North Carolina in the U.S. there have been horrific examples of massive lagoons of pig waste bursting their seams and flooding nearby rivers, killing everything in their wake. 17 Again, the polluters, in this case the factory farm operators (and indirectly the consumers of animal products), are not paying the true cost for the pollution they create. A waste surcharge levied per animal or a limit on the total quantity of waste that can be kept in a certain area are policy options. In the examples outlined above, the government could dictate that any revenue generated by agricultural pollution taxes or permit trading be allocated towards efforts to reduce those problems. For example, the revenue from taxes levied on nitrogen fertilizer could be used to buy land adjacent to waterways, create additional buffer zones, improve water quality monitoring, or fund ecological restoration efforts in dead zones and other waterways impacted by agricultural runoff. Taxes on animal production could be used to develop better ways to recycle animal waste into energy and fertilizer, or create more effective means of disposal. The issue of agricultural pesticides is much more complicated because the current state of our scientific knowledge with respect to toxins is extremely poor. Most economic policy responses are reasonably straightforward when it is possible to make estimates of damages. But when we know very little about which chemicals have which effects, and how they act in combination, we are left with little in our economic toolbox that can provide anything approaching precise solutions. I will address the issue of chemical pollution more generally in Chapter 10, and include more specifics on pesticides; the central problem is one of risk management. How should we weigh The Department of Agriculture does not publish the size of individual farms, but they do publish the number of farms over a certain size and the total number of head on those farms. The data below is taken from the 2002 Census of Agriculture (National Agricultural Statistics Service, 2004): Animal farm size # Farms # head average head/farm cattle and calves >=5,000 905 12,936,108 14,294 hogs and pigs >=5,000 2206 31,715,604 14,377 poultry-layers >=100,000 498 252,712,220 507,454 chickens-meat n/a 37,937 1,389,279,047 36,621 16 Based on information from a 1997 report compiled by the minority staff of the U.S. Senate Committee on Agriculture, Nutrition and Forestry for Senator Tom Harkin of Iowa (D), the U.S. meat industry generates 1.4 billion tons of animal waste annually, 130 times as much as annual human waste production (Silverstein, 1999). 17 According to the NRDC, an 8‐acre hog‐waste lagoon burst in North Carolina in 1995, spilling 25 million gallons of manure spilled into the New River and killing about 10 million fish. Between 1995 and 1998, 13 million fish died due to 200 manure‐related incidents and 1,000 spills occurred at livestock feedlots in 10 states. At least 5 manure lagoons burst in North Carolina in 1995 due to damage from Hurricane Floyd. Outbreaks of Pfiesteria piscicida in Maryland and North Carolina have been linked to chicken and hog‐waste runoff, killing millions of fish and causing health problems for the local human populations (Natural Resources Defense Council, 2005). 15 What Environmentalists Need to Know – (9) Agriculture 85 improving the productivity of agriculture, and thereby lowering the price of food, against the increased exposure to toxic risks, both for ourselves and the plants and animals that come in contact with pesticides? The organic agriculture industry has demonstrated that many people are prepared to pay a significant price premium to purchase foods with much less quantities of toxic residues. It is possible to argue that the emergence of the organic market is proof of the market’s effectiveness, in that individuals can choose their level of risk based on their own priorities. 18 On the other hand, banning pesticides or dramatically increasing their price, in order to reduce their use, would likely lead to higher food prices and deny people this option based on their own perceived risk preferences. But perhaps this is the right thing to do. It all comes down to whether the larger impacts on ecosystems and farm workers are great enough to warrant such an intervention, as well as whether people are truly informed about the risks they face from pesticide residues, which again, are poorly understood. There is no doubt that there are some pesticides, for example methyl bromide, which are known to be highly toxic and damaging to the environment, which have rightly been banned (although exceptions have been made and they remain on the market). 19 There are also some pesticides that are universally thought to be benign that have proved very useful for farmers and have demonstrably improved agricultural productivity. 20 It is the pesticides that we are less sure of, both with respect to their impacts and their overall effectiveness, where decisions get trickier. Should the onus be on producers to prove that not only is a pesticide safe but also greatly needed for the industry? Or should the onus be on those who want to prevent the use of chemicals to prove that they are damaging and that substitutes exist? To be continued next chapter. Genetically Modified Organisms (GMOs) The issue of whether to allow the use of GMOs in agricultural production is a topic for which the environmental community is essentially split. There are some who think that GMOs represent a such an extreme deviation from what is “natural” and pose such great environmental and health risks that the process should be banned, which is what the organic industry has done; in fact, virtually the only way to get food that is free (in principle) 21 of GMOs is to buy organic. The issue as the price premium declines, especially in developed countries where even many low‐income people purchase luxury items such as big‐screen televisions, cell phones, and cars. 19 For a list of EPA and UN banned or severely restricted pesticides, visit http://www.epa.gov/oppfead1/international/piclist.htm. Critical use exemptions exist for those situations where the exemption applicant can show that significant market disruption will happen without an exemption, and that there are no technically or economically feasible alternatives. For methyl bromide, independent advisory panels to the Parties of the Montreal Protocol review each country’s exemption applications and determine the final allocation of exemptions (U.S. Environmental Protection Agency, 2007). The U.S. 2008 exemptions are published for public record at http://www.epa.gov/ozone/mbr/2008CUEFinalRule12‐19‐07.pdf. 20 Examples of relatively benign pesticides include sulfur, petroleum oil, mineral oil, copper sulfate, and copper hydroxide. In California, these pesticides make up 50% of total use (Gan, 2001). 21 Even organic foods might be contaminated with GMOs because drifting pollen from GMO crop fields can contaminate organic fields (Gillam, 2008). 18 The counterargument that because of its price organic is by definition elitist is becoming less and less of an What Environmentalists Need to Know – (9) Agriculture 86 European Union has been the most adamantly opposed to GMOs, going so far as to ban their importation from the U.S., until their recent loss in the WTO court. 22 Putting aside issues of what is natural (which includes the argument that most examples of genetic engineering are little more than the acceleration of plant‐breeding that has been practiced for millennia), the fundamental argument against GMOs once again revolves around notions of risk. Those opposed to GMOs believe that the introduction of new organisms into the environment has not been studied well enough and presents an unacceptable environmental hazard. There are also concerns that people with allergies to certain foods may be unaware that the genes of one food are contained in another, thus leading to medical risks. Those in favor of GMOs cite their potential to actually decrease the environmental impact of agriculture through the development of pest‐resistant crops or crops that require less water and fertilizer. There is also the potential to modify crops to increase their nutrient content, which is being done with rice, bananas, and potatoes, and could be very beneficial in countries where the populace suffers from malnutrition. 23 The consensus view based on the available evidence is that so far GMO crops do not represent a grave threat to ecosystems. 24 GMOs have been in production on a large scale for over 10 years and there is as of yet no reported incidences of major ecological disruptions due to the propagation of GMO crops. 25 This is not to suggest that there aren’t potential negative impacts or impacts that have yet to be discovered; only that little to no evidence currently exists. However, there exists a significant consumer rights movement that believes individuals have a right to know whether they are eating GMO food or not, which is pushing for mandatory labeling. 26 From a market‐based perspective this seems reasonable since consumers can only begin to make informed decisions if they have sufficient information with which to do so. But if we are going to require mandatory GMO labeling the question arises as to what other information should be mandatory. Foods do not list the pesticides and fertilizers used in their production, or the miles the food traveled, or the country of origin, or the wages of the workers. It is 22 The dispute settlement board found that by implementing a moratorium on genetically modified products, the European Commission was in violation of trade agreements. The EC was given a reasonable amount of time to implement the recommendations and rulings of the DSB, which originally was to expire 21 November 2007. Currently, the deadline has been extended until 11 June 2008 (World Trade Organization, 2008c). 23 According to a report by Friends of the Earth, no crops with enhanced nutrition have been introduced commercially (Villar & Freese, 2008). Experimentally, bananas are being engineered to carry vaccines for hepatitis B, cholera, jaundice, polio, measles, and diarrhea, as well as resistant to fungus. “Golden rice” was developed at Texas A&M with excess beta‐carotene. Potatoes with the hepatitis B vaccine, and high‐protein sweet potatoes are also being developed (Baden‐Wurttemberg, n.d.). 24 The GM Science Review Panel, commissioned as part of the United Kingdom’s investigation into the safety of genetically modified crops, concluded that the currently available GM crops are unlikely to cause additional threat to UK ecosystems (GM Science Review Panel, 2003). 25 The UN reports that large‐scale growth of genetically modified crops first began in the United States around 1996 (Dargie, 2001). 26 Organizations and groups backing this approach include a grassroots campaign promoting GMO labeling with the support of several politicians and food companies (http://www.thecampaign.org/), The Land Institute out of Salina, KS (http://www.landinstitute.org/), Friends of the Earth (http://www.fao.org/), Recipe for America (http://www.recipeforamerica.org/), Greenpeace Canada (http://www.greenpeace.org/canada/en/), Consumers International http://www.consumersinternational.org/). What Environmentalists Need to Know – (9) Agriculture 87 difficult to make the case that this information is any less important. And mandatory labeling of GMO foods is costly, requiring sorting by type throughout the production process along with expensive monitoring. Is it worth it? Without clear evidence that GMOs represent new and significant risks to the environment it is not clear that the mandatory labeling is warranted at this time. Already there are plenty of companies that voluntarily advertise GMO‐free food and organic is by default GMO‐free. Certainly, in the case of foods with a high allergen potential mandatory labeling is warranted; for example, if peanut genes were injected into almonds. If the evidence continues to point to the relative benign nature of GMOs it seems appropriate to let the market choose the winners and losers in this new realm of agricultural technology. In the instances where GMOs can cut costs and minimize environmental impacts they should be embraced. Where they are used for little more than cosmetic improvements this may strike some as wasteful, but if the products are competitive and there is significant demand from farmers they shouldn’t be opposed strictly on ideological grounds. Remember, it is not the government’s job to regulate people’s tastes, but to protect the public interest. If in fact GMOs do develop the potential to greatly reduce environmental impacts this may pose a challenge to the organic industry, which may be compelled to revisit its opposition. It is certainly permissible for any industry to determine its own standards, but an industry that prides itself on environmental stewardship should be open to the possibility that GMO technology could be an ally in the future. References Baden‐Wurttemberg. (n.d.). Vaccination with bananas – the use of green gene technology. The Biotech/Life Sciences Portal. Retrieved March 17, 2008, from http://www.bio‐ pro.de/en/life/magazin/00386/index.html. Birrell, K. (2007). Kiwi fruit for America. Frontier Centre for Public Policy. Retrieved March 11, 2008, from http://www.fcpp.org/main/publication_detail.php?PubID=2005. Borlaug, N. and J. Carter. (2005, October 14). Food for thought. The Wall Street Journal. Retrieved May 31, 2008, from AgBioWorld: http://www.agbioworld.org/biotech‐ info/topics/borlaug/WSJ‐2005‐Foodthought.html. Connecticut Department of Environmental Protection. (2007). Nitrogen control program for Long Island Sound. Retrieved March 15, 2008, from http://www.ct.gov/dep/cwp/view.asp?a=2719&q=325572&depNav_GID=1654. Council of Economic Advisers (U.S.). (1991). Trade liberalization and economic growth. In Economic report of the President (pp. 233‐263). Washington D.C.: Author. Retrieved October 5, 2008, from http://fraser.stlouisfed.org/publications/ERP/issue/1515/. Dargie, J. (2001). Biotechnology, GMOs, ethics and food production. Stockholm: Food and Agriculture Organization of the United Nations. Retrieved March 15, 2008, from http://www.fao.org/news/2001/stockholm/biotech.pdf. Diamond, J. (1987, May). The worst mistake in the history of the human race. Discover Magazine, 64‐66. Ears of plenty (Electronic version). (2005, December 20). The Economist. Retrieved May 31, 2008, from http://nue.okstate.edu/crop_information/The_Story_of_Wheat.htm. What Environmentalists Need to Know – (9) Agriculture 88 Federated Farmers of New Zealand, Inc. (2002). Life after subsidies. Frontier Centre for Public Policy. Retrieved March 10, 2008, from http://www.fcpp.org/main/publication_detail.php?PubID=171. Food and Agriculture Organization of the United Nations. (2004). Table A.4 Land use. FAO Statistical Yearbook, 2(1). Retrieved March 10, 2008, from http://www.fao.org/es/ess/yearbook/vol_1_1/site_en.asp?page=resources. Food and Agriculture Organization of the United Nations. (2008). Online database query. Aquastat. Retrieved March 13, 2008, from http://www.fao.org/nr/water/aquastat/dbase/index.stm. Gan, J. (2001, Fall). Pesticide use trend in California. PesticideWise, 1. Retrieved March 15, 2008, from http://www.pw.ucr.edu/PesticdeWise.asp. Gillam, C. (2008, March 12). U.S. organic food industry fears GMO contamination. Reuters. Retrieved March 15, 2008, from http://www.reuters.com/article/domesticNews/idUSN1216250820080312. GM Science Review Panel, The. (2003). GM science review (first report): An open review of the science relevant to GM crops and food based on interests and concerns of the public. London: Department of Trade and Industry. Retrieved June 1, 2008, from http://www.gmsciencedebate.org.uk/. National Agricultural Statistics Service. (2004). 2002 Census of agriculture: U.S. national level data. Retrieved March 15, 2008, from http://www.agcensus.usda.gov/Publications/2002/index.asp. Natural Resources Defense Council. (2005). Facts about pollution from livestock farms. NRDC Issues: Water. Retrieved March 15, 2008, from http://www.nrdc.org/water/pollution/ffarms.asp. Office of Water Use Efficiency. (2008). Agricultural water use program. California Department of Water Resources. Retrieved March 12, 2008, from http://www.owue.water.ca.gov/agdev/index.cfm. Organization for Economic Co‐operation and Development. (2004a). Producer support estimate by commodity. Compliment database to Agricultural Policies in OECD Countries: At a Glance. Retrieved March 11, 2008, from http://www.oecd.org/document/58/0,2340,en_2649_37401_32264698_1_1_1_37401,00.ht ml. Organization for Economic Co‐operation and Development. (2004b). Total support estimate. Compliment database to Agricultural Policies in OECD Countries: At a Glance. Retrieved March 11, 2008, from http://www.oecd.org/document/58/0,2340,en_2649_37401_32264698_1_1_1_37401,00.ht ml. Organization for Economic Co‐operation and Development. (2007a). Agricultural policies in non­ OECD countries: Monitoring and evaluation 2007­Highlights. Retrieved March 12, 2008, from http://www.oecd.org/document/5/0,3343,en_2649_37401_38271429_1_1_1_37401,00.ht ml. Organization for Economic Co‐operation and Development. (2007b). Agricultural policies in OECD countries: Monitoring and evaluation 2007. Retrieved March 12, 2008, from http://www.oecd.org/document/0/0,3343,en_2649_37401_39508672_1_1_1_37401,00.ht ml. Sayre, L. (2003). Farming without subsidies in New Zealand. The New Farm. Retrieved March 11, 2008, from http://www.newfarm.org/features/0303/newzealand_subsidies.shtml. Silverstein, K. (1999). Meat factories – Pollutants from meat factories. Sierra. Retrieved March 15, 2008, from http://findarticles.com/p/articles/mi_m1525/is_1_84/ai_53501840. What Environmentalists Need to Know – (9) Agriculture 89 U.S. Bureau of Reclamation. (2006). Agreement signals start to historic San Joaquin River restoration. U.S. Department of the Interior: Bureau of Reclamation. Retrieved March 13, 2008, from http://www.usbr.gov/newsroom/newsrelease/detail.cfm?RecordID=13681. U.S. Environmental Protection Agency. (2007, December 19). Protection of stratospheric ozone: The 2008 critical use exemption from the phaseout of methyl bromide. (40 CFR Part 82). Washington, DC: Federal Register (Vol. 27, no. 248). Retrieved March 15, 2008, from http://www.epa.gov/ozone/mbr/2008CUEFinalRule12‐19‐07.pdf. United Nations Environment Program. (1999). Economic instruments. Global Environment Outlook 2000, p.208. Retrieved March 10, 2008, from http://www.unep.org/geo2000/english/0138.htm. United Nations Environment Program. (2003). Global Environment Outlook Year Book 2003. Retrieved March 13, 2008, from http://www.unep.org/geo/yearbook/yb2003/. Villar, J. L. and B. Freese. (2008). Who benefits from gm crops? Amsterdam: Friends of the Earth International. Retrieved March 15, 2008, from http://www.centerforfoodsafety.org/WhoBenefitsPR2_13_08.cfm. Walsh, D. and T. Barrett. (2008, May 22). Problems with Congress override of farm bill. CNN Politics. Retrieved June 1, 2008, from CNN.com: http://www.cnn.com/2008/POLITICS/05/22/farm.bill/. Water to flow for salmon, farmers under San Joaquin River settlement. (2006). Environment News Service. Retrieved March 13, 2008, from http://www.ens‐ newswire.com/ens/sep2006/2006‐09‐15‐01.asp. Woodruff, J. (2008, May 15). Congress passes $290B Farm Bill despite White House opposition. [Online broadcast].Arlington, VA: Public Broadcasting Service. Retrieved June 1, 2008, from http://www.pbs.org/newshour/bb/politics/jan‐june08/farmbill_05‐15.html. World Trade Organization. (2008a, January 22). DS250: United States – Equalizing Excise Tax Imposed by Florida on Processed Orange and Grapefruit Products. Retrieved March 10, 2008, from http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds250_e.htm. World Trade Organization. (2008b, January 22). DS267: United States – Subsidies on Upland Cotton. Retrieved March 10, 2008, from http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds267_e.htm. World Trade Organization. (2008c, January 22). DS291: European Communities – Measures Affecting the Approval and Marketing of Biotech Products. Retrieved March 15, 2008, from http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds291_e.htm. What Environmentalists Need to Know – (9) Agriculture 90 Chapter 10 Chemical Pollution One of the defining moments in the environmental movement was the 1962 publication of Rachel Carson’s book, Silent Spring, which awakened America and the world to the potential hazard that toxic chemicals could wreak on the environment. Carson’s work led to a major public outcry, which gave rise to many of the organizations that comprise the modern environmental movement. In 1972 the U.S. banned the chemical DDT, which Carson had linked to reductions in bird populations, including the nation’s symbol—the bald eagle—and the peregrine falcon. 