ENVIRONMENTAL
ECONOMICS LECTURE NOTE
Mustapha Muktar, Ph.D
Department of Economics
Bayero University, Kano-Nigeria
http//:www.mustaphamuktar.blogspot.com
NATURE AND SCOPE OF ENVIRONMENTAL
ECONOMICS
Introduction
The environment become one of the major concerns to the
present economy because of the activities of man. The relationship between man
and environment have been changing along the development process from
generation to generation. Economists are concerned with increasing demand of
resourcess and its implication on the natural environment, therefore, a
controversey on the limits to growth. The environment provides food shelter,
clothing, medicine, raw materials and other resources.
Economics is concerned with making best allocation of
resources among competing alternatives, it is concerned with utilization of
resourcess to ensure an improvement in welfare. There is therefore, a strong
link between the environment and economics, humanity are faced with alot of
environmental problems which have economic dimensions.
Environmental Economics is that aspect of economics that
deals with the interelationships between the environment and economic
development, it studies the ways by which a balance is striked between
the two, it is also concerned with how the damage done can come to a halt or
reversed.
Scope
of Environmental Economics
1. To strike a balance between economic growth and the
environment
2. Pollution control from economic point of view
3. The nature of consumption and utilization of resources as
they are being depleted, therefore optimal use with minimal level of wastage is
needed
4. Limits to growth as growth must be controlled through
taxes and other fiscal measures to make it optimal
Relationship between Environment and the Economy
Since the environment provides resources for economic
activities, all economies should therefore be concerned with the following
basic objectives, they are;
1. Effeciency in the utilization of resourcess
2. Equity in terms of distribution of income and resourcess
as well as compensations
3. Stability, such that taxes, charges and other control
measures should not be too high to discourage/reduce output
4. Growth, all economies aim at sustainable economic growth
Man and Environment
The evolution and process of human civilization is a
story of man in his struggles against nature man has to subject nature to
satisfy his wants because he needs basic necessities of life and in his attemp
to satisfy them, he not only conquers the immediate environment but jeopardizes
the future of the next generation to come. This interrelationship is presented
below;
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Environmental Factors:
Land,
Climate, Vegetation, Menirals, Water, Atmosphere etc
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Human Factors: Demography, Economy, and Culture
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Technology
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Use of
Natural Environment
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The
Environment Changes
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Feedback and
Alteration
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From the figure above, one can see how the environment
provides land, climate, forests, water bodies and other assets. Human factors
inform of demography, culture and economy used technology to decide on how to
use the assets provided by the environment and in so doing, the environment
changes and the feedback is that it is altered from its natural formation.
ENVIRONMENTAL
POLLUTION
Introduction
Pollution
is the release by man of substances, chemicals and other products into the
environment that adversely affects life and properties. It can also be a
consequence of natural disaster. For example hurricanes often involve water
contamination, oil spills or the release of hazardous materials into the
environment. The substances that are released into the environment are term