1 Like many of the other landmark pieces of environmental legislation that were passed during this era in the United States (The Endangered Species Act, Clean Water Act, and Clean Air Act), there was no explicit use of benefit‐cost analysis employed to enact the ban. No economists were asked to determine the “value” of the bald eagles and falcons and weigh this against the benefits to agriculture (mostly the cotton industry) of the use of DDT. It was determined that it was simply unacceptable to risk the extinction of these birds and the larger environmental and human costs associated with the use of DDT. More than 35 years have passed and there is virtually no one in the U.S. that believes that the ban was the wrong decision. There has been some controversy regarding attempts to ban or greatly diminish the use of DDT in developing countries, particularly those in the tropics, because DDT can be effective against the mosquitoes that carry malaria, which unfortunately, still kills tens of thousands of people a year. 2 Still, most people today would be surprised to learn that the majority of chemicals that they are routinely exposed to have barely been studied at all. Those which have are usually tested in animal studies, which do not necessarily provide accurate information regarding human health effects (putting aside the ethical implications of subjecting millions of animals to often painful procedures). In addition, there is virtually no scientific data that analyzes the synergistic effect of the thousands of chemicals working in concert in our bodies and the environment every day. 3 It is not an exaggeration to suggest that we are all, more than ever, human “guinea pigs” when it comes to the toxic legacy we have both inherited and continue to contribute to. While in most parts of the world longevity is increasing—a testament to one measure of improved health— cancer deaths remain extremely high. The persistent high incidence of cancer may very well turn out to be a product of our chemical burden, given that the blood stream of the average person can contain the chemical made its way into the coastal ecosystems and into the fish that were subsequently eaten by the eagles and other raptors. The bird populations quickly declined because they were unable to reproduce. DDE, the primary component of DDT, builds up in the fatty tissue and inhibits the female birds from producing the calcium necessary to create strong eggshells. When nobody else would expose the situation, Rachel Carson published her book, Silent Spring, leading to Congressional hearings about DDT and the eventual banning of DDT by the Environmental Protection Agency on December 31, 1972 (U.S. Fish and Wildlife Service, 2007). 2 Malaria killed 65,510 people around the world in 2003: total confirmed malarial deaths = 5,308 and total probable or clinically diagnosed malarial deaths = 60,202 (World Health Organization, 2007). There are those who argue that small‐scale and largely indoor spraying of DDT against malaria provides benefits to human health that outweigh any potential environmental or other human health risks. 3 The published EPA review process does not include testing synergistic effects of chemicals (U.S. Environmental Protection Agency, 2007). 1 After World War II, DDT was used extensively to control mosquitoes and agricultural pests. Due to runoff, What Environmentalists Need to Know – (10) Chemical Pollution 91 more than 90 different chemicals, many of them known to be toxic in isolation. 4 It is safe to say that whatever damage we are inflicting on ourselves is multiplied many times over on non‐human creatures, who do not have the benefit of advanced medicine, detection, filtration, or the ability to switch food sources based on a knowledge of their toxicity. Faced with the prospect that our current levels of chemical pollution are subjecting us and our surroundings to elevated levels of risk, which we don’t fully understand, conventional economic analysis does not suffice. We simply do not have the information with which to even begin making a fully‐informed benefit‐cost analysis, even if it was deemed an ethically appropriate method to assess which chemicals should be restricted or not. This presents a much more difficult policy situation than some of the other environmental problems that we face. We are dealing with probabilities of risk, with large gaps in our knowledge and a great degree of uncertainty. Comparing how the U.S. approaches the issue of controlling toxic substances with the approach currently being undertaken by the European Union is instructive. In the U.S., industry has much more power to limit restrictions on chemicals, which must be proven to be harmful before they can be regulated. The EU, on the other hand, invokes the “precautionary principle” and the bar for banning or restricting chemicals is much lower; chemicals are restricted if there is even a reasonable chance that they can cause significant harm. 5 This difference in regulatory approach is creating a widening gulf between the types of chemicals that are permitted within the U.S. and the EU. Historically, there have been major differences in the chemicals allowed across developed and developing countries, and this shift marks a contrast to the era when the U.S. set one of the highest standards for chemical safety in the world. For example, the family of chemicals known as phthalates, which are used to make plastic toys more pliant, has now been banned in the EU due to fears that children will chew on them and face a toxic risk, whereas in most of the U.S. the chemical is still widely used (some states, including California, have recently banned it). 6 Although the EU has not undertaken explicit benefit‐cost analyses in its rulings prohibiting many chemicals, as always there is an underlying benefit‐cost logic below the surface. In cases where relatively cheap substitutes exist that are known to be less toxic, the EU has ruled in favor of bans or limitations on the more toxic materials. In areas where a chemical is crucial to a production process and the overall competitiveness of European industry, the precautionary approach has not always prevailed; for example, despite a growing volume of evidence that bisphenol A (BPA) 4 A study by the Environmental Working group in conjunction with Mount Sinai School of Medicine found an average of 91 chemicals in 9 participants. In total, they found 167 different chemicals in the participants, 76 of the found chemicals are carcinogens, 79 cause birth defects or affect development, and 94 are neurotoxins (Environmental Working Group, 2003). 5 Michael Rogers (2003) and Mark Schapiro (2007) discuss the EU’s use of the precautionary principle in chemical regulation. 6 The CDC reports that the effect of phthalates on humans is not entirely known, but some studies suggest that it affects semen quality, genital development in boys, shortened pregnancies and premature breast development in adolescent girls (Center for Disease Control, 2007). Phthalates have been banned in the European Union and California (“California bans plastic toy chemcal,” 2007). What Environmentalists Need to Know – (10) Chemical Pollution 92 mimics estrogen in the body and causes cancer and developmental disabilities, it has not been banned in the EU (Goodman, 2008). 7 The lessons on how best to approach the issue of chemical pollution by the environmental community (which can be applied to all forms, including industrial, residential, and agricultural chemicals) can be summarized as follows: 1. Changing the regulatory paradigm is probably the most important step in reducing toxic chemicals. With woefully incomplete scientific information on the majority of chemicals in everyday use, a regulatory system that requires definitive proof of toxicity will almost always favor industry over the public health and the environment. Stressing that the burden of toxic chemicals often falls on the most vulnerable—pregnant women, infants, the elderly—is a big part of changing this paradigm. The crux of the argument is not so much about economic efficiency, but about the disproportionate distributional impacts of chemical pollution. 2. Policies that encourage the development of non‐toxic or “green” substitutes for common chemicals represent probably one of the best long‐term strategies for dramatically reducing the use of toxic chemicals. Such policies include subsidies for “green” chemical research, 8 as well as more money for research that demonstrates the ill effects of the chemicals currently in use. 9 3. Given the tens of thousands of chemicals currently in use, it is best to focus on classes of chemicals, such as PCBs. 10 This way the unintended consequence of banning one chemical, only to have industry switch to another related chemical that is equally or potentially more toxic, can be avoided. 4. Focus on the chemicals that are most likely contributing to the worst impacts; i.e. choose priorities. This may seem like stating the obvious, but there have been notable examples of environmental groups expending significant resources to oppose the use of chemicals that are not believed to be acutely toxic. For example, the opposition to Alar in the U.S. in 1989, or the more 7 The decision to not ban BPA is probably due in part to strong industry pressure due to the pervasiveness of the chemical in plastic (polycarbonate) bottles and containers; however, it is difficult to know whether the continuing allowance of BPA is primarily because of industry pressure or primarily due to lingering questions about the scientific evidence of health effects (Schapiro, Mark, personal communication, December 9, 2008). 8 The environmentally responsible solvents and processes program of the National Science Foundation Science and Technology Center publishes a list of related research groups at http://www.nsfstc.unc.edu/research.htm. Other schools involved in “green” chemical research include the University of Tennessee (http://eerc.ra.utk.edu/ccpct/index.html) and Yale University (http://www.greenchemistry.yale.edu/). 9 In 2001, the European Commission published a white paper entitled ‘Strategy for a future Chemical Policy,’ in which it described a single system to record the names, properties, and risks of all chemicals produced or imported at a rate greater than one metric ton per year (Ahrens, 2002). The REACH program (Registration, Evaluation, Authorization, and Restriction of Chemical substances) entered into law on June 1, 2007, and shifts the burden of proof from the countries’ authorities to the chemical producers and includes existing chemicals in the regulatory scheme. The central database will be run by a new organization, the European Chemicals Agency (ECHA) in Helsinki; the organization will be formed by June 1, 2008, and the REACH provisions will be phased in over the next 11 years (European Commission, 2008). 10 Polychlorinated biphenyl is a family of compounds previously used commonly as a lubricant, heat‐transfer fluid, and plasticizer. PCBs are known to be a skin irritant and suspected to cause birth defects and cancer (PCB, n.d.a). They are especially deadly to fish and invertebrates, and stay within the food chain for several years (PCB, n.d.b). What Environmentalists Need to Know – (10) Chemical Pollution 93 recent campaigns against fluoride in drinking water. 11 This is not to suggest that these chemicals are entirely benign, only that given limited political capital and resources priorities are essential; campaigns against elevated levels of mercury or lead offer a much better public and environmental health return for every ounce of organizational investment. 12 5. Finally, the most controversial of my recommendations: in most cases eschew market‐based mechanisms in favor of “command and control” policies such as limits or bans. Command and control regulation is often frowned upon within most economic circles (usually for good reason) but in the area of toxic chemicals it may be the best regulatory approach we have. The problem with market‐based mechanisms—taxes and cap and trade—is that they can easily lead to the unintended consequence of simply shifting to other toxic chemicals or even worse, to the creation of “toxic hotspots.” For example, plans have been discussed in the U.S. to extend the cap and trade system for sulfur pollution to mercury. 13 The policy would set a cap on the total levels of mercury emitted by coal‐ fired power plants and then issue permits to be traded. From an efficiency standpoint the policy would most likely “work,” in that it would reduce total mercury pollution at the lowest cost; unfortunately, some segments of the population might be exposed to unacceptably high risks in the process. It is entirely conceivable that the older plants with high mitigation costs would purchase the bulk of the permits, thereby leading to much higher concentrations of mercury in the surrounding areas. Just about everyone would agree that it is extremely unethical to enact policies that lead to increased toxic burdens of particular segments of the population. In this case a limit on mercury emissions across all power plants, while not the most cost‐effective, is preferable. Equity concerns sometimes must trump efficiency concerns. This logic can be applied to the majority of situations in which the goal is to curtail the use of acutely toxic chemicals, especially those that disproportionately harm the most vulnerable populations. References Ahrens, R. (2002, September 27). European chemicals policy reform – from paralysis to action. (EEB Pub. No. 2002/016). Brussels: European Environmental Bureau. Retrieved March 19, 2008, from http://www.eeb.org/activities/chemicals/Publication‐EEB‐013_02.pdf. California bans plastic toy chemical. (2007, October 17). CBS News online. Retrieved March 18, 2008, from http://www.cbsnews.com/stories/2007/10/15/health/main3366238.shtml. Carson, R. (1962). Silent spring. Boston: Houghton Mifflin. 11 Chemistry Daily publishes information about the campaign to ban Alar: http://www.chemistrydaily.com/chemistry/Alar. The Fluoride Action Network’s campaign against fluoride is found here: http://www.fluoridealert.org/. 12 Economist Rick Nevin’s research shows a direct relationship between lead exposure levels in children and the violent crime rate two decades later. This relationship is consistent across nine countries and a century of data (Vedantam, 2007). Another recently published study provides a biological explanation to the variation of crime rates with lead exposure. Using MRI scans, scientists found that adolescents who were exposed to lead as children have less brain matter in the parts of the prefrontal cortex associated with judgment and reasoning (Marshall, 2008). 13 The EPA issued a rule to permanently cap and control mercury emissions from coal‐fired power plants on March 15, 2005. The Clean Air Mercury Rule (CARM) extends the Clean Air Interstate Rule (CAIR) to address SO2, NOx, and mercury simultaneously (U.S. Environmental Protection Agency, 2008). However, a recent ruling by the D.C. Circuit Court of Appeals vacates the CARM rule and the EPA is currently evaluating the implications of this ruling (State of New Jersey, 2008). What Environmentalists Need to Know – (10) Chemical Pollution 94 Center for Disease Control. (2007). Spotlight on phthalates. CDC’s Third National Report on Human Exposure to Environmental Chemicals. (NCEH Pub 05‐0664). Atlanta: Center for Disease Control. Retrieved March 18, 2008, from http://www.cdc.gov/exposurereport/pdf/factsheet_phthalates.pdf. Environmental Working Group. (2003). BodyBurden: The pollution in people. (Executive summary). Oakland, CA: Author. Retrieved June 1, 2008, from http://archive.ewg.org/reports/bodyburden1/es.php. European Commission. (2008). REACH. Retrieved March 22, 2008, from http://ec.europa.eu/environment/chemicals/reach/reach_intro.htm. Goodman, S. (2008, July 24). Bisphenol A poses no human health risk, E.U. agency says. Greenwire. Retrieved December 13, 2008, from http://www.factsonplastic.com/bisphenol‐a‐poses‐no‐ human‐health‐risk‐eu‐agency‐says/. Marshall, J. (2008, May 28). Lead exposure linked to violent crime, brain changes. Discover News. Retrieved October 24, 2008, from Discovery Channel online: http://dsc.discovery.com/news/2008/05/28/lead‐violent‐crime.html. PCB. (n.d.a). Dictionary.com Unabridged (v 1.1). Retrieved March 18, 2008, from Dictionary.com website: http://dictionary.reference.com/browse/PCB. PCB. (n.d.b). The American Heritage® Science Dictionary. Retrieved March 18, 2008, from Dictionary.com website: http://dictionary.reference.com/browse/PCB. Rogers, M. (2003). Risk analysis under uncertainty, the Precautionary Principle, and the new EU chemicals strategy. Regulatory Toxicology and Pharmacology, 37(3), 370‐381. Abstract obtained March 18, 2008, from ScienceDirect doi: 10.1016/S0273‐2300(03)00030‐8. Schapiro, M. (2007). Exposed: The toxic chemistry of everyday products and what’s at stake for American power. White River Junction, VT: Chelsea Green Publishing. State of New Jersey, et al. v. Environmental Protection Agency, 2008 U.S. App. LEXIS 2797 (D.C. Cir., February 8, 2008). Retrieved March 22, 2008, from LexisNexis Academic database. U.S. Environmental Protection Agency. (2007, January). OVERVIEW: Office of Pollution Prevention and Toxics Programs, pg. 7‐8, 18‐19. Washington, DC: Author. Retrieved March 22, 2008, from http://www.epa.gov/oppt/pubs/oppt101c2.pdf. U.S. Environmental Protection Agency. (2008). Clean Air Mercury Rule. Retrieved March 22, 2008, from http://www.epa.gov/camr/basic.htm. U.S. Fish and Wildlife Service. (2007). Endangered species. Rachel Carson: A Conservation Legacy. Retrieved March 17, 2008, from http://www.fws.gov/rachelcarson/toolkit/Endangered%20Species/index.html. Vedantam, S. (2007, July 8). Research links lead exposure, criminal activity. Washington Post Online. Retrieved October 24, 2008, from http://www.washingtonpost.com/wp dyn/content/article/2007/07/07/AR2007070701073.html. World Health Organization. (2007). Data query. Global Health Atlas. Retrieved March 17, 2008, from http://www.who.int/globalatlas/DataQuery/default.asp. What Environmentalists Need to Know – (10) Chemical Pollution 95 Chapter 11 Fisheries The oceans are in serious trouble; this is not hyperbole or more “doom and gloom” prognosticating. Multiple assessments of the state of the oceans show that the majority of fisheries are declining and face complete collapse. 1 This decline of the world’s fisheries is easy to explain: virtually all of the oceans are “open access” resources and fishermen, fueled by a surge in demand for seafood, 2 harvest as much fish as they can, resulting in unsustainable rates of fishing. Not only has demand for seafood skyrocketed, but technology for catching fish has improved dramatically; many large commercial fleets employ sophisticated sonar systems costing hundreds of thousands of dollars and nets hundreds of meters long. Theoretically, the solution to the problem of overfishing is relatively straightforward as well: limit the quantity of fish that can be caught. This necessitates creating property rights to fishery resources and assigning them to different parties (or finding some other way to distribute them, such as an auction); essentially creating a cap and trade style system. In countries such as New Zealand, Norway, Iceland, and Canada and the United States, efforts have been made to create property rights for fisheries and limit the total catch; these are referred to as Individual Fishing Quota (IFQ) or Individual Tradable Quota (ITQ) systems. 3 In almost all of the regions where they have been implemented they have been successful at helping to create sustainable fisheries. In all of these programs fisherman can freely buy and sell permits amongst themselves. The mechanics of setting up these programs are complex and they are not simple to manage. First of all, IFQs are only possible in areas where the government or some other legal entity has clear property rights over the ocean resources with which they can exercise authority. The Law of the Sea Convention grants nations the rights to all ocean resources within 200 miles of their coastlines. 4 These regions are where all of the current IFQ systems exist. Within these boundaries that 90% of predatory fish stocks have been depleted since the start of industrialized fishing in the 1950s (2003). A later study has found that loss of ocean biodiversity results in increasing rates of fishery collapse and exponential decrease in recovery potential, stability, and water quality, meaning that as we remove key pieces of oceanic systems, the ocean becomes increasingly unable to provide us with food or maintain quality water, and the chance for recovery decreases (Worm et al, 2006). 2 World demand for seafood has increased from around 20 million tones in 1950 to around 140 million tones in 2004, and is expected to grow to about 179 million tones by 2015 (Food and Agriculture Organization, 2006). 3 New Zealand, Iceland, Canada, United States, Australia, Greenland, Norway, Portugal, the Netherlands, United Kingdom, and South Africa all utilize ITQ systems (Florida Fish and Wildlife, 2005). 4 The United Nations Convention on the Law of the Sea (UNCLOS) came into force on November 16, 1994. It addresses topics such as territorial sea limits and areas of economic jurisdiction, legal status of resources on the sea floor beyond national jurisdiction, navigational rights, conservation and management of marine resources, and marine research regimes. UNCLOS grants coastal countries with a 12‐mile territorial sea limit, within which a country can enforce any law and regulate and exploit any resources. The countries are also granted a contiguous zone extending 24 nautical miles from shore within which they can implement certain rights to pursue drug smugglers, illegal immigrants, and tax evaders. Beyond the contiguous zone, coastal countries have the right and obligation to exploit, develop, manage, and conserve all resources within a 200‐ 1 After studying four continental shelf systems and nine oceanic systems, Myers and Worm published in 2003 What Environmentalists Need to Know – (11) Fisheries 97 nations are entitled to utilize their ocean resources as they sit fit, which includes creating property rights systems over particular resources. The scientific data for fisheries to be slated for an IFQ system has to be very strong in order to determine the sustainable levels of fishing. This is complicated by the fact that fish species intermingle; while fishing for one species other species are often caught as well. This typically results in conservative estimates for the “maximum allowable catch.” Another reason in support of more conservative estimates is that when faced with fishing quotas fishermen are apt to “high‐ grade”—only bring to shore the best catches and dump the others back into the ocean—which increases the total impact of a given fish quota. Since the science of fisheries is imperfect, fisheries must be constantly monitored and if it turns out that the original quotas were set too high, there needs to be adjustments made in future allotments. An IFQ system, like all cap and trade systems, only works if there is reliable and consistent enforcement. In the case of fishing, fishermen are required to present their quotas at the docks when they bring in their hauls. Inspectors must be present to identify the species, weigh them, and check that the fishermen have sufficient quotas. If they do not, this must be met with stiff penalties in order to deter breaking the rules. Fisheries in which there are a small number of docks where fishermen can bring to shore their catches make the system much more manageable. While the general distrust of government among fishermen is even greater than in the general population, there is a grudging acceptance that IFQs may be one of the best ways to ensure the long‐ term sustainability of fisheries, which is certainly in the long‐term interests of the fishing industry. The major complaints against IFQs are that they generally raise the cost of fishing and that more often than not they lead to a decrease in current fishing employment (even if they ensure long‐term survivability of the fishing industry). This simply reflects the reality that currently there is too much fishing and that the fisheries cannot support the current levels of employment. This, of course, raises equity concerns since some people must lose their jobs. Quotas are typically allotted to those who have historically been active in the fishery, and the greater degree of overfishing the lower the total amount of allowable quotas to get the fishery back on a sustainable path. Compensating those who are unable to continue fishing can come in the form of “buyouts” from the government; some governments have chosen to auction a limited number of the fishing quotas and use this revenue to pay the fishermen who exit the industry. The bottom line is that the pressure on most fisheries is excessive and there needs to be some pull‐back if the fisheries are going to survive. It is important to note that IFQ systems may still entail significant negative externalities to marine resources that are unacceptable. Millions of animals including sea lions, turtles, dolphins, whales, and sharks are caught (as bycatch) in fishermen’s nets every year, and most die horrible deaths. 5 In addition, practices such as “bottom trawling,” in which large nets literally scrape the ocean floor in search of fish, often destroy everything in their wake. This practice is banned in parts of the world, but it is still widely practiced; efforts are currently underway for a global ban. 6 The bottom line is mile radius of shore. Globally, these exclusive economic zones ensure that 99% of all fisheries fall within at least one country’s jurisdiction (United Nations Division for Ocean Affairs, 1998). 5 44 billion pounds of bycatch are recorded annually (Dobrzynski, Gray, & Hirshfield, 2002). 6 In 2006, Iceland and Russia led other fishing nations to block UN negotiators from gaining unanimous support for a global ban on bottom trawling (Heilprin, 2006). Since then, annual UN Generally Assembly What Environmentalists Need to Know – (11) Fisheries 98 that commercial fishing, even if technically “sustainable,” entails serious damage to marine life; there is no way around it. Efforts can be made to modify nets or improve monitoring so that fewer animals are inadvertently killed, but the numbers will always be high in large‐scale fishing operations. In addition, as promising as the IFQ systems are there are many scientists who think that they are not sufficient to the task given the catastrophic damage that has been done to marine ecosystems. There is a relatively new movement that supports the creation of Marine Protected Areas (MPAs) in which all fishing is banned for a prolonged period in order to allow for the ecosystems to recover. Some researchers estimate that 20% of the world’s coastal ecosystems should be designated as MPAs in order to ensure the long‐term health of the marine environment (Constanza, 1998). MPA systems are currently being developed in the United States, 7 Kiribati, 8 Australia, Canada, Chile, Colombia, Easter Island, Fiji, Grenada, Italy, Federated States of Micronesia, New Zealand, Samoa, Solomon Islands, South Africa, Spain, Vanuatu, and Vietnam, among others, 9 however, so far they only represent a tiny fraction of total ocean resources. There is already some evidence that the fisheries adjacent to MPAs improve over time. 10 Because MPAs ban virtually all forms of consumptive use, they are typically more controversial than IFQ systems. A very positive development on the international scene is the WTO’s increasing recognition that global fisheries’ subsidies are significant trade distortions that need to be eliminated. The WTO is slated to address this issue in the current round of Doha negotiations. 11 This issue underscores the potentially very constructive role that the WTO can play in helping the world move away from some of the more egregious forms of “perverse subsidies” that wreak havoc on the environment around the world. 12 Environmentalists have often been at odds with the WTO, but this is one area where they should be in strong agreement; it will be a great day when environmentalists are resolutions have called on fishing nations to protect bottom fisheries on the high seas and other vulnerable marine ecosystems. UN FAO is to help fisheries management organizations develop guidelines to protect these ecosystems. The February 2008 FAO meeting ended without creating any guidelines, but agreed to meet again in August 2008 (Deep Sea Conservation Coalition, 2008). 7 Marine Protected Areas of the United States: http://www.mpa.gov. 8 The world’s largest marine protected areas was recently created in the Phoenix Islands of Kiribati (Conservation International, 2008). 9 The Sea Around Us, WWF, UNEP, WCMC, and IUCN have created a searchable database of marine protected areas: http://www.mpaglobal.org/home.html. 10 Gell and Roberts compiled many studies showing the improvement of fisheries inside protected areas (Gell & Roberts, 2003). For example, inside the Tsitsikamma National Park in South Africa (one of the oldest marine protected areas), fish species are found in numbers 5‐42 times greater than outside the protected area boundaries. In reserves around New Zealand, snapper are 14 times more likely to be larger than the legal catch size than in unprotected areas. Lingcod in protected areas off the Washington coast produce 20 times more eggs than those in outside the protected areas. 11 At the ministerial meetings in Doha in 2001WTO member nations agreed to address the issue of fisheries subsidies in the next round of talks, with the goal of helping developing countries capitalize on their own small‐scale fishing economies (Capella, 2004). In December 2005, the U.S., EU, Brazil, Chile, New Zealand, Senegal, and the Philippines called on the WTO to ban the subsidies contributing to overfishing. Iceland and Norway agreed to limit subsidies, while Japan, South Korea, and Taiwan have agreed to support bans on the subsidies that lead to harmful overfishing as long as there is not a blanket ban on all fisheries subsidies. Unfortunately, any agreement on fisheries subsidies will not come into effect until all other issues are resolved and a final document is agreed upon by all parties to the WTO talks (Bradsher, 2005). 12 Norman Myers has written extensively on this subject. For examples, see his article in Nature (1998), and his book co‐written with Jennifer Kent (2001). What Environmentalists Need to Know – (11) Fisheries 99 touting the WTO’s success at eliminating fisheries (and agricultural, energy, forestry, and water) subsidies as evidence of a new global consensus on the benefits of well‐functioning markets. References Bradsher, K. (2005, December 15). New consensus on WTO fishing policy. The International Herald Tribune, p. 15. Retrieved October 25, 2008, from LexisNexis Academic database. Capella, P. (2004, April 27). Momentum builds in global talks on fisheries subsidies. Agence France Presse, Financial Pages. Retrieved October 25, 2008, from LexisNexis Academic database. Conservation International. (2008, February 14). World’s largest marine protected area created in Pacific Ocean. Conservation International. Retrieved March 22, 2008, from http://www.conservation.org/newsroom/pressreleases/Pages/PIPA‐largest‐protected‐ area‐in‐pacific.aspx. Costanza, R., F. Andrade, P. Antunes, M. van den Belt, D. Boesch, D. Boersma, F. Catarino, S. Hanna, K. Limburg, B. Low, M. Molitor, J. G. Pereira, S. Rayner, R. Santos, J. Wilson, and M. Young. (1998, July 10). Principles for sustainable governance of the oceans. Science, 281, 198‐199. Retrieved June 1, 2008, from http://www.uvm.edu/~gundiee/publications/Costanza%20et%20al.%20Science%201998 .pdf. Deep Sea Conservation Coalition. (2008, February 10). UN FAO: Meetings end without agreement on guidelines for high seas deep‐sea fisheries. Deep Sea Conservation Coalition News. Retrieved March 22, 2008, from http://www.savethehighseas.org/display.cfm?ID=167. Dobrzynski, T., C. Gray, and M. Hirshfield. (2002). Oceans at risk: Wasted catch and the destruction of ocean life. Washington, DC: Oceana. Retrieved March 22, 2008, from http://www.oceana.org/uploads/bycatch_final.pdf. Florida Fish and Wildlife Conservation Commission. (2005). Individual fishing quota (IFQs). Retrieved March 22, 2008, from http://myfwc.com/commission/2005/Nov/RD_ITQ_Dec2005_2.pdf. Food and Agriculture Organization of the United Nations. (2007). State of the world fisheries and aquaculture 2006. (ISSN 1020‐5489). Rome: Author. Retrieved March 22, 2008, from http://www.fao.org/docrep/009/A0699e/A0699e00.htm. Gell, F. R., and C. M. Roberts. (2003). Benefits beyond boundaries: The fishery effects of marine reserves. Trends in Ecology & Evolution, 18(9), 448‐455. Retrieved June 1, 2008, from http://assets.panda.org/downloads/benefitsbeyondbound2003.pdf. Heilprin, J. (2006, November 24). Moves to impose trawling ban stymied. Washington Post online. Retrieved March 22, 2008, from http://www.washingtonpost.com/wp‐ dyn/content/article/2006/11/24/AR2006112400766.html. Meyers, R. and B. Worm. (2003, May 15). Rapid worldwide depletion of predatory fish communities. Nature, 423(6937), 280‐283. Retrieved October 24, 2008, from Research Library Core database. (Document ID: 343927311). Myers, N. (1998). Lifting the veil on perverse subsidies. Nature, 392(6674), 327‐328. Retrieved October 25, 2008, from Research Library Core database. (Document ID: 28288937). Myers, N. and J. Kent. (2001). Perverse subsidies: How misused tax dollars harm the environment and the economy. Washington, DC: Island Press. Previewobtained October 25, 2008, from Google Books: http://books.google.com/books?id=mA‐ t1xAJDDUC&dq=norman+myers+subsidies&printsec=frontcover&source=bl&ots=ATm8ggF z_v&sig=ySiU9q3FaIR5wNqngm9P60‐ Vwzo&hl=en&sa=X&oi=book_result&resnum=1&ct=result#PPP1,M1. What Environmentalists Need to Know – (11) Fisheries 100 United Nations Division for Ocean Affairs and the Law of the Sea. (1998). The United Nations Convention on the Law of the Sea (A historical perspective). New York: Author. Retrieved March 22, 2008, from http://www.un.org/Depts/los/index.htm. Worm, B., E. B. Barbier, N. Beaumont, J. E. Duffy, C. Folke, B. S. Halpern, J. B. C. Jackson, H. K. Lotze, F. Micheli, S. R. Palumbi, E. Sala, K. A. Selkoe, J. J. Stachowicz, and R. Watson. (2006, November 3). Impacts of biodiversity loss on ocean ecosystem services. Science, 314(5800), 787‐790. What Environmentalists Need to Know – (11) Fisheries 101 Chapter 12 Deforestation The majority of the world’s biodiversity exists in forest ecosystems, 1 many of which are under threat. The pressures on forests are varied, ranging from logging (legal and illegal), urban development, agricultural conversion, acid rain, and fire. Behind all of these pressures lie two driving forces of forestry decline: the de facto “open access” status of much of the world’s forests and the under‐pricing of forest ecosystem services. Similar to much of the world’s oceans (for which property rights do not exist), much of the world’s forests are located in remote areas with low population densities and where the enforcement powers of a central authority are weak to non‐existent. The result is a situation where property rights over forestry resources, even if they exist on paper, are often not enforced and are tenuous at best. This leads to a race to exploit forest resources before others can claim them, which in turn leads to massive deforestation. Not only does the open access nature of forests lead to their over‐exploitation, but often there are additional incentives to cut down trees. Unfortunately, in many developing countries rampant corruption is often the norm; government authorities, in league with illegal loggers, engage in massive deforestation, even in areas that are set aside as protected areas. 2 In developed countries there is less outright corruption, but government subsidies for road construction and timber leases priced at well below the true market value result in much the same—excessive deforestation and abuse of the resources held in the public trust. 3 The best way to decrease deforestation would be to directly address these issues: improve the system of property rights and decrease corruption in developing countries, and get rid of government subsidies for timber companies in the developed world (of course, there are instances where these recommendations would apply to both sets of countries). The impediments within the developing countries are obvious; establishing and strengthening the rule of law is much easier said than done. But the obstacles in the developed world, while easier to solve theoretically, are also difficult because of the power of the timber companies and a lack of public awareness about the ways in which government actively exacerbates deforestation (this is similar to the situation with regards to agricultural subsidies). But even if we could miraculously improve the institutions of governance in developing countries and diminish the perverse policies in developed countries that promote deforestation, there would still remain serious threats to the world’s forests through the other channels mentioned above. Development pressures would still exist and agricultural conversion would not go away. 1 Even though their share of global land area has decreased by half (from about half of global land cover to about a quarter), forests continue to provide habitat to more than 50% of the world’s species (Groombridge & Jenkins, 2000). Forests are found on all six inhabited continents, especially in the tropical and temperate zones. Good maps of global forest cover and overall terrestrial ecological zones can be found at: http://www.fao.org/DOCREP/004/Y1997E/y1997e1g.htm, figures 47‐1 and 47‐2, respectively. 2 Illegal logging constitutes 90% of all logging activity in Cambodia, 80% in Bolivia and Peru, 70‐80% in Indonesia, and 70% in Ecuador, Gabon, and Papa New Guinea (World Bank, 2006). 3 For example, the United States Forest Service loses around $40 million annually subsidizing the logging industry in the Tongass National Forest and cheap logging fees for Canadian timber companies are disputed as unfair subsidies by the US logging industry (Taxpayers for Common Sense, n.d.; Cushman, 2006). What Environmentalists Need to Know – (12) Deforestation 103 This brings us back to one of the central intuitions from economics of the environment: the goal is not to reduce deforestation to zero, but to balance the legitimate uses of forest resources with the needs of preservation. Currently, the ecosystem services that forests provide are vastly undervalued; in fact, they often are taken completely for granted. For example, trees sequester carbon, and therefore, release carbon when they are cut or burned. While efforts are underway to put a global price on carbon (in order to stem global warming), currently a company that cuts down a tract of forest land and releases tons of carbon into the atmosphere pays no price for this carbon pollution. Conversely, few developing countries that decide to halt deforestation receive any compensation for the carbon that they sequester. This is one of the major sticking points of the most recent climate change negotiations; developing countries want “avoided deforestation” to count towards carbon credits and be compensated for them (Walsh, 2007; Fogarty, 2007). But carbon sequestration is only one of many ecosystem services that forests provide. Water filtration, storm protection, habitat for biodiversity, providing clean air, and protecting against soil erosion all have tremendous economic value, but are rarely either measured or enter into the decision‐making process when forests are cleared. Efforts, however, are underway to measure the values of forest ecosystem services and create mechanisms by which communities can be rewarded for preservation efforts. 4 The best example of such a policy in action is probably in Costa Rica, where since 1997 the country has embarked on an ambitious plan to pay landowners for forest preservation based on the valuable ecosystem services they provide (Chomitz, Brenes, & Constantino, 1998). The program has largely been a success and is heralded as a model for other countries to follow. In the first phase, approximately 4,000 projects received approximately $65.8 million to conserve approximately 300,000 hectares of forest land across the country (Sanchez‐Azofeifa, Pfaff, Robalino, & Boomhower, 2007). 5 One problem with the program is that funding comes primarily from a fuel tax, which is regressive in that it disproportionately impacts the poor. If the post‐Kyoto agreement allows for carbon credits for avoided deforestation this may provide an opportunity for additional outside funding. Some other excellent examples of forest ecosystem services incorporated into economic decisions in novel ways include: 1. Panama‐ in order to decrease sediment run‐off into the Panama Canal (caused by deforestation), which leads to expensive dredging efforts, the government is paying people to plant trees in areas adjacent to the canal (Are you being served?, 2005). University, The Nature Conservancy, and World Wildlife Fund to define the economic value of ecosystem services at locations around the world: http://www.naturalcapitalproject.org/about.html. The Gund Institute for Ecological Economics at the University of Vermont is also working to measure the value of forest ecosystems: http://www.uvm.edu/giee/. 5 A review of the program by Sierra and Russman suggests that payments are not directly contributing to forest conservation and that the funds would be better spent in restoration activities (2006). A study by Brian Steed offers the conclusion that while the program is theoretically good, areas of caution/concern include ensuring that incentives are adequate for the targeted participants and that solid foundations and payment mechanisms are established to ensure continuity of the program over time (2007). 4 The Natural Capital Project is a joint effort among The Woods Institute for the Environment at Stanford What Environmentalists Need to Know – (12) Deforestation 104 2. Belize‐ the government accepted funding from Shaman Pharmaceuticals to preserve 2,400 hectares of forest as an ethnobiomedical reserve in exchange for the rights to the discovery of new drugs (Spiro, 1998). 6 3. New York City‐the city bought the forest land in its upstate watershed since the trees provide water purification cheaper than an industrial water purification plant (U.S. Environmental Protection Agency, 2008). 4. Niger & Kenya‐recognizing the value of trees for soil protection and as a renewable source of food and wood products, these governments have provided many incentives for tree planting to local communities (U.S. State Department, 2004; World Agroforestry Centre, 2004). Setting aside large swaths of forest land in protected areas or national parks, particularly where biodiversity is most concentrated, is also a worthy goal. Many international conservation organizations, such as the Nature Conservancy, World Wildlife Fund, and Conservation International are heavily involved in working with governments across the world to protect unique forest habitats. This often involves outside funding from both philanthropists and governments at a time when there are many causes competing for limited aid dollars, and sometimes conservation is not a priority. These efforts, however, are crucial. One policy mechanism that is once again gaining traction is “debt‐for‐nature” swaps, in which outside funders purchase a portion of country’s international debt (at pennies on the dollar) in exchange for conservation commitments equal to the face value of that debt. In this way, poorer countries get much‐needed debt relief and conservation groups get habitat protection at a large discount. Debt‐for‐nature swaps began in the 1980s during the time of the major debt crises in Latin America, and since then some lessons have been learned. 7 First, it is not enough for developing country governments simply to promise to protect areas and nothing more; they must create detailed management plans and commit resources to their enforcement. This puts more onus on the recipient countries, but also creates a mechanism for accountability and ensures that real conservation is taking place instead of nothing more than the creation of “paper parks.” Recent examples of these transactions are in the countries of Guatemala and Costa Rica. 8 This leads to another key point that environmentalists are starting to confront head‐on: most of the world’s forests are populated and cannot simply be cordoned off in order to be protected. A 2004 article entitled, “A Challenge to Conservationists,” sparked a furious debate in the environmental 6 The Terra Nova Rainforest reserve, which was deeded to the Belize Association of Traditional Healers in 1993, was designed for three purposes: use by traditional healers and their students, use by US scientists for ethnobotanical and ecological research, and ecotourism (Balick, Arvigo, & Romero, 1994). Bioprospecting may, however, have limited viability as a force for forest preservation (Simpson, Sedjo, & Reid, 1996). 7 The first recorded swap took place in 1987 between Bolivia and Conservation International (Resor, 1997). 8 Conservation International and the Nature Conservancy, in conjunction with the United States and Guatemalan governments, worked out a debt for nature swap in 2006 to provide Guatemala with more than $24 million for forest protection (Historic debt‐for‐nature swap, 2006). The largest swap in history occurred in 2007 when the US government, Nature Conservancy and Conservation International came together to purchase $26 million of Costa Rica’s foreign debt at a discounted price of $12.6 million (“Costa Rica,” 2007). What Environmentalists Need to Know – (12) Deforestation 105 community because the article accused the “Big Three” environmental conservation groups (mentioned above) of often ignoring the plight of the indigenous groups in and around the areas that they tried to protect (Chapin, 2004). The author paints a picture of these groups as arrogant and out of touch with the needs of local people and their historical rights to forest resources. Needless to say, the article produced major responses from the accused parties and a lot of discussion. 9 The net effect has been a healthy discourse; environmentalists are beginning to grapple more effectively with how to incorporate models of “sustainable development” into forest conservation plans, and to treat forest ecosystems as arenas of human‐nature interaction, instead of simply zones for wildlife. This is a crucial development because the majority of the world’s forests will remain in private hands. We are past the time when the choice was between forest conservation or meeting human needs; they must both be accomplished in order to guarantee sustainability. References Are you being served? Environmental economics. (2005, April 23). Economist. Retrieved March 23, 2008, from LexisNexis Academic. Balick, M. J., R. Arvigo, and L. Romero. (1994). The development of an ethnobiomedical forest reserve in Belize: Its role in the preservation of biological and cultural diversity. Conservation Biology, 8(1), 316‐317. Retrieved March 23, 2008, from Jstor. Chapin, M. (2004, November/December). A challenge to conservationists. World Watch Magazine, 17(6), 17‐31. Retrieved November 4, 2008, from World Watch: http://www.worldwatch.org/system/files/EP176A.pdf. Chomitz, K. M., E. Brenes, and L. Constantino. (1998). Financing environmental services: The Costa Rican experience and its implications. Washington, DC: The World Bank. Costa Rica gets largest debt‐for‐nature swap. (2007, October 17). World News – World Environment. Retrieved February 27, 2008, from http://www.msnbc.msn.com/id/21345405/. Cushman, T. (2006, February 1). Import taxes on Canadian softwood raises the price by 20 percent. Do US sawmills really need the protection? Builder. Retrieved March 23, 2008, from LexisNexis Academic. Fogarty, D. (2007, December 5). Saving rainforests a thorny issue at Bali talks. Reuters. Retrieved February 21, 2008, from http://www.reuters.com/article/environmentNews/idUSSP15328520071205?sp=true. Groombridge, B. and M. D. Jenkins. (2000). Global biodiversity: Earth’s living resources in the 21st century. Cambridge: World Conservation Press. Historic debt‐for‐nature swap protects Guatemala’s tropical forests. (2006, October 2). The Nature Conservancy. Retrieved March 22, 2008, from http://www.nature.org/pressroom/press/press2641.html. Resor, J. P. (1997). Debt‐for‐nature swaps: A decade of experience and new directions for the future. Unasylva, 48(188). Retrieved March 22, 2008, from http://www.fao.org/docrep/w3247E/w3247e00.htm#Contents. Initial responses to Chapin’s article, including responses by the “Big Three,” were published in the January/February 2005 World Watch magazine and are available for download here: http://www.worldwatch.org/system/files/EP181C.pdf. Additional responses that were not published in print are available here: http://www.worldwatch.org/node/1832. 9 What Environmentalists Need to Know – (12) Deforestation 106 Sanchez‐Azofeifa, G. A., A. Pfaff, J. A. Robalino, and J. P. Boomhower. (2007). Costa Rica’s payment for environmental services program: Intention, implementation, and impact. Conservation Biology, 21(5), 1165‐1173. Retrieved March 23, 2008, from EJS E‐Journals. Sierra, R. and E. Russman. (2006, August). On the efficiency of environmental service payments: A forest conservation assessment in the Osa Peninsula, Costa Rica. Ecological Economics, 59(1), 131‐141. doi:10.1016/j.ecolecon.2005.10.010. Abstractretrieved November 4, 2008, from Science Direct: http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6VDY‐ 4HRMV3W‐ 2&_user=10&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_version=1&_urlVersion=0&_ userid=10&md5=37ca6a40d75d9d6a82f68d76377daf2f. Simpson, R. D., R. A. Sedjo, and J. W. Reid. (1996, February). Valuing biodiversity for use in pharmaceutical research. The Journal of Political Economy, 104(1), 163‐185. Spiro, G.. (1998, May). What’s Rosita Arvigo up to now? An update. The Monthly Aspectarian: The magazine for the New Age (online edition). Retrieved November 11, 2008, from http://www.lightworks.com/MonthlyAspectarian/1998/May/0598‐07.htm. Steed, B. C. (2007, Fall). Government payments for ecosystem services – Lessons from Costa Rica. Journal of Land Use, 23(1), 177‐202. Retrieved November 4, 2008, from http://www.law.fsu.edu/Journals/landuse/vol23_1/Steed.pdf. Taxpayers for Common Sense. (n.d.). Tongass logging subsidies – cost to taxpayers. Washington DC: Author. Retrieved March 23, 2008, from http://www.taxpayer.net/forest/tongass/loggingsubsidies.htm. U.S. Environmental Protection Agency. (2008). Watershed land acquisition program. New York City watershed: Watershed protection programs. Retrieved November 4, 2008, from http://www.epa.gov/region02/water/nycshed/protprs.htm#rules. U.S. State Department. (2004). Land management. Desertification: Earth’s Silent Scourge. Retrieved March 23, 2008, from http://usinfo.state.gov/products/pubs/desertific/land.htm. Walsh, B. (2007, July 12). Getting credit for saving trees. Time. Retrieved March 22, 2008, from http://www.time.com/time/magazine/article/0,9171,1642887,00.html. World Agroforestry Centre. (2004). Annual report 2004: Restoring hope restoring the environment. Nairobi: Author. Retrieved March 23, 2008, from http://worldagroforestry.org/downloads/publications/PDFs/rp13340.pdf. World Bank, The. (2006). Strengthening forest law enforcement and governance: Addressing a systematic constraint to sustainable development (Report No. 36638‐GLB). Washington, DC: Author. Retrieved November 4, 2008, from http://www.illegal‐ logging.info/uploads/Forest_Law_FINAL_HI_RES_9_27_06_FINAL_web.pdf. What Environmentalists Need to Know – (12) Deforestation 107 Chapter 13 Population Growth & Technological Change Population growth and its impact on the environment has been a hot topic for decades, ever since Paul Ehrlich’s the “Population Bomb” was published in 1968. Extending many of the arguments first put forth by Thomas Malthus in the 18th Century, 1 Ehrlich predicted an exponential increase in global population coupled with massive starvation, given that growth in the food supply wouldn’t be able to keep pace. The world’s population has essentially doubled in the past 40 years, from 3.3 million to 6.5 million, 2 but there has not been widespread famine. In fact, where there have been regional food crises (e.g. Ethiopia in 1983‐1985), 3 they have not been caused by a global food shortage, but by unfavorable changes in local climatic conditions coupled with ineffective and unresponsive governments. Global food production continues to keep pace with population growth, and given that vast quantities of food is used inefficiently in the production of livestock, there is plenty of food available to feed a much greater world population (raising grain crops such as soy and corn and feeding them to cows, pigs, and chickens wastes about 90% of the energy content of the primary food crop). 4 As the Nobel Laureate Amartya Sen has convincingly demonstrated, the issue of famine, starvation, and malnutrition is dictated more by economic opportunity and the presence of a democratic government accountable to the people then by natural resource constraints. 5 The question arises whether at present a focus on population growth, and policies to limit it, should be priorities for environmentalists. There are those who argue that increases in population are the root cause of many of our present environmental problems, and that these will only be exacerbated by billions more people. There is no doubt that all else equal, if we were to simply add more people to the world, environmental problems would grow worse. But population growth rates interact with many important social and economic variables, and require a more nuanced perspective. In addition, it is not accurate to claim that population growth is the root cause of environmental problems; it is specific types of consumption that drive environmental degradation. For example, a U.S. citizen who owns two SUVs, a 2000 square‐foot home, all of which are air‐ conditioned, and eats factory‐raised meat multiple times a day, has an environmental footprint hundreds of times as big as a rice farmer in Vietnam. A focus exclusively on population is misplaced because it does not account for these differences in consumption. Most of the world’s population 1 Copies of Malthus’ writings can be found at 2 The global population grew from 3,342,771 in 1965, to 6,514,751 in 2005 (Population Division, 2005). http://www.faculty.rsu.edu/~felwell/Theorists/Malthus/Index.htm. famine in Ethiopia,” 2008). 3 Ethiopia has suffered multiple famines, the most severe of which lasted from 1983 to 1985 (“1984‐1985 4 Animals convert 5‐15% of the energy content embodied in plants into cellular material (Decrausaz, 2005). 5 For more information see some of Amartya Sen’s work on this subject (Dr’eze & Sen, 1987). What Environmentalists Need to Know – (13) Population & Technology 109 growth is taking place in the developing countries of the world, while most of the consumption takes place in the developed world. 6 This is starting to change; consumption is rising in the developing world as income rises, but at the same time population growth rates are declining. 7 This is because population growth rates are highly correlated with income. As people become wealthier the opportunity cost of having an additional child grows (think college tuition and less time spent working at a higher salary) and people tend to prefer to invest more resources in few number of children (conversely, those who are desperately poor have large numbers of kids because many of them die prematurely and children act as a form of social insurance for their old age). This presents environmentalists with somewhat of a conundrum: it is the wealthy that are driving the high rates of consumption, and yet as people become wealthier they have fewer children. If limiting total global population were truly the goal, the surest way to achieve this would be to help countries develop and become wealthy as quickly as possible. However, if we were simply to duplicate current patterns of consumption with billions of new people the results would be disastrous. This is why the population issue is largely a distraction; the key issue is how to transition to much more resource efficient modes of production that allow for high levels of material well‐being, with a projected stable population of potentially nine billion people later this century. 8 This is not to suggest that efforts to improve women’s health and empowerment, which are also highly correlated with decreases in population growth, should not also be supported. But from a strictly environmental perspective, it is the transition to a less resource‐intensive economy that should be the top priority. There are some encouraging signs that this is already on the way. As economies grow they tend to become much more energy efficient and the ratio of additional resource use for every dollar of additional GDP declines as well. 9 We have yet, however, to reach a 6 Consumer Spending and Population, by Region, 2000 (Worldwatch Institute, 2004): Region United States and Canada Western Europe East Asia and Pacific Latin America and the Caribbean Eastern Europe and Central Asia South Asia Australia and New Zealand Middle East and North Africa Sub-Saharan Africa Share of World Private Consumption Expenditures (%) 31.5 28.7 21.4 6.7 3.3 2 1.5 1.4 1.2 Share of World Population (%) 5.2 6.4 32.9 8.5 7.9 22.4 0.4 4.1 10.9 declining in most developing countries (not Sub‐Saharan Africa or the Middle East) since the mid‐1960s (Soubbotina, 2004). 8 The medium projection is for the population to rise to 9.2 billion people by 2075, declining to 8.3 billion by 2175, and then increasing back up to 9 billion by 2300 (United Nations, 2003). 7 Due in large part to economic growth, birth rates (and consequently population growth rates) have been What Environmentalists Need to Know – (13) Population & Technology 110 point where the absolute amount of resource use declines as countries grow; while countries do become better at utilizing resources they still do consume more in raw terms. Creating a society where we can become richer while using less absolute quantities of natural resources is the great challenge that we face. Getting there will require enacting many of the policies already outlined in this volume, but it will also necessitate major new incentives for technological innovation. Environmental economists have long argued that if only prices reflected the “full” costs of production—including all of the external costs and free of government subsidies—this would raise the price of commodities such as oil, gas, forest products, and minerals sufficiently to create new incentives for the creation of renewable and less polluting substitutes. There is no doubt a large degree of truth to this. For example, once greenhouse gases are assigned a price, we will likely see a move away from coal as a power source and a greater move towards alternatives such as wind and solar, which will be able to more effectively compete. The same goes for the full range of other products and services that currently enjoy an artificially low price, due to either direct government subsidies or the lack of accounting for the environmental damage they generate. But “getting the prices right” alone is unlikely to provide sufficient incentives for the type of major environmental innovations, and their quick adoption, that many scientists think is key to averting environmental crises. Therefore, further government action is warranted. Economic analysis can help environmentalists differentiate between the types of interventions that will likely support these efforts versus those that will hamper them. Case in point: subsidies for corn ethanol production. Over the past few years, with global warming and energy security major topics in the news, the U.S. government dramatically increased subsidies for ethanol production to the tune of billions of dollars 10 ; this is on top of the already lavish subsidies that corn farmers receive. Predictably, this has led to a surge in domestic ethanol production. The problem is that ethanol is a terrible 9 Energy intensity by region, 1980‐2030, from Energy Information Agency (2007): 10 Between 1979 and 1986, total subsidies to ethanol jumped from $86 million to $2 billion (in 2006 dollars). US Government support of ethanol grew to $5.8‐7.0 billion in 2006, could reach $11 billion in 2008, and is expected to continue rising into the future (Koplow, 2007). What Environmentalists Need to Know – (13) Population & Technology 111 substitute for oil; not only does corn production result in a host of significant externalities (such as the “dead zone” in the Gulf of Mexico), but it turns out that once we account for all of the energy that goes into ethanol production it represents actually a net increase in greenhouse gas emissions per unit of fuel. 11 This means that the end result of this expensive government program is more environmental degradation, more greenhouse gases, and less incentive for truly “green” energy alternatives (they are at an economic disadvantage since they do not receive subsidies). For the next decade the example of ethanol subsidies should be environmentalists’ “Exhibit A” of how not to craft government policy. Why did this policy fail so miserably (and more importantly, how can this be avoided in the future)? For starters, farm politics in the U.S. has more to do with the electoral map than with sound economics. But more fundamentally, this policy was premised on the notion that the government should be in the business of picking “winning” technology and actively supporting it. This is not the job of governments since they are not particularly good at it. What governments can and should do is create an economic climate where an entire host of technologies can vie and compete for dominance in an even playing‐field. For example, renewable portfolio standards, which mandate that a certain percentage of energy in a region be produced using renewable technology, don’t state which technology. They leave the playing field wide open and don’t distort the market in favor of one technology over the other. Generous research grants for R&D in renewable energy, whose findings are subsequently made part of the public domain, would also support the entire renewable sector and not privilege one technology over the other. Grants are particularly good at encouraging risk‐taking behavior, which is often the key to the development of new “breakout” technologies. The use of economic prizes can also generate innovation without distorting incentives against any subset of nascent technologies. For example, a prize for the first commercially viable carbon sequestration technology would leave the field open to a host of initiatives, including clean coal, underwater sequestration, or other forms of geoengineering. Already the government, as well as some private foundations, has sponsored (relatively minor) prizes in the areas of fuel‐efficiency, robotics, and medicine, which have been reasonably successful. 12 In order to have a major impact and draw significant new talent to environmental projects these prizes would have to be large and prestigious. There may come a time when specific new technologies have proven themselves worthy of significant government support, especially if major infrastructure changes are required. For example, if car battery technology improves dramatically such that it would be possible to The production of ethanol results in a net 25% increase in energy; however, most of that energy is embodied in the animal feed byproduct (Hill, Nelson, Tilman, Polasky & Tiffany, 2006). 12 The X PRIZE Foundation’s first award, the Ansari X PRIZE, went to Burt Rotan in October 2004 for completing the first private flight to space. Other X PRIZES include the Progressive Automotive X PRIZE to develop a production‐capable 100mpg vehicle, the Archon X PRIZE for Genomics to develop a breakthrough in genome sequencing, the Google Lunar X PRIZE to send a robot to the moon. Soon to come are several energy X PRIZEs. While a private company sponsors each X PRIZE, the Progressive Automotive X PRIZE, for example, is offered in partnership with the US Department of Energy. For more information, visit http://www.xprize.org/. 11 What Environmentalists Need to Know – (13) Population & Technology 112 transition to 100% battery‐powered vehicles, it may be justified for the government to invest in the new types of power grids that would be required to support such an effort. But again, extreme caution would have to be exercised so that we didn’t have a repeat of the corn ethanol debacle. Switching to an electric transportation sector only makes sense if the new vehicles are extremely energy efficient and if we generate electricity form predominantly renewable sources. Switching from gasoline‐powered vehicles to electricity generated from coal wouldn’t be an improvement; it might actually make matters worse. This is why all major environmental initiatives must pass a “life cycle test”; all of the impacts across the board must be incorporated into the final assessment. If this had been done with respect to ethanol, the subsidy program would never have been passed. If Congress had insisted on finding a way to financially support farmers in the pursuit of new energy policy, support for research into better forms of cellulosic ethanol or the conversion of agricultural land to wind and solar energy could have been explored, both of which would have been significantly better policy. The more a policy allows for a wide range of potential solutions and focuses on the root causes of problems, the more efficient it will be and the lower probability that it will lead to environmentally harmful unintended consequences. References 1984‐1985 famine in Ethiopia. (2008). Wikipedia. Retrieved March 23, 2008, from http://en.wikipedia.org/wiki/1984%E2%80%931985_famine_in_Ethiopia. Decrausaz, B. (2005). Virtual water and agriculture in the context of sustainable development. Adelaide: OECD Workshop on agriculture and water. Retrieved March 23, 2008, from http://www.oecd.org/secure/pdfDocument/0,2834,en_21571361_34281952_35590094_1_ 1_1_1,00.pdf. Dr'eze, J. and A. Sen. (1987) Hunger and public action. Oxford: Clarendon Press. Referenced in Sen, A. (1999). Democracy as a universal value. Journal of Democracy, 10(3), 3‐17. Retrieved March 23, 2008, from http://muse.jhu.edu/demo/jod/10.3sen.html. Energy Information Administration. (2007). Chapter 1 – World energy and economic outlook. International Energy Outlook 2007. Washington DC: Author. Retrieved March 23, 2008, from http://www.eia.doe.gov/oiaf/ieo/world.html. Hill, J., E. Nelson, D. Tilman, S. Polasky, and D. Tiffany. (2006, July 25). Environmental, economic, and energetic costs and benefits of biodiesel and ethanol biofuels. Proceedings of the National Academy of Sciences, 103(30), 11206‐11210. Retrieved March 24, 2008, from http://www.pnas.org/cgi/reprint/0604600103v1. Koplow, D. (2007). Biofuels – At what cost? Government support for ethanol and biodiesel in the United States: 2007 update. Geneva: International Institute for Sustainable Development. Retrieved March 24, 2008, from http://www.earthtrack.net/earthtrack/library/BiofuelsUSupdate2007.pdf. Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat. (2005). World population prospects: The 2006 revision and World urbanization prospects: The 2005 revision. Retrieved March 23, 2008, from http://esa.un.org/unpp. Soubbotina, T. P. (2004). Beyond economic growth: An introduction to sustainable development (2nd ed.). Washington, DC: The World Bank. Retrieved November 6, 2008, from DEPweb: http://www.worldbank.org/depweb/english/beyond/global/index.html. What Environmentalists Need to Know – (13) Population & Technology 113 United Nations Department of Economic and Social Affairs, Population Division. (2003). World population in 2300. New York: Author. Retrieved March 23, 2008, from http://www.un.org/esa/population/publications/longrange2/Long_range_report.pdf. Worldwatch Institute. (2004). State of the world 2004: Consumption by the numbers. Retrieved March 23, 2008, from http://www.worldwatch.org/node/1783. What Environmentalists Need to Know – (13) Population & Technology 114 Chapter 14 Demand­Side Interventions The majority of this book has focused on supply‐side solutions—policies that influence the behavior of farmers, landowners, timber companies, fisherman, and corporations. Many of these policies, by influencing the prices and quantities of goods produced, end up influencing demand. But there are many interesting and effective policy interventions that directly address the demand‐side of the equation. The following are descriptions of some of the latest and potentially most effective demand‐side interventions for improving environmental quality (in no particular order): 1. Real­time electricity pricing Virtually everywhere the price of electricity is constant throughout both the months of the year and the hours of the day; for example, electricity always costs $.115/kilowatt hour where I live, whether at noon in the middle of the summer or at night in the dead of winter. This is extremely inefficient because the cost of producing energy, as well as the associated pollution, varies greatly at different times. During peak energy demand times, which are typically during the days in the hot summer months (mainly due to air conditioning demand), energy can be up to 300% more costly to produce. 1 Since so many power plants need to be on line to meet demand, the pollution created is also worse (due to the warm weather). Economists have long recommended charging customers different electricity prices at different times in order to match the true cost of producing electricity. If both consumers and businesses had to pay a premium for electricity in the hot daytime hours, this would help shift production towards less intensive periods and decrease pollution. Setting up such a system requires special metering and billing and making sure that customers understand the differential pricing system. Real‐time pricing experiments are already underway in Italy, Canada, the United States (especially California), Turkey, Australia, New Zealand, the Netherlands, and the Nordic countries, with positive results (“Smart meter,” 2008). This policy is consistent with the economic maxim that prices should reflect the true costs of production as accurately as possible. 2. Block water pricing Water prices for piped water throughout much of the world are relatively minor with respect to personal income; the result is that very few people pay much attention to the amount of water they 1 From a study to estimate costs in New South Wales, total peak‐time electricity load costs $89.59/MWh, while total off‐peak electricity load costs $22.66/MWh. In the middle, the total shoulder time electricity load costs $47.25/MWh. However, due to variations in the power supply mix, electricity production can cost as much as $123.77/MWh and $30.92/MWh during peak and off‐peak loads, respectively. In this study, peak time includes Monday‐Friday, 7am‐9am and 5pm‐8pm; shoulder time includes Monday‐Friday, 9am‐5pm and 8pm‐midnight; off‐peak time includes weekends, public holidays, and Monday‐Friday 10pm‐7am (Intelligent Energy Systems, 2004). What Environmentalists Need to Know – (14) Demand‐Side 115 use, unless there is a serious draught situation. While businesses pay more for water, the same basic scenario applies in most cases: the price of water isn’t high enough to lead to major changes in usage. But water is a precious commodity that is becoming increasingly scarce, and is required for many environmental uses, such as rivers, wetlands, and lakes. Reducing water demand is a priority in areas with rapid population growth and limited rainfall, particularly with climate change threatening future supplies. One way to reduce water demand is to employ block pricing, which is essentially a tiered pricing schedule; for residential use, prices remain low for an amount of water that covers average usage (with a little leeway built in for larger families), and then prices rise sharply for usage that exceeds this monthly amount. This has the desired effect of creating a significant disincentive to use more water than is needed for essential uses such as washing, bathing, and cooking; e.g. for lawns, washing cars, etc. The same system can be put in place for industry, with rates held constant for normal use patterns and then sharp increases levied for producers that use water inefficiently. Block water pricing is in use in Albuquerque, NM, Goleta, CA, Irvine Ranch Water District, CA, Massachusetts, Phoenix, AZ, and Seattle, WA. 2 3. South Korea’s “law of one­use” for disposal items In 2005 South Korea passed a ground‐breaking law requiring all retailers to charge customers for items that are “one‐use” disposable items, such as paper cups and plastic bags. The result has been a sea‐change in behavior in South Korea; for example, the use of paper bags has decreased by 24%. 3 Predictably, many Koreans now bring their own cups to cafes and their own shopping bags to stores in order to avoid the charges, which can add up quickly. By putting a price on waste, the South Korean government was able to create incentives for environmentally‐friendly behavior. 2 A demand‐reducing strategy that includes block pricing among other incentives produced the following water savings (U.S. Environmental Protection Agency, 2002): (1) Albuquerque, NM: reduction of 45gallons/capita/day from 1995‐2001, and 14% reduction in peak demand from 1990‐2001 (2) Goleta, CA: 50% decrease in per capita usage from 1989‐1991 (3) Irvine Ranch Water District, CA: water savings of 19% from 1990‐1992 (4) Massachusetts Water Resources Authority: water savings of 24% from 1987‐1988 (5) Phoenix, AZ: per capita water savings of 6% from 1982‐1987, and 14% total decrease in water usage 1990‐1995 (6) Seattle, WA: 2.3% water reduction from 1990‐1998 contributed to pricing structure alone 3 The Resource Conservation and Recycling Facilitation Act, originally signed in 1992 and amended in 2002, requires stores to charge 100 Won for paper bags and 50 Won for plastic bags regardless of the value of the purchase. Fast‐food establishments and restaurants are required to recycle at least 90% of their used paper containers, and a voluntary program has to‐go establishments charging a deposit on their paper containers, refundable when the item is returned for recycling (Sang, 2003). The purchase of paper bags has decreased from 48.6% in 2001 to 24.0% in 2004 and 30% of disposable cups were returned for recycling (Ministry of Environment, 2005). What Environmentalists Need to Know – (14) Demand‐Side 116 4. Shaming: The case of WildAid Over the past decades, driven by huge increases in wealth, the world has witnessed an increase in demand for all sorts of wild animal products, many of them illegal. 4 The trade in bushmeat, shark fins, exotic birds and reptiles, and tiger bone has devastated many ecosystems and threatens to drive many species to extinction. It is virtually impossible to prevent trade in illegal wildlife with government regulation alone; if there is sufficient demand there will always be someone willing to break the law in order to supply the market (just look at the illegal drug trade). Since much of this demand is driven by the wealthy, groups such as WildAid have begun to use an age‐old technique to dampen this demand: public shaming. WildAid runs major media campaigns in countries when the trade in wildlife is greatest, often using celebrities (e.g. Yao Ming and Jackie Chan to speak out against shark fin soup in China) to carry their blunt message: buying these products is disrespectful to one’s culture and homeland. 5 Sustained campaigns of this nature are absolutely essential to decrease demand, which is the only way to permanently depress the markets for wildlife. 5. Congestion pricing for automobiles Similar to real‐time pricing for electricity, congestion pricing refers to a system where automobiles are charged a premium for driving during peak hours (usually within crowded city limits) in order to decrease rush‐hour traffic and the associated pollution. London was the first major city to institute congestion pricing and the results so far indicate that congestion pricing is working. 6 New York City has floated an idea similar to London’s, but it has yet to be enacted. One of the concerns is that these programs hurt small businesses, especially those dependent on ground transportation. Since individual commuters have many public transportation options this isn’t a primary concern. 6. Status quo bias and default options: Green power and beyond As discussed in chapter 6, one of the most fascinating findings within the field of behavioral economics is what is called “status quo bias,” which refers to the tendency for people to stick with default options even if they are not economically optimal. 4 By 2005, the global value of the wildlife trade had increased 150% from the early 1990s, from $158.9 billion to $239.5 billion (Roe et al, 2002; Engler & Parry‐Jones, 2007). viewers globally per week. These PSAs can be viewed on the WildAid website at: http://www.wildaid.org/index.asp?CID=7&PID=507. The current campaign has famous Asian athletes and celebrities speaking out against illegal animal products. 6 In 2003, London became the first city to charge all (with some exceptions) private vehicles a fee to enter the city center on weekdays between 7am and 6pm in order to reduce congestion and pollution. Video cameras around the city record license plates, which are then matched to a list of all vehicles that have paid for the right to drive in the city. By 2006, average traffic speed within the fee zone had increased 37%, peak period congestion delays decreased by approximately 30%, bus congestion delays decreased 50%, bus ridership increased 14% and subway ridership increased by around 1%, with apparently continuing improvement (Litman, 2006). 5 More than 80 celebrities have filmed public service announcements that have reached more than 1 billion What Environmentalists Need to Know – (14) Demand‐Side 117 There has been surprisingly little investigation into how default options influence decisions in the environmental realm, but it is likely a major factor in some very important areas; hopefully it will eventually garner the attention it deserves within the environmental community. Besides the example of “green power”, just imagine how consumer choice would change if the default position for produce was pesticide‐free—that is, fruits and vegetables without pesticides remained unlabeled—while what is now considered conventional and devoid of labels was instead labeled “grown with pesticides”? 7. Harnessing institutional and government purchasing power This policy prescription is straightforward: pressuring major institutions, including the government, to procure products from green sources. For example, the U.S. government is the biggest purchaser of paper in the world, so if it chooses to buy recycled paper or paper without bleach this has both a dramatic impact on pollution from paper products and also on the composition of the entire industry; 7 in fact, some institutions are so large that they can create new markets almost overnight. Amazing environmental benefits could be reaped if institutions decided to use non‐toxic products or to buy power from renewable sources. These institutions can include non‐profits, foundations, educational establishments, and well as businesses. For example, when WalMart decides to significantly reduce packaging this has dramatic implications for entire upstream industries; 8 when the City of San Francisco decides to replace bottled water with water filters at sinks this can lead to major reductions in energy use and refuse; 9 when Home Depot decides to carry FSC certified wood products this can create huge new markets for sustainable wood that didn’t yet exist. 10 Even small institutions can have relatively large impacts. Where I work we have begun a policy whereby 50% of the food served at campus‐wide events must be plant‐based, all new appliances must be Energy Star certified, all campus plants should be draught resistant native varieties, and all cleaning products should be non‐toxic. Clinton’s recycled paper mandates in 1993 and 1998, 98% of all paper purchases are compliant with the 30% recycled content requirement, saving 400,000 trees annually, and spending over $350 million on recycled products every year (Government Purchasing Project, n.d.). 8 In September 2006, Wal‐Mart announced that beginning in 2008 they would make purchasing decisions based on supplier’s ability to cut down on packaging. Wal‐Mart is expected to save $3.4 billion annually from this policy, and the entire supply chain is expected to save around $11 billion annually (“Wal‐Mart goes green,” 2005). Packaging should be reduced by 5%, and 667,000 metric tones of carbon dioxide kept from entering the atmosphere (“Wal‐Mart packaging,” 2006). 9 By July 1, 2007, all city offices were prohibited from buying any single serving water bottles, and by December 1, 2007, all city offices were to have switched from bottled dispensers to dispensers of Hetch Hetchy water. 47 million gallons of oil are used and one billion pounds of carbon dioxide are released to produce the bottles consumed annually by Americans (Newsom, 2007). The new dispensers will cost about $400 each, but this cost is minimal in comparison to the $500,000 the city of San Francisco used to spend each year on bottled water (Vega, 2007). 10 In 1999, The Home Depot announced a new policy of preferential treatment for FSC certified wood and suppliers (Home Depot, 2003). Between 1999 and 2003, sales of FSC certified wood at the Home Depot increased from $15 million to $350 million (Standley, 2005). 7 The US Government purchases more than 20 billion sheets of copier paper each year. Due to President What Environmentalists Need to Know – (14) Demand‐Side 118 The best environmental policies include a combination of supply and demand side management— working to pressure producers to become more environmentally friendly while using the pressure of market demand to reward those who do so (or conversely, penalize those who do not). References Confessore, N. (2008, April 7). Congestion pricing plan dies in Albany. New York Times. Retrieved November 6, 2008, from http://cityroom.blogs.nytimes.com/2008/04/07/congestion‐ pricing‐plan‐is‐dead‐assembly‐speaker‐says/?hp. Engler, M. and R. Parry‐Jones. (2007). Opportunity or threat: The role of the European Union in global wildlife trade. Brussels: TRAFFIC. Retrieved November 5, 2008, from http://www.traffic.org/general‐topics/. Government Purchasing Project. (n.d.). Government purchasing factsheet. Washington DC: Resource Conservation Alliance & Author. Retrieved March 29, 2008, from http://www.gpp.org/pub.html. Home Depot, The. (2003, December 3). The Home Depot® and Tembec team up to offer environmentally friendly lumber to consumers. The Home Depot. Retrieved March 29, 2008, from http://ir.homedepot.com/ReleaseDetail.cfm?ReleaseID=123833. Intelligent Energy Systems. (2004). The long run marginal cost of electricity generation in New South Wales. Sydney: Author. Retrieved March 25, 2008, from http://www.ipart.nsw.gov.au/documents/Pubvers_Rev_Reg_Ret_IES010304.pdf. Litman, T. (2006). London congestion pricing: Implications for other cities. Victoria, BC: Victoria Transport Policy Institute. Retrieved March 26, 2008, from http://www.vtpi.org/london.pdf. Ministry of Environment Republic of Korea. (2005, June 4). Purchase Fewer Disposable Bags, Return More Paper Cups. Ministry of Environment Republic of Korea (Press release). Retrieved March 26, 2008, from http://eng.me.go.kr/docs/news/press_view.html?seq=282&page=8&mcode. Newsom, G. (2007, July 21). Permanent phase­out of bottled water purchases by San Francisco city and county government (Executive directive 07‐05). San Francisco: Office of the Mayor. Retrieved March 29, 2008, from http://sfwater.org/Files/Pressreleases/Bottled%20Water%20Executive%20Order.pdf. Roe, D., T. Mulliken, S. Milledge, J. Mremi, S. Mosha, and M. Grieg‐Gran. (2002). Making a killing or making a living? Wildlife trade, trade controls and rural livelihoods. Biodiversity and Livelihoods Issues No.6. London: IIED. Retrieved November 6 2008, from http://www.iied.org/pubs/display.php?o=9156IIED. Sang, D. L. (2003). Waste reduction and recycling law in Korea. International Environmental Law Committee Newsletter, 5(1). Retrieved March 26, 2008, from http://www.abanet.org/environ/committees/intenviron/newsletter/feb03/korea/. Smart meter. (2008). Wikipedia. Retrieved March 25, 2008, from http://en.wikipedia.org/wiki/Smart_meter. Standley, V. (2005, September 12). New green building materials. Green Guide. Retrieved March 29, 2008, from http://www.thegreenguide.com/doc/110/materials. U.S. Environmental Protection Agency Office of Water. (2002). Cases in water conservation: How efficiency programs help water utilities save water and avoid costs (EPA832‐B‐02‐003). Washington DC: Author. Retrieved March 26, 2008, from http://www.epa.gov/owm/water‐ efficiency/pubs/index.htm. What Environmentalists Need to Know – (14) Demand‐Side 119 Vega, C. M. (2007, June 22). Mayor to cut off flow of city money for bottled water. San Francisco Chronicle. Retrieved March 29, 2008, from http://www.sfgate.com/cgi‐ bin/article.cgi?f=/c/a/2007/06/22/BAGE8QJVIL1.DTL. Wal‐Mart goes green on packaging. (2005, September 22). BBC News. Retrieved March 29, 2008, from http://news.bbc.co.uk/2/hi/business/5372660.stm. Wal‐Mart packaging reduction plan could save $11 billion. (2006, September 25). Environmental Leader. Retrieved March 29, 2008, from http://www.environmentalleader.com/2006/09/25/wal‐mart‐packaging‐reduction‐plan‐ could‐save‐11‐billion/. What Environmentalists Need to Know – (14) Demand‐Side 120 Final Thoughts & Additional Resources Due to their complexity, solving environmental problems requires creative thinking and the ability to juggle and digest huge quantities of information. Hopefully, this book has demonstrated how economic thinking and analysis can help better understand the root causes of environmental problems and the types of policies that will make actors change their behavior. All of these efforts are continually a work‐in‐progress. Economic tools can always use refinement and as our scientific understanding of ecosystems grows we will always face surprises. Due to the dynamic nature of the environmental movement, the chapters in this book will be updated periodically. Please also make sure to check the website frequently for links to case studies and commentary (http://policy.miis.edu/faculty/scorse.html). The following are a list of other online resources for those who want to stay current: Blogs & Websites Grist: http://grist.org/ Environmental Economics: http://www.env‐econ.net/ Periodicals Environment 360: http://e360.yale.edu/ On Earth: http://www.onearth.org/ Conservation Magazine: http://www.conbio.org/CIP/toc40710.cfm Nature Conservancy Magazine: http://www.nature.org/magazine/spring2008/ Review of Environmental Economics & Policy (requires subscription or e‐journal access): http://reep.oxfordjournals.org/ The Economist (always has something interesting on the environment): http://www.economist.com/ In the hopes of a greener and more peaceful world…. What Environmentalists Need to Know – Final Thoughts 121 Comprehensive Reference List 1984‐1985 famine in Ethiopia. (2008). Wikipedia. Retrieved March 23, 2008, from http://en.wikipedia.org/wiki/1984%E2%80%931985_famine_in_Ethiopia. About Friends of McNeil River. (n.d.). Retrieved September 27, 2008, from http://www.mcneilbears.org/index.cfm?section=About. Agreement between Merck and Costa Rica’s National Biodiversity Institute, The. (n.d.). Intellectual property right and the environment. Retrieved October 12, 2008, from http://www.american.edu/TED/hpages/ipr/misa.htm. Ahrens, R. (2002, September 27). European chemicals policy reform – from paralysis to action. (EEB Pub. No. 2002/016). Brussels: European Environmental Bureau. Retrieved March 19, 2008, from http://www.eeb.org/activities/chemicals/Publication‐EEB‐013_02.pdf. Air emissions summary through 2005. (2007). Air Trends. Retrieved November 4, 2007, from Environmental Protection Agency: http://epa.gov/airtrends/2006/emissions_summary_2005.html. Alston, L. J., G. D. Libecap, and B. Mueller. (1999). Titles, conflict, and land use: The development of property rights and land reform on the Brazilian Amazon frontier. Ann Arbor: University of Michigan Press. Preview obtained December 12, 2007, from Google Books: http://books.google.com/books?id=IuYrOK3Re04C. Americans and the World. (n.d.). Trade with China. World Public Opinion.org. Retrieved February 19, 2008, from http://www.americans‐world.org/digest/regional_issues/china/china5.cfm. Are you being served? Environmental economics. (2005, April 23). Economist. Retrieved March 23, 2008, from LexisNexis Academic. Arrow, K. J., M. L. Cropper, G. C. Eads, R. W. Hahn, L. B. Lave, R. G. Noll, P. R. Portney. M. Russell, R. Schmalensee, V. K. Smith, and R. N. Stavins. (1996, April 12). Is there a role for benefit‐cost analysis in environmental, health, and safety regulation? Science, 272, 221‐222. Arrow, K., R. Solow, P. R. Portney, E. E. Leamer, R. Radner and H. Schuman. (1993). Report of the NOAA panel on contingent valuation. Federal Register, 58(10), 4601‐4614. Azzi, C. F. and J. C. Cox. (1973). Equity and efficiency in evaluation of public programs. The Quarterly Journal of Economics, 87(3), 495‐502. Retrieved December 26, 2007, from JSTOR database. Baden‐Wurttemberg. (n.d.). Vaccination with bananas – the use of green gene technology. The Biotech/Life Sciences Portal. Retrieved March 17, 2008, from http://www.bio‐ pro.de/en/life/magazin/00386/index.html. Bali delegates agree to support forests‐for‐climate (REDD) plan. (2007, December 16). Mongabay.com. Retrieved February 21, 2008, from http://news.mongabay.com/2007/1215‐redd.html. Balick, M. J., R. Arvigo, and L. Romero. (1994). The development of an ethnobiomedical forest reserve in Belize: Its role in the preservation of biological and cultural diversity. Conservation Biology, 8(1), 316‐317. Retrieved March 23, 2008, from Jstor. Bao, Y., W. Wu, M. Wang, W. Liu. (2007). Disadvantages and future research directions in valuation of ecosystem services in China. International Journal of Sustainable Development and World Ecology, 14(4), 372‐381. Retrieved November 17, 2007, from ProQuest database. Barde, J. and D. Pearce. (1991). Valuing the environment: Six case studies. London: Earthscan. Referenced in Mazurek. Janice V. (1996). The role of health risk assessment and cost‐benefit analysis in environmental decision making in selected countries: An initial survey. Resources for the Future Discussion Paper 96­36. Retrieved September 8, 2008, from http://www.rff.org/rff/Documents/RFF‐DP‐96‐36.pdf. Barker T., I. Bashmakov, L. Bernstein, J. E. Bogner, P. R. Bosch, R. Dave, O. R. Davidson, B. S. Fisher, S. Gupta, K. Halsnæs, G.J. Heij, S. Kahn Ribeiro, S. Kobayashi, M. D. Levine, D. L. Martino, O. Masera, B. Metz, L. A. Meyer, G.‐J. Nabuurs, A. Najam, N. Nakicenovic, H. ‐H. Rogner, J. Roy, J. Sathaye, R. Schock, P. Shukla, R. E. H. Sims, P. Smith, D. A. Tirpak, D. Urge‐Vorsatz, D. Zhou. (2007). Technical summary. In: Climate change 2007: Mitigation. Contribution of Working What Environmentalists Need to Know – References iii Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change [B. Metz, O. R. Davidson, P. R. Bosch, R. Dave, L. A. Meyer (eds)], Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA. Bartczak, A., H. Lindhjem, S. Navrud, M. Zandersen, and T. Zylicz. (2008). Valuing forest recreation on the national level in a transition economy: The case of Poland. Forest Policy and Economics, 10(7‐8), 467‐472. Retrieved November 18, 2008, from http://mpra.ub.uni‐ muenchen.de/11483/. Bird, L. and B. Swezey. (2006.) Green power marketing in the United States: A status report (Ninth Edition) (NREL/TP‐620‐40904). Golden, CO: National Renewable Energy Laboratory. Retrieved March 29, 2008, from http://www.eere.energy.gov/greenpower/resources/pub_chrono.shtml. BirdLife International. (2008). EBA Programme. BirdLife International Data Zone. Retrieved February 20, 2008, from http://www.birdlife.org/datazone/ebas/eba_programme.html. Birrell, K. (2007). Kiwi fruit for America. Frontier Centre for Public Policy. Retrieved March 11, 2008, from http://www.fcpp.org/main/publication_detail.php?PubID=2005. Borlaug, N. and J. Carter. (2005, October 14). Food for thought. The Wall Street Journal. Retrieved May 31, 2008, from AgBioWorld: http://www.agbioworld.org/biotech‐ info/topics/borlaug/WSJ‐2005‐Foodthought.html. Bouton, M. M., C. Hug, S. Kull, M. Kulma, B. I. Page, T. C. Schaffer, S. Veltcheva, C. B. Whitney, and D. Yang. (2006). The United States and rise of China and India. The Chicago Council on Global Affairs. Retrieved on February 19, 2008, from http://www.thechicagocouncil.org/curr_pos.php. Bradsher, K. (2005, December 15). New consensus on WTO fishing policy. The International Herald Tribune, p. 15. Retrieved October 25, 2008, from LexisNexis Academic database. Burros, M. (2005, April 10). Stores say wild salmon, but tests say farm bred. The New York Times. Retrieved January 29, 2008, from New York Times online: http://www.nytimes.com/2005/04/10/dining/10salmon.html California bans plastic toy chemical. (2007, October 17). CBS News online. Retrieved March 18, 2008, from http://www.cbsnews.com/stories/2007/10/15/health/main3366238.shtml. Capella, P. (2004, April 27). Momentum builds in global talks on fisheries subsidies. Agence France Presse, Financial Pages. Retrieved October 25, 2008, from LexisNexis Academic database. Carbon Tax Center. (2008, February 26). FAQs. Retrieved May 25, 2008, from http://www.carbontax.org/faq/. Carson, R. (1962). Silent spring. Boston: Houghton Mifflin. Carson, R. T., R. C. Mitchell, M. Hanemann, R. J. Kopp, S. Presser, and P. A. Ruud. (2003). Contingent valuation and lost passive use: Damages from the Exxon Valdez oil spill. Environmental and Resource Economics, 25, 257‐286. Carson, R.T. (in press). Introduction. In Contingent Valuation: A Comprehensive Bibliography and History. Northampton, MA: Edward Elgar Publishing. Center for Disease Control. (2007). Spotlight on phthalates. CDC’s Third National Report on Human Exposure to Environmental Chemicals. (NCEH Pub 05‐0664). Atlanta: Center for Disease Control. Retrieved March 18, 2008, from http://www.cdc.gov/exposurereport/pdf/factsheet_phthalates.pdf. Cesar, H. S. J. and P. J. H. van Beukering. (2004). Economic valuation of the coral reefs of Hawaii. Pacific Science, 58(2), 231‐242. Abstract retrieved December 9, 2008, from http://www.cababstractsplus.org/google/abstract.asp?AcNo=20043090540. Chapin, M. (2004, November/December). A challenge to conservationists. World Watch Magazine, 17(6), 17‐31. Retrieved November 4, 2008, from World Watch: http://www.worldwatch.org/system/files/EP176A.pdf. What Environmentalists Need to Know – References iv Chen, D. W. (2004a, June 16). Special master steered a program through its many curves. The New York Times Online. Retrieved October 28, 2007, from www.nytimes.com: http://query.nytimes.com/gst/fullpage.html?res=9500E5D91E30F935A25755C0A9629C8 B63&n=Top/Reference/Times%20Topics/People/F/Feinberg,%20Kenneth%20R. Chen, D. W. (2004b, November 18). $7 billion for the grief of Sept. 11. The New York Times Online. Retrieved October 28, 2007, from www.nytimes.com: http://www.nytimes.com/2004/11/18/nyregion/18fund.html?_r=1&n=Top/Reference/Ti mes%20Topics/People/F/Feinberg,%20Kenneth%20R.&oref=slogin. Chomitz, K. M., E. Brenes, and L. Constantino. (1998). Financing environmental services: The Costa Rican experience and its implications. Washington, DC: The World Bank. Christine Todd Whitman, Administrator of Environmental Protection Agency, et al. v. American Trucking Associations, Inc. et al., 531 U.S. 457 (2001). Retrieved September 15, 2008, from LexisNexis Academic database. Cisco. (2006, June 22). China to contribute 27% to global economic growth by 2020. Press Release. Hong Kong: Author. Retrieved September 28, 2008, from http://newsroom.cisco.com/dlls/global/asiapac/news/2006/pr_06‐22.html. Clean Air Interstate Rule. (2007). Retrieved November 4, 2007, from Environmental Protection Agency: http://www.epa.gov/cair/index.html. Colchester, M. (2006, April). FSC dilemmas in the heart of Borneo: Step‐wise sand bag or sell out? World Rainforest Movement bulletin, 105. Retrieved September 27, 2008, from http://www.wrm.org.uy/bulletin/105/Borneo.html. Confessore, N. (2008, April 7). Congestion pricing plan dies in Albany. New York Times. Retrieved November 6, 2008, from http://cityroom.blogs.nytimes.com/2008/04/07/congestion‐ pricing‐plan‐is‐dead‐assembly‐speaker‐says/?hp. Connecticut Department of Environmental Protection. (2007). Nitrogen control program for Long Island Sound. Retrieved March 15, 2008, from http://www.ct.gov/dep/cwp/view.asp?a=2719&q=325572&depNav_GID=1654. Conservation International. (2005). Map of Hotspots. Biodiversity Hotspots. Retrieved February 20, 2008, from http://biodiversityhotspots.org/xp/hotspots/resources/Pages/maps.aspx. Conservation International. (2008). Hotspots Defined. Hotspots Science. Retrieved February 20, 2008, from http://www.biodiversityhotspots.org/xp/hotspots/hotspotsscience/Pages/hotspots_defin ed.aspx. Conservation International. (2008, February 14). World’s largest marine protected area created in Pacific Ocean. Conservation International. Retrieved March 22, 2008, from http://www.conservation.org/newsroom/pressreleases/Pages/PIPA‐largest‐protected‐ area‐in‐pacific.aspx. Conservation International. (n.d.). Human Population. Biodiversity Hotspots. Retrieved February 27, 2008, from http://www.biodiversityhotspots.org/xp/hotspots/hotspotsscience/hotspots_in_peril/Pag es/human_population.aspx. Consumer Reports. (2006). The salmon scam: ‘Wild’ often isn’t. Consumer Reports.org. Retrieved January 29, 2008, from http://www.consumerreports.org/cro/food/food‐shopping/meats‐ fish‐protein‐foods/mislabeled‐salmon/salmon‐8‐06/overview/0608_salmon_ov.htm. Costa Rica gets largest debt‐for‐nature swap. (2007, October 17). World News – World Environment. Retrieved February 27, 2008, from http://www.msnbc.msn.com/id/21345405/. Costanza, R., F. Andrade, P. Antunes, M. van den Belt, D. Boesch, D. Boersma, F. Catarino, S. Hanna, K. Limburg, B. Low, M. Molitor, J. G. Pereira, S. Rayner, R. Santos, J. Wilson, and M. Young. (1998, July 10). Principles for sustainable governance of the oceans. Science, 281, 198‐199. Retrieved June 1, 2008, from What Environmentalists Need to Know – References v http://www.uvm.edu/~gundiee/publications/Costanza%20et%20al.%20Science%201998 .pdf. Council of Economic Advisers (U.S.). (1991). Trade liberalization and economic growth. In Economic report of the President (pp. 233‐263). Washington D.C.: Author. Retrieved October 5, 2008, from http://fraser.stlouisfed.org/publications/ERP/issue/1515/. Cushman, T. (2006, February 1). Import taxes on Canadian softwood raises the price by 20 percent. Do US sawmills really need the protection? Builder. Retrieved March 23, 2008, from LexisNexis Academic. Damodaran, A. (2008). Historical returns on stocks, bonds, and bills – United States. The Data Page. Retrieved January 23, 2008, from http://pages.stern.nyu.edu/~adamodar/New_Home_Page/data.html. Dargie, J. (2001). Biotechnology, GMOs, ethics and food production. Stockholm: Food and Agriculture Organization of the United Nations. Retrieved March 15, 2008, from http://www.fao.org/news/2001/stockholm/biotech.pdf. Dasgupta, P.. (2006). Comments on the Stern review’s economics of climate change. University of Cambridge. Retrieved November 4, 2007, from http://www.econ.cam.ac.uk/faculty/dasgupta/STERN.pdf. DeCanio, S. J. (2003). Economic analysis, environmental policy, and intergenerational justice in the Reagan administration: The case of the Montreal Protocol. International Environmental Agreement: Politics, law and economics, 3(4), 299‐321. Retrieved February 6, 2008, from ABI/INFORM Global database. Decrausaz, B. (2005). Virtual water and agriculture in the context of sustainable development. Adelaide: OECD Workshop on agriculture and water. Retrieved March 23, 2008, from http://www.oecd.org/secure/pdfDocument/0,2834,en_21571361_34281952_35590094_1_ 1_1_1,00.pdf. Deep Sea Conservation Coalition. (2008, February 10). UN FAO: Meetings end without agreement on guidelines for high seas deep‐sea fisheries. Deep Sea Conservation Coalition News. Retrieved March 22, 2008, from http://www.savethehighseas.org/display.cfm?ID=167. Diamond, J. (1987, May). The worst mistake in the history of the human race. Discover Magazine, 64‐66. Dobrzynski, T., C. Gray, and M. Hirshfield. (2002). Oceans at risk: Wasted catch and the destruction of ocean life. Washington, DC: Oceana. Retrieved March 22, 2008, from http://www.oceana.org/uploads/bycatch_final.pdf. Dr'eze, J. and A. Sen. (1987) Hunger and public action. Oxford: Clarendon Press. Referenced in Sen, A. (1999). Democracy as a universal value. Journal of Democracy, 10(3), 3‐17. Retrieved March 23, 2008, from http://muse.jhu.edu/demo/jod/10.3sen.html. DSS Management Consultants Inc., and RWDI Air Inc. (2005). Replacing Ontario’s coal­fired electricity generation. Ontario: Ontario Ministry of Energy. Retrieved September 8, 2008, from http://www.localpower.org/documents/reporto_ome_costofcoal.pdf. Ears of plenty (Electronic version). (2005, December 20). The Economist. Retrieved May 31, 2008, from http://nue.okstate.edu/crop_information/The_Story_of_Wheat.htm. Easterly, W. (2006). The white man’s burden: Why the West’s efforts to aid the rest have done so much ill and so little good. New York: Penguin Press. Citation retrieved May 26, 2008, from http://www.amazon.com. Ellerman, D. and B. K. Buchner. (2007, Winter). The European Union emissions trading scheme: Origins, allocation, and early results. Review of Environmental Economics and Policy, 1(1), 68‐87. Energy Information Administration. (2002). Comparison of global warming potentials from the second and third assessment reports of the Intergovernmental Panel on Climate Change What Environmentalists Need to Know – References vi (IPCC). IPCC Global Warming Potential. Retrieved November 23, 2007, from http://www.eia.doe.gov/oiaf/1605/gwp.html. Energy Information Administration. (2007). Chapter 1 – World energy and economic outlook. International Energy Outlook 2007. Washington DC: Author. Retrieved March 23, 2008, from http://www.eia.doe.gov/oiaf/ieo/world.html. Engler, M. and R. Parry‐Jones. (2007). Opportunity or threat: The role of the European Union in global wildlife trade. Brussels: TRAFFIC. Retrieved November 5, 2008, from http://www.traffic.org/general‐topics/. Environmental Valuation Reference Inventory. (2007). Geographic characteristics. Retrieved November 19, 2007, from Tour EVRI: http://www.evri.ec.gc.ca/. Environmental Working Group. (2003). BodyBurden: The pollution in people. (Executive summary). Oakland, CA: Author. Retrieved June 1, 2008, from http://archive.ewg.org/reports/bodyburden1/es.php. Environmentalists buy out Bella Coola Outfitters in BC. (2005). The Hunting Report. Retrieved January 28, 2008, from HuntingReport.com: http://www.huntingreport.com/worldupdate.cfm?articleid=239. European Commission. (2008). REACH. Retrieved March 22, 2008, from http://ec.europa.eu/environment/chemicals/reach/reach_intro.htm. Evans, W. N., S. J. Berardi, M. M. Ducla‐Soares, and P. R. Portney. (1992). The determinants of pesticide regulation: A statistical analysis of EPA decision making. Journal of Political Economy, 100(1), 175‐197. Exxon Shipping Company, et al., Petitioners v. Grant Baker et al., 128 S. Ct. 2605 (2008). Retrieved September 6, 2008, from LexisNexis Academic database. Federated Farmers of New Zealand, Inc. (2002). Life after subsidies. Frontier Centre for Public Policy. Retrieved March 10, 2008, from http://www.fcpp.org/main/publication_detail.php?PubID=171. Florida Fish and Wildlife Conservation Commission. (2005). Individual fishing quota (IFQs). Retrieved March 22, 2008, from http://myfwc.com/commission/2005/Nov/RD_ITQ_Dec2005_2.pdf. Fogarty, D. (2007, December 5). Saving rainforests a thorny issue at Bali talks. Reuters. Retrieved February 21, 2008, from http://www.reuters.com/article/environmentNews/idUSSP15328520071205?sp=true. Food and Agriculture Organization of the United Nations. (2004). Table A.4 Land use. FAO Statistical Yearbook, 2(1). Retrieved March 10, 2008, from http://www.fao.org/es/ess/yearbook/vol_1_1/site_en.asp?page=resources. Food and Agriculture Organization of the United Nations. (2007). State of the world fisheries and aquaculture 2006. (ISSN 1020‐5489). Rome: Author. Retrieved March 22, 2008, from http://www.fao.org/docrep/009/A0699e/A0699e00.htm. Food and Agriculture Organization of the United Nations. (2008). Online database query. Aquastat. Retrieved March 13, 2008, from http://www.fao.org/nr/water/aquastat/dbase/index.stm. Gage, D. (2008, May 2). Kleiner Perkins bets big on green tech firms. San Francisco Chronicle. Retrieved May 25, 2008, from SFGate: http://www.sfgate.com/cgi‐ bin/article.cgi?f=/c/a/2008/05/01/BUTH10F8I3.DTL. Gan, J. (2001, Fall). Pesticide use trend in California. PesticideWise, 1. Retrieved March 15, 2008, from http://www.pw.ucr.edu/PesticdeWise.asp. Gell, F. R., and C. M. Roberts. (2003). Benefits beyond boundaries: The fishery effects of marine reserves. Trends in Ecology & Evolution, 18(9), 448‐455. Retrieved June 1, 2008, from http://assets.panda.org/downloads/benefitsbeyondbound2003.pdf. What Environmentalists Need to Know – References vii Gillam, C. (2008, March 12). U.S. organic food industry fears GMO contamination. Reuters. Retrieved March 15, 2008, from http://www.reuters.com/article/domesticNews/idUSN1216250820080312. Global Insight, Inc. (2005, August). Global macroeconomic scenarios and world trade statistics and forecast. (Contract No. 146531). Retrieved September 28, 2008, from http://www.pancanal.com/esp/plan/estudios/0303‐exec.pdf. GM Science Review Panel, The. (2003). GM science review (first report): An open review of the science relevant to GM crops and food based on interests and concerns of the public. London: Department of Trade and Industry. Retrieved June 1, 2008, from http://www.gmsciencedebate.org.uk/. Goodman, S. (2008, July 24). Bisphenol A poses no human health risk, E.U. agency says. Greenwire. Retrieved December 13, 2008, from http://www.factsonplastic.com/bisphenol‐a‐poses‐no‐ human‐health‐risk‐eu‐agency‐says/. Government Purchasing Project. (n.d.). Government purchasing factsheet. Washington DC: Resource Conservation Alliance & Author. Retrieved March 29, 2008, from http://www.gpp.org/pub.html. Greenhouse gas reduction scheme. New South Wales State Government. Retrieved October 13, 2007, from http://greenhousegas.nsw.gov.au/. Greenhouse, L. (2008, April 15). Court sets fall debate on standards of water act. The New York Times Online. Retrieved September 15, 2008, from www.nytimes.com: http://www.nytimes.com/2008/04/15/washington/15scotus.html?_r=1&oref=slogin. Groombridge, B. and M. D. Jenkins. (2000). Global biodiversity: Earth’s living resources in the 21st century. Cambridge: World Conservation Press. Hamilton, J P. (2005). Regulation through revelation: The origin, politics, and impacts of the toxics release inventory program. New York: Cambridge University Press. Preview obtained January 29, 2008, from http://www.amazon.com/Regulation‐through‐Revelation‐Politics‐ Inventory/dp/0521855306. Harrington, W., R. D. Morgenstern, and P. Nelson. (2000). On the accuracy of regulatory cost estimates. Journal of Policy Analysis and Management, 19(2), 297‐322. Heilprin, J. (2006, November 24). Moves to impose trawling ban stymied. Washington Post online. Retrieved March 22, 2008, from http://www.washingtonpost.com/wp‐ dyn/content/article/2006/11/24/AR2006112400766.html. Hendrickson, J. (2006, February 1). The economics of fairness. Message posted to The Everyday Economist Blog: http://everydayecon.wordpress.com/2006/02/01/the‐economics‐of‐ fairness/. Hill, J., E. Nelson, D. Tilman, S. Polasky, and D. Tiffany. (2006, July 25). Environmental, economic, and energetic costs and benefits of biodiesel and ethanol biofuels. Proceedings of the National Academy of Sciences, 103(30), 11206‐11210. Retrieved March 24, 2008, from http://www.pnas.org/cgi/reprint/0604600103v1. Historic debt‐for‐nature swap protects Guatemala’s tropical forests. (2006, October 2). The Nature Conservancy. Retrieved March 22, 2008, from http://www.nature.org/pressroom/press/press2641.html. Hochfelder, J. (2006‐2007). The Hochfelder Report. Retrieved September 14, 2008, from http://www.newyorkinjurycases.com/personal‐injury‐article.asp?id=19408. Hoerner, J. A. and B. Bosquet. (2001). Environmental tax reform: The European experience. Washington, DC: Center for a Sustainable Economy. Retrieved November 20, 2007, from http://www.rprogress.org/publications/2001/eurosurvey_2001.pdf. Home Depot, The. (2003, December 3). The Home Depot® and Tembec team up to offer environmentally friendly lumber to consumers. The Home Depot. Retrieved March 29, 2008, from http://ir.homedepot.com/ReleaseDetail.cfm?ReleaseID=123833. What Environmentalists Need to Know – References viii Hotelling, H. (1947). Letter to the National Park Service. Published in Prewitt. (1949). The Economics of Public Recreation. The Prewitt Report. Washinton DC: Department of the Interior. Retrieved February 27, 2008, from http://selene.uab.es/prieram/carta.htm. Hsu, S. (Forthcoming). A realistic evaluation of climate change litigation through the lens of a hypothetical lawsuit. University of Colorado Law Review. Retrieved September 6, 2008, from SSRN: http://ssrn.com/abstract=1014870. Indulgence. (2008). Wikipedia. Retrieved May 24, 2008, from Wikipedia: http://en.wikipedia.org/wiki/Indulgences. Insurance safety institute finds higher speeds lead to increase in mortalities [5 Edition]. (1999, January 19). Journal of Commerce. Retrieved November 2, 2007, from ProQuest. Intelligent Energy Systems. (2004). The long run marginal cost of electricity generation in New South Wales. Sydney: Author. Retrieved March 25, 2008, from http://www.ipart.nsw.gov.au/documents/Pubvers_Rev_Reg_Ret_IES010304.pdf. International Monetary Fund. (2006). Government finance statistics yearbook, pp. 12‐23. International Monetary Fund. (2007, October). World economic and financial surveys. World Economic Outlook Database. Retrieved February 18, 2008, from http://www.imf.org/external/pubs/ft/weo/2007/02/weodata/index.aspx. International Monetary Fund. (2008, January 29). An update of the key WEO projections. World Economic Outlook. Retrieved February 20, 2008, from http://www.imf.org/external/pubs/ft/weo/2008/update/01/index.htm. International Union for Conservation of Nature (IUCN). (2007, April 18‐20). Countdown 2010 for marine ecosystems. Retrieved October 12, 2007, from www.countdown2010.net/file_download/78. IPCC. (2007). Summary for policymakers. In: Climate change 2007: The physical science basis. Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change [Solomon, S., D. Qin, M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M.Tignor and H.L. Miller (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA. Jacobsen, J. B. and N. Hanley. (2008, August 8). Are there income effects on global willingness to pay for biodiversity conservation? [Electronic version]. Environmental and Natural Resource Economics. Abstract retrieved October 12, 2008, from SpringerLink: http://www.springerlink.com/content/mn20014x2473736u/. Submitted manuscript available at http://www.economics.stir.ac.uk/People/staff/Hanley/jacobsen%20and%20hanley%20re vised.pdf. Joint Economic Committee Study. (1997). Tradable emissions. United States Congress. Retrieved November 24, 2007, from http://www.house.gov/jec/cost‐gov/regs/cost/emission.htm. Joskow, P. L., R. Schmalensee, and E. M. Bailey. (1998). The market for sulfur dioxide emissions. The American Economic Review, 88(4), 669‐685. Retrieved November 24, 2007, from EbscoHost: http://web.ebscohost.com/ehost/pdf?vid=3&hid=22&sid=999b41f2‐26ee‐46fa‐9051‐ 84176932d6a6%40SRCSM1. Kepner, J. (2004). Synergy: The big unknowns of pesticide exposure. Pesticides and You, 23(4), 17‐ 20. Retrieved September 7, 2008, from Beyond Pesticides: http://www.beyondpesticides.org/infoservices/pesticidesandyou/Winter%2003‐ 04/Synergy.pdf. Kindest cut of all, The. (2002, November 16). The Economist. Retrieved March 2, 2008, from Lexis‐ Nexis. King, S. R. and T. J. Carlson. (1995). Biocultural diversity, biomedicine, and ethnobotony: The experience of Shaman Pharmaceuticals. Interciencia, 19(3), 134‐139. Retrieved November 11, 2008, from http://interciencia.org/v20_03/art03/index.html. What Environmentalists Need to Know – References ix Koplow, D. (2007). Biofuels – At what cost? Government support for ethanol and biodiesel in the United States: 2007 update. Geneva: International Institute for Sustainable Development. Retrieved March 24, 2008, from http://www.earthtrack.net/earthtrack/library/BiofuelsUSupdate2007.pdf. Koretz, G. (1997). Hit the gas‐‐and save lives: The paradox of higher speed limits. Business Week, 3548, 20. Retrieved November 2, 2007, from ProQuest. LaCoast. (1999, Summer). Other impacts from coastal wetlands. Retrieved November 19, 2007, from http://www.lacoast.gov/watermarks/1999c‐summer/4other/. Lee, B. and W. Lee. (2004). The effect of information overload on consumer choice quality in an on‐ line environment. Psychology & Marketing, 21(3), 159‐183. Retrieved September 28, 2008, from ABI/INFORM Global database. (Document ID: 573032131). Litman, T. (2006). London congestion pricing: Implications for other cities. Victoria, BC: Victoria Transport Policy Institute. Retrieved March 26, 2008, from http://www.vtpi.org/london.pdf. Lopez, R. and G. I. Galinato. (2005). Deforestation and forest‐induced carbon dioxide emissions in tropical countries: how do governance and trade openness affect the forest‐income relationship? The Journal of Environment Development, 14(1), 73‐100. Retrieved October 19, 2007, from SAGE Publications: http://jed.sagepub.com/cgi/reprint/14/1/73.pdf. Lovgren, S. (2006, December 14). China’s rare river dolphin now extinct, experts announce. National Geographic News. Retrieved February 27, 2008, from http://news.nationalgeographic.com/news/2006/12/061214‐dolphin‐extinct.html. Madrian, B. C. and D. F. Shea. (2000). The power of suggestion: Inertia in 401(K) participation and savings behavior. Working Paper 7682, National Bureau of Economic Research. Retrieved January 31, 2008, from http://ideas.repec.org/p/nbr/nberwo/7682.html. Mankiw, G. (2006, December 9). Pigouvian questions. Message posted to http://gregmankiw.blogspot.com/. Marshall, J. (2008, May 28). Lead exposure linked to violent crime, brain changes. Discover News. Retrieved October 24, 2008, from Discovery Channel online: http://dsc.discovery.com/news/2008/05/28/lead‐violent‐crime.html. Mathews, S. (2005). Imperial imperatives: Ecodevelopment and the resistance of Adivasis of Nagarhole National Park, India. Law, Social Justice, and Global Development Journal (LGD), 1. Retrieved October 12, 2008, from http://www2.warwick.ac.uk/fac/soc/law/elj/lgd/2005_1/mathews/. McKibben, B. (2007, December 28). Remember this: 350 parts per million. Washington Post. Retrieved May 9, 2008, from http://www.washingtonpost.com. Medema, S. G. (2004, July). Mill, Sidgwick, and the evolution of the theory of market failure. Online working paper. Retrieved October 12, 2007, from http://www.utilitarian.net/sidgwick/about/2004070102.pdf. Melosi, M. V. (2000). Environmental justice, political agenda setting, and the myths of history. Journal of Policy History, 12(1), 43‐71. Abstract retrieved October 12, 2008, from Project MUSE: http://muse.jhu.edu/login?uri=/journals/journal_of_policy_history/v012/12.1melosi.html. Metcalf, G. E., S. Paltsev, J. Reilly, H. Jacoby, J. F. Holak. (2008, May). Analysis of U.S. greenhouse gas tax proposals. NBER Working paper no. 13980. Abstract retrieved September 28, 2008, from http://www.nber.org/papers/w13980. Metrick, A. and M. L. Weitzman. (1998, Summer). Conflicts and choices in biodiversity prerservation.The Journal of Economic Perspectives, 12(3), 21‐34. Retrieved March 2, 2008, from Jstor. What Environmentalists Need to Know – References x Meyers, R. and B. Worm. (2003, May 15). Rapid worldwide depletion of predatory fish communities. Nature, 423(6937), 280‐283. Retrieved October 24, 2008, from Research Library Core database. (Document ID: 343927311). Mill, J. S. (1879). Utilitarianism. London: Longmans, Green, and Co. In The Project Gutenberg. (2004). Retrieved February 20, 2008, from http://www.gutenberg.org/ebooks/11224. Millennium development goals report 2007, The. (2007). New York: United Nations. Retrieved November 4, 2007, from http://mdgs.un.org/unsd/mdg/Resources/Static/Products/Progress2007/UNSD_MDG_Rep ort_2007e.pdf. Millennium Ecosystem Assessment, 2005. Ecosystems and human well­being: Synthesis. Washington, DC: Island Press. Retrieved May 22, 2008, from http://www.millenniumassessment.org/en/synthesis.aspx. Ministry of Environment Republic of Korea. (2005, June 4). Purchase Fewer Disposable Bags, Return More Paper Cups. Ministry of Environment Republic of Korea (Press release). Retrieved March 26, 2008, from http://eng.me.go.kr/docs/news/press_view.html?seq=282&page=8&mcode. Monbiot, G. (2006, October 18). Selling indulgences. The Guardian. Retrieved May 24, 2008, from Monbiot.com: http://www.monbiot.com/archives/2006/10/19/selling‐indulgences/. Myers, N. (1998). Lifting the veil on perverse subsidies. Nature, 392(6674), 327‐328. Retrieved October 25, 2008, from Research Library Core database. (Document ID: 28288937). Myers, N. and J. Kent. (2001). Perverse subsidies: How misused tax dollars harm the environment and the economy. Washington, DC: Island Press. Preview obtained October 25, 2008, from Google Books: http://books.google.com/books?id=mA‐ t1xAJDDUC&dq=norman+myers+subsidies&printsec=frontcover&source=bl&ots=ATm8ggF z_v&sig=ySiU9q3FaIR5wNqngm9P60‐ Vwzo&hl=en&sa=X&oi=book_result&resnum=1&ct=result#PPP1,M1. Myers, N., R. A. Mittermeier, C. G. Mittermeier, G. A. B. da Fonseca, and J. Kent. (2000, February 24). Biodiversity hotspots for conservation priorities. Nature, 403, pp 853‐858. Retrieved February 20, 2008, from http://www.ithaca.edu/faculty/rborgella/environment/biodiversity_hotspot.pdf. National Agricultural Statistics Service. (2004). 2002 Census of agriculture: U.S. national level data. Retrieved March 15, 2008, from http://www.agcensus.usda.gov/Publications/2002/index.asp. Natural Resources Defense Council. (2005). Facts about pollution from livestock farms. NRDC Issues: Water. Retrieved March 15, 2008, from http://www.nrdc.org/water/pollution/ffarms.asp. Nelson, G.C., V. Harris, and S.W. Stone. (2001). Deforestation, land use, and property rights: Empirical evidence from Darien, Panama. Land Economics, 77(2), 187‐205. Retrieved October 19, 2007, from HW Wilson Web: http://vnweb.hwwilsonweb.com/hww/shared/shared_main.jhtml?_requestid=57820. Newsom, G. (2007, July 21). Permanent phase­out of bottled water purchases by San Francisco city and county government (Executive directive 07‐05). San Francisco: Office of the Mayor. Retrieved March 29, 2008, from http://sfwater.org/Files/Pressreleases/Bottled%20Water%20Executive%20Order.pdf. Newsweek. (2007, July 29). Slaughter in the jungle: Chief threat to world's endangered species no longer habitat destruction. PR Newswire. Retrieved March 2, 2008, from ABI/INFORM Dateline database. (Document ID: 1311780681). Nordhaus, W. D. (2001, January 4). After Kyoto: Alternative mechanisms to control global warming. Joint session of the American Economic Association and the Association of Environmental What Environmentalists Need to Know – References xi and Resource Economists, Atlanta, Georgia. Retrieved September 28, 2008, from http://www.angelfire.com/co4/macroeconomics302/c.pdf. Nordhaus, W. D. (2007). Critical assumptions in the Stern review on climate change. Science, 317(5835), 201‐202. Retrieved January 21, 2008, from http://nordhaus.econ.yale.edu/recent_stuff.html. Nordhaus, W. D. (2007, Winter). To tax or not to tax: Alternative approaches to slowing global warming. Review of Environmental Economics, 1(1), 26‐44. Retrieved September 30, 2008, from http://nordhaus.econ.yale.edu/nordhaus_carbontax_reep.pdf. Office of Water Use Efficiency. (2008). Agricultural water use program. California Department of Water Resources. Retrieved March 12, 2008, from http://www.owue.water.ca.gov/agdev/index.cfm. Oil spill could threaten S.F. Bay wildlife for years. (2007, November 9). CNN.com. Retrieved September 6, 2008, from CNN.com: http://www.cnn.com/2007/US/11/09/bay.spill.ap/. Oil spills and disasters. (2007). Retrieved October 12, 2007, from http://www.factmonster.com/ipka/A0001451.html. Organization for Economic Co‐operation and Development. (2004a). Producer support estimate by commodity. Compliment database to Agricultural Policies in OECD Countries: At a Glance. Retrieved March 11, 2008, from http://www.oecd.org/document/58/0,2340,en_2649_37401_32264698_1_1_1_37401,00.ht ml. Organization for Economic Co‐operation and Development. (2004b). Total support estimate. Compliment database to Agricultural Policies in OECD Countries: At a Glance. Retrieved March 11, 2008, from http://www.oecd.org/document/58/0,2340,en_2649_37401_32264698_1_1_1_37401,00.ht ml. Organization for Economic Co‐operation and Development. (2007a). Agricultural policies in non­ OECD countries: Monitoring and evaluation 2007­Highlights. Retrieved March 12, 2008, from http://www.oecd.org/document/5/0,3343,en_2649_37401_38271429_1_1_1_37401,00.ht ml. Organization for Economic Co‐operation and Development. (2007b). Agricultural policies in OECD countries: Monitoring and evaluation 2007. Retrieved March 12, 2008, from http://www.oecd.org/document/0/0,3343,en_2649_37401_39508672_1_1_1_37401,00.ht ml. Organization for Economic Cooperation and Development. (2008). OECD environmental outlook to 2030. Danvers, MA: Author. Preview obtained September 28, 2008, from Google Books: http://books.google.com/books?id=8YSB8LMpLaYC&pg=PA82&lpg=PA82&dq=global+gdp +growth+2030&source=web&ots=e2yxcM7ym‐ &sig=uuSKowx1Z5lMCFzKugzvyTIJUew&hl=en&sa=X&oi=book_result&resnum=10&ct=res ult#PPA82,M1. Ortega, E., O. Cavalett, R. Bonifacio, and M. Watanabe. (2005). Brazilian soybean production: Emergy analysis with an expanded scope. Bulletin of Science Technology Society, 25(4), 323‐ 334. Retrieved October 19, 2007, from SAGE Publications: http://bst.sagepub.com/cgi/reprint/25/4/323.pdf. Parry, M.L., O.F. Canziani, J.P. Palutikof, P.J. van der Linden, and C.E. Hanson, (Eds.). (2007). Climate change 2007: Impacts, adaptation and vulnerability. Contribution of working group II to the fourth assessment report of the Intergovernmental Panel on Climate Change. Cambridge, UK: Cambridge University Press. Retrieved January 21, 2008, from IPCC: http://www.ipcc.ch/pdf/assessment‐report/ar4/wg2/ar4‐wg2‐intro.pdf. PCB. (n.d.a). Dictionary.com Unabridged (v 1.1). Retrieved March 18, 2008, from Dictionary.com website: http://dictionary.reference.com/browse/PCB. What Environmentalists Need to Know – References xii PCB. (n.d.b). The American Heritage® Science Dictionary. Retrieved March 18, 2008, from Dictionary.com website: http://dictionary.reference.com/browse/PCB. Pearce, D., G. Atkinson, and S. Mourato. (2006). Cost­benefit analysis and the environment: Recent developments. Paris: OECD Publishing. Preview obtained September 6, 2008, at Google Books: http://books.google.com/books?id=nTPbxgsvBD0C&pg=PA194&lpg=PA194&dq=health+be nefits+dominate+environmental+cost‐ benefit&source=web&ots=fyvqo6G4V9&sig=WJtF3Pbv‐ VFHDX_IyNEFIzvBs7Y&hl=en&sa=X&oi=book_result&resnum=10&ct=result#PPA3,M1. Pew Research Center. (2007). Pew Global Attitudes Project. Retrieved February 16, 2008, from http://pewglobal.org/reports/display.php?ReportID=256. Pigou, A. C. (1932). The Economics of welfare (4th ed.). London: Macmillan and Co. Retrieved November 20, 2007, from http://www.econlib.org/Library/NPDBooks/Pigou/pgEW.html. Point Carbon. (2008, March). EU ETS phase II – The potential and scale of windfall profits in the power sector. Godalming, Surrey, UK: World Wildlife Fund. Retrieved May 25, 2008, from http://www.wwf.org.uk/filelibrary/pdf/ets_windfall_report_0408.pdf. Polling Report, Inc. (2008a). International trade / Global economy. Polling Report.com. Retrieved February 19, 2008, from http://www.pollingreport.com/trade.htm. Polling Report, Inc. (2008b). Problems and priorities. Polling Report.com. Retrieved February 18, 2008, from http://www.pollingreport.com/prioriti.htm. Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat. (2005). World population prospects: The 2006 revision and World urbanization prospects: The 2005 revision. Retrieved March 23, 2008, from http://esa.un.org/unpp. Regional Greenhouse Gas Initiative. (2007, October). Overview of RGGI CO2 budget trading program. New York: Author. Retrieved May 25, 2008, from http://www.rggi.org/docs/program_summary_10_07.pdf. Regional Greenhouse Gas Initiative. (n.d.) Regional Greenhouse Gas Initiative auction results. Retrieved October 4, 2008, from http://www.rggi.org/co2‐auctions/results. Resor, J. P. (1997). Debt‐for‐nature swaps: A decade of experience and new directions for the future. Unasylva, 48(188). Retrieved March 22, 2008, from http://www.fao.org/docrep/w3247E/w3247e00.htm#Contents. Rodgers, G. D. (1993). Estimating jury compensation for pain and suffering in product liability cases involving nonfatal personal injury. Journal of Forensic Economics, 6(3), 251‐262. Retrieved September 14, 2008, from http://www.nafe.net/JFE/j06_3_06.pdf. Roe, D. (2002). Toxic chemical control policy: Three unabsorbed facts. ELR News & Analysis 32. Roe, D., T. Mulliken, S. Milledge, J. Mremi, S. Mosha, and M. Grieg‐Gran. (2002). Making a killing or making a living? Wildlife trade, trade controls and rural livelihoods. Biodiversity and Livelihoods Issues No.6. London: IIED. Retrieved November 6 2008, from http://www.iied.org/pubs/display.php?o=9156IIED. Rogers, M. (2003). Risk analysis under uncertainty, the Precautionary Principle, and the new EU chemicals strategy. Regulatory Toxicology and Pharmacology, 37(3), 370‐381. Abstract obtained March 18, 2008, from ScienceDirect doi: 10.1016/S0273‐2300(03)00030‐8. Royden‐Bloom. (2007, September 18). State greenhouse gas (GHG) actions. National Association of Clean Air Agencies (NACAA). Retrieved October 12, 2007, from http://www.4cleanair.org/Documents/StateGHGActions‐chart.pdf. S. Res. 1132, 112th Sess. (S.C. 1997‐98). Retrieved May 25, 2008, from http://www.scstatehouse.net/sess112_1997‐1998/bills/1132.htm. Sanchez‐Azofeifa, G. A., A. Pfaff, J. A. Robalino, and J. P. Boomhower. (2007). Costa Rica’s payment for environmental services program: Intention, implementation, and impact. Conservation Biology, 21(5), 1165‐1173. Retrieved March 23, 2008, from EJS E‐Journals. What Environmentalists Need to Know – References xiii Sandel, M.J. (1997, December 15). It's immoral to buy the right to pollute [editorial]. New York Times, A19. Reprinted in Hoffman, Andrew J. (2000). Competitive environmental strategy: A guide to the changing business landscape (pp. 40‐42). Washington, D.C.: Island Press. Preview obtained September 20, 2008, from Google Books: http://books.google.com/books?id=6gxwmh6JTIsC&printsec=frontcover. Sang, D. L. (2003). Waste reduction and recycling law in Korea. International Environmental Law Committee Newsletter, 5(1). Retrieved March 26, 2008, from http://www.abanet.org/environ/committees/intenviron/newsletter/feb03/korea/. Satellite imagery to be used to detect illegal logging, determine sustainability. (2006, December 21). Mongabay.com. Retrieved September 27, 2008, from http://news.mongabay.com/2006/1221‐fsc.html. Sayre, L. (2003). Farming without subsidies in New Zealand. The New Farm. Retrieved March 11, 2008, from http://www.newfarm.org/features/0303/newzealand_subsidies.shtml. Schapiro, M. (2007). Exposed: The toxic chemistry of everyday products and what’s at stake for American power. White River Junction, VT: Chelsea Green Publishing. Schmalensee, R., P. L. Joskow, A. D. Ellerman, J. P. Montero, and E. M. Bailey. (1998, Summer). An interim evaluation of sulfur dioxide emissions trading. Journal of Economic Perspectives, 12(3), 53‐68. Sierra, R. and E. Russman. (2006, August). On the efficiency of environmental service payments: A forest conservation assessment in the Osa Peninsula, Costa Rica. Ecological Economics, 59(1), 131‐141. doi:10.1016/j.ecolecon.2005.10.010. Abstract retrieved November 4, 2008, from Science Direct: http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6VDY‐ 4HRMV3W‐ 2&_user=10&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_version=1&_urlVersion=0&_ userid=10&md5=37ca6a40d75d9d6a82f68d76377daf2f. Silverstein, K. (1999). Meat factories – Pollutants from meat factories. Sierra. Retrieved March 15, 2008, from http://findarticles.com/p/articles/mi_m1525/is_1_84/ai_53501840. Simpson, R. D., R. A. Sedjo, and J. W. Reid. (1996, February). Valuing biodiversity for use in pharmaceutical research. The Journal of Political Economy, 104(1), 163‐185. Smart meter. (2008). Wikipedia. Retrieved March 25, 2008, from http://en.wikipedia.org/wiki/Smart_meter. Smith, K. (2007). The carbon neutral myth: Offset indulgences for your climate sins. Amsterdam: Transnational Institute. Retrieved May 24, 2008, from Carbon Trade Watch: http://www.carbontradewatch.org/pubs/carbon_neutral_myth.pdf. Smith, M. (2001, November). The unlikely environmentalists. Phoenix New Times News. Retrieved March 2, 2008, from http://www.phoenixnewtimes.com/2001‐11‐22/news/the‐unlikely‐ environmentalists/full. Smith, S. V. (2000, March 22). Jury verdicts and dollar value of human life. Journal of Forensic Economics. Retrieved September 14, 2008, from Access my Library: http://www.accessmylibrary.com/coms2/summary_0286‐28755781_ITM. Solow, R. M. (1991). Sustainability: An economist's perspective. In R. Dorfman and N. S. Dorfman (Eds.), Economics of the environment: Selected readings (3rd ed.) (pp. 179‐187). New York: W. W. Norton. Soubbotina, T. P. (2004). Beyond economic growth: An introduction to sustainable development (2nd ed.). Washington, DC: The World Bank. Retrieved November 6, 2008, from DEPweb: http://www.worldbank.org/depweb/english/beyond/global/index.html. Speed limit and deaths [Letter]. (1997, October 19). New York Times (Late Edition (east Coast)), p. 14. Retrieved November 2, 2007, from ProQuest. What Environmentalists Need to Know – References xiv Spiro, G. (1998, May). What’s Rosita Arvigo up to now? An update. The Monthly Aspectarian: The magazine for the New Age (online edition). Retrieved November 11, 2008, from http://www.lightworks.com/MonthlyAspectarian/1998/May/0598‐07.htm. Standley, V. (2005, September 12). New green building materials. Green Guide. Retrieved March 29, 2008, from http://www.thegreenguide.com/doc/110/materials. State of New Jersey, et al. v. Environmental Protection Agency, 2008 U.S. App. LEXIS 2797 (D.C. Cir., February 8, 2008). Retrieved March 22, 2008, from LexisNexis Academic database. Steed, B. C. (2007, Fall). Government payments for ecosystem services – Lessons from Costa Rica. Journal of Land Use, 23(1), 177‐202. Retrieved November 4, 2008, from http://www.law.fsu.edu/Journals/landuse/vol23_1/Steed.pdf. Stern, N. (2006). Stern review report on the economics of climate change (Pre‐publication version). Retrieved November 4, 2007, from HM Treasury: http://www.hm‐ treasury.gov.uk/independent_reviews/stern_review_economics_climate_change/stern_revi ew_report.cfm. Sunstein, C. (2007). Of Montreal and Kyoto: A tale of two protocols. Harvard Environmental Law Review 32. Retrieved February 19, 2008, from http://www.law.harvard.edu/students/orgs/elr/vol31_1/sunstein.pdf. Szabo, G. (2006). EU ETS – Action 2006. Retrieved September 21, 2008, from http://www.euets.com/index.php?page=75&l=1. Szabo, M. (2008, July 23). Don’t offset your CO2 emissions, retire them. Planet Ark. Retrieved September 21, 2008, from http://www.planetark.org/dailynewsstory.cfm/newsid/494 57/story.htm. Taxpayers for Common Sense. (n.d.). Tongass logging subsidies – cost to taxpayers. Washington DC: Author. Retrieved March 23, 2008, from http://www.taxpayer.net/forest/tongass/loggingsubsidies.htm. The Kyoto Protocol – A brief summary. (2007). European Commission. Retrieved November 4, 2007, from EUROPA: http://ec.europa.eu/environment/climat/kyoto.htm. Tietenberg, T. 1998. Disclosure strategies for pollution control. Environmental and Resource Economics 11, 587‐602, Citation retrieved January 29, 2008, from Sand, Peter H. (2002). The right to know: Environmental information disclosure by government and industry. Munich: University of Munich, Institute of International Law: http://www.inece.org/forumspublicaccess_sand.pdf. Tsuchiya, A. and P. Dolan. (2006). Equity of what in health? Distinguishing between outcome egalitarianism and gain egalitarianism. University of Sheffield Working Paper. Retrieved December 26, 2007, from http://www.shef.ac.uk/content/1/c6/01/87/47/DP0611.pdf. U.S. Bureau of Reclamation. (2006). Agreement signals start to historic San Joaquin River restoration. U.S. Department of the Interior: Bureau of Reclamation. Retrieved March 13, 2008, from http://www.usbr.gov/newsroom/newsrelease/detail.cfm?RecordID=13681. U.S. Environmental Protection Agency Office of Water. (2002). Cases in water conservation: How efficiency programs help water utilities save water and avoid costs (EPA832‐B‐02‐003). Washington DC: Author. Retrieved March 26, 2008, from http://www.epa.gov/owm/water‐ efficiency/pubs/index.htm. U.S. Environmental Protection Agency. (1999). 33/50 Program: The final record. (Office of Pollution Prevention and Taxes Rep. No. EPA‐745‐R‐99‐004). Retrieved November 19, 2007, from http://www.epa.gov/opptintr/3350/3350‐fnl.pdf. U.S. Environmental Protection Agency. (2006). SO2 emissions and the allowance bank, 1995‐2005. Acid rain program: 2005 progress report. (EPA‐430‐R‐06‐015). Washington, DC: Author. Retrieved May 20, 2008, from: http://www.epa.gov/airmarkt/progress/docs/2005report.pdf. What Environmentalists Need to Know – References xv U.S. Environmental Protection Agency. (2006). Wetlands: Protecting life and property from flooding. (Office of Water Rep. No. EPA843‐F‐06‐001). Retrieved November 17, 2007, from http://www.epa.gov/owow/wetlands/pdf/Flooding.pdf. U.S. Environmental Protection Agency. (2007). Trends in greenhouse gas emissions. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990­2005. Public Review Draft. Retrieved November 20, 2007, from http://epa.gov/climatechange/emissions/downloads07/07Trends.pdf. U.S. Environmental Protection Agency. (2007, December 19). Protection of stratospheric ozone: The 2008 critical use exemption from the phaseout of methyl bromide. (40 CFR Part 82). Washington, DC: Federal Register (Vol. 27, no. 248). Retrieved March 15, 2008, from http://www.epa.gov/ozone/mbr/2008CUEFinalRule12‐19‐07.pdf. U.S. Environmental Protection Agency. (2007, January). OVERVIEW: Office of Pollution Prevention and Toxics Programs, pg. 7‐8, 18‐19. Washington, DC: Author. Retrieved March 22, 2008, from http://www.epa.gov/oppt/pubs/oppt101c2.pdf. U.S. Environmental Protection Agency. (2008). Clean Air Mercury Rule. Retrieved March 22, 2008, from http://www.epa.gov/camr/basic.htm. U.S. Environmental Protection Agency. (2008). Watershed land acquisition program. New York City watershed: Watershed protection programs. Retrieved November 4, 2008, from http://www.epa.gov/region02/water/nycshed/protprs.htm#rules. U.S. Fish and Wildlife Service. (2007). Endangered species. Rachel Carson: A Conservation Legacy. Retrieved March 17, 2008, from http://www.fws.gov/rachelcarson/toolkit/Endangered%20Species/index.html. U.S. State Department. (2004). Land management. Desertification: Earth’s Silent Scourge. Retrieved March 23, 2008, from http://usinfo.state.gov/products/pubs/desertific/land.htm. Union of Concerned Scientists. (2007, June 29). Findings of the IPCC Fourth Assessment Report: Climate change mitigation. Global Warming. Retrieved September 29, 2008, from http://www.ucsusa.org/global_warming/science_and_impacts/science/findings‐of‐the‐ ipcc‐fourth‐1.html#3. United Nations Committee on Economic, Social, and Cultural Rights. (2002). The right to water (General Comment No. 15 (arts 11 and 12)). New York: Author. Retrieved October 14, 2007, from http://www.unhchr.ch/html/menu2/6/cescr.htm. United Nations Department of Economic and Social Affairs, Population Division. (2003). World population in 2300. New York: Author. Retrieved March 23, 2008, from http://www.un.org/esa/population/publications/longrange2/Long_range_report.pdf. United Nations Division for Ocean Affairs and the Law of the Sea. (1998). The United Nations Convention on the Law of the Sea (A historical perspective). New York: Author. Retrieved March 22, 2008, from http://www.un.org/Depts/los/index.htm. United Nations Environment Program / Global Environment Facility. (2006, August). Draft regional guidelines for the fifth meeting of the RTF‐E in Sabah, Malaysia. Sabah, Malaysia: Author. Retrieved October 27, 2007, from http://earthmind.net/marine/docs/draft‐regional‐ guidelines‐valuation.pdf. United Nations Environment Program. (1999). Economic instruments. Global Environment Outlook 2000, p.208. Retrieved March 10, 2008, from http://www.unep.org/geo2000/english/0138.htm. United Nations Environment Program. (2003). Global Environment Outlook Year Book 2003. Retrieved March 13, 2008, from http://www.unep.org/geo/yearbook/yb2003/. United Nations General Assembly. (1948). Universal declaration of human rights (Resolution 217 A (III)). New York: Author. Retrieved October 14, 2007, from http://www.un.org/Overview/rights.html. What Environmentalists Need to Know – References xvi United Nations Statistics Division. (n.d.). United States. Interest rate, government long­term bond yields, per cent per annum, period average. Retrieved November 4, 2007, from United Nations Statistics Division: http://unstats.un.org/unsd/cdb/cdb_series_xrxx.asp?series_code=6310. United States Climate Action Partnership. (2007). A call for action. Washington, DC: Author. Retrieved September 29, 2008, from http://us‐cap.org/index.asp. United States of America v. Derrik Hagerman and Wabash Environmental Technologies, LLC, 525 F. Supp. 2d 1058 (2007). Retrieved September 21, 2008, from LexisNexis Academic database. United States of America v. Sheon DiMaio, 255 Fed. Appx. 537 (2007). Retrieved September 21, 2008, from LexisNexis Academic database. US‐China Joint Economic Research Group. (2007, December). US­China joint economic study: Economic analyses of energy saving and pollution abatement policies for the electric power sectors of China and the United States, Summary for Policymakers. Retrieved September 6, 2008, from Environmental Protection Agency: http://www.epa.gov/airmarkets/international/china/JES_Summary.pdf. Vedantam, S. (2007, July 8). Research links lead exposure, criminal activity. Washington Post Online. Retrieved October 24, 2008, from http://www.washingtonpost.com/wp‐ dyn/content/article/2007/07/07/AR2007070701073.html. Vega, C. M. (2007, June 22). Mayor to cut off flow of city money for bottled water. San Francisco Chronicle. Retrieved March 29, 2008, from http://www.sfgate.com/cgi‐ bin/article.cgi?f=/c/a/2007/06/22/BAGE8QJVIL1.DTL. Villar, J. L. and B. Freese. (2008). Who benefits from gm crops? Amsterdam: Friends of the Earth International. Retrieved March 15, 2008, from http://www.centerforfoodsafety.org/WhoBenefitsPR2_13_08.cfm. Walker, R. (2004). Theorizing land‐cover and land‐use change: The case of tropical deforestation. International Regional Science Review, 27(3), 247‐270. Retrieved October 19, 2007, from SAGE Publications: http://irx.sagepub.com/cgi/reprint/27/3/247.pdf. Wal‐Mart goes green on packaging. (2005, September 22). BBC News. Retrieved March 29, 2008, from http://news.bbc.co.uk/2/hi/business/5372660.stm. Wal‐Mart packaging reduction plan could save $11 billion. (2006, September 25). Environmental Leader. Retrieved March 29, 2008, from http://www.environmentalleader.com/2006/09/25/wal‐mart‐packaging‐reduction‐plan‐ could‐save‐11‐billion/. Walsh, B. (2007, July 12). Getting credit for saving trees. Time. Retrieved March 22, 2008, from http://www.time.com/time/magazine/article/0,9171,1642887,00.html. Walsh, D. and T. Barrett. (2008, May 22). Problems with Congress override of farm bill. CNN Politics. Retrieved June 1, 2008, from CNN.com: http://www.cnn.com/2008/POLITICS/05/22/farm.bill/. Warren, W. (2005, May 5). Comments on OMB draft report and guidelines. [Letter to the Office of Management and Budget]. United States Congress. Retrieved September 8, 2008, from http://www.whitehouse.gov/omb/inforeg/2003report/334.pdf. Washington Toxics Coalition. (2004). Many U.S. residents carry toxic pesticides above “safe” levels. Press Release. Washington, DC: Author. Retrieved October 14, 2008, from http://www.watoxics.org/pressroom/press‐releases/pr‐2004‐05‐11. Water to flow for salmon, farmers under San Joaquin River settlement. (2006). Environment News Service. Retrieved March 13, 2008, from http://www.ens‐ newswire.com/ens/sep2006/2006‐09‐15‐01.asp. Weiss, R. (2003, April 7). Africa's apes are imperiled, researchers warn [FINAL Edition]. The Washington Post, p. A.07. Retrieved March 2, 2008, from National Newspapers Core database. (Document ID: 321804241). What Environmentalists Need to Know – References xvii Weitzman, M. L. (2007). A review of the Stern review on the economics of climate change. Journal of Economic Literature, 45(3), 703‐724. West, H. R. (2008). Utilitarianism. As contributed to Encyclopedia Britannica. Retrieved February 20, 2008, from http://www.utilitarianism.com/utilitarianism.html. WildAid. (2007). The end of the line?(2nd edition). San Francisco: WildAid. Retrieved March 2, 2008, from http://www.oceana.org/sharks/shark‐report. Wiser, R., M. Bolinger, and E. Holt. (2000, August). Customer choice and green power marketing: A critical review and analysis of experience to date. Prepared for the ACEEE Summer Study on Energy Efficiency in Buildings. Retrieved March 29, 2008, from http://www.eere.energy.gov/greenpower/resources/pub_chrono.shtml. Woodruff, J. (2008, May 15). Congress passes $290B Farm Bill despite White House opposition. [Online broadcast].Arlington, VA: Public Broadcasting Service. Retrieved June 1, 2008, from http://www.pbs.org/newshour/bb/politics/jan‐june08/farmbill_05‐15.html. World Agroforestry Centre. (2004). Annual report 2004: Restoring hope restoring the environment. Nairobi: Author. Retrieved March 23, 2008, from http://worldagroforestry.org/downloads/publications/PDFs/rp13340.pdf. World Bank fund will pay to leave forests standing. (2007, December 11). Environmental News Service. Retrieved February 21, 2008, from http://www.ens‐ newswire.com/ens/dec2007/2007‐12‐11‐01.asp. World Bank, The. (2004). How much is an ecosystem worth? Assessing the economic value of conservation. World Bank Working paper no. 30893. Retrieved October 27, 2007, from http://www‐wds.worldbank.org. World Bank, The. (2006). Strengthening forest law enforcement and governance: Addressing a systematic constraint to sustainable development (Report No. 36638‐GLB). Washington, DC: Author. Retrieved November 4, 2008, from http://www.illegal‐ logging.info/uploads/Forest_Law_FINAL_HI_RES_9_27_06_FINAL_web.pdf. World Bank, The. (2006). The road to 2050: Sustainable development for the 21st century. (Report no. 36021). Washington, DC: Author. Retrieved May 22, 2008, from World Bank Documents and Reports: http://www.worldbank.org/reference/. World Health Organization. (2007). Data query. Global Health Atlas. Retrieved March 17, 2008, from http://www.who.int/globalatlas/DataQuery/default.asp. World Resources Institute, United Nations Environment Program, United Nations Development Program, and World Bank. (1998). World resources 1998­99: Environmental change and human health. Washington, DC: Author. Retrieved October 27, 2007, from http://pubs.wri.org/pubs_description.cfm?PubID=2889. World Trade Organization. (2008a, January 22). DS250: United States – Equalizing Excise Tax Imposed by Florida on Processed Orange and Grapefruit Products. Retrieved March 10, 2008, from http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds250_e.htm. World Trade Organization. (2008b, January 22). DS267: United States – Subsidies on Upland Cotton. Retrieved March 10, 2008, from http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds267_e.htm. World Trade Organization. (2008c, January 22). DS291: European Communities – Measures Affecting the Approval and Marketing of Biotech Products. Retrieved March 15, 2008, from http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds291_e.htm. World Wildlife Fund. (2006). Role of the Global Ecoregions and how they are selected. World Wildlife Fund Where we Work. Retrieved February 20, 2008, from http://www.panda.org/about_wwf/where_we_work/ecoregions/about/role/index.cfm. World Wildlife Fund. (2008). Debt‐for‐nature swaps. Conservation Finance. Retrieved February 27, 2008, from http://www.worldwildlife.org/conservationfinance/swaps.cfm. What Environmentalists Need to Know – References xviii Worldwatch Institute. (2004). State of the world 2004: Consumption by the numbers. Retrieved March 23, 2008, from http://www.worldwatch.org/node/1783. Worm, B., E. B. Barbier, N. Beaumont, J. E. Duffy, C. Folke, B. S. Halpern, J. B. C. Jackson, H. K. Lotze, F. Micheli, S. R. Palumbi, E. Sala, K. A. Selkoe, J. J. Stachowicz, and R. Watson. (2006, November 3). Impacts of biodiversity loss on ocean ecosystem services. Science, 314(5800), 787‐790. Worrell, D. (2006, September). Venture capitalists see potential in green businesses. Entrepreneur Magazine. Retrieved January 31, 2008, from Entrepreneur.com: http://www.entrepreneur.com/money/financing/venturecapital/article165820.html. WWF Center for Conservation Finance. (2003a). Bilateral debt‐for‐nature swaps by creditor. Debt­ for­nature swaps. Retrieved February 27, 2008, from http://www.worldwildlife.org/conservationfinance/pubs/bilateral_swaps_summary.pdf. WWF Center for Conservation Finance. (2003b). Commercial debt‐for‐nature swaps summary table. Debt­for­nature swaps. Retrieved February 27, 2008, from http://www.worldwildlife.org/conservationfinance/pubs/commercial_swaps_summary.pd f. Zweibel, K., J. Mason, and V. Fthenakis. (2008, January). A solar grand plan. Scientific American. Retrieved September 30, 2008, from http://www.sciam.com/article.cfm?id=a‐solar‐grand‐ plan. What Environmentalists Need to Know – References xix ...
View Full Document

Ask a homework question - tutors are online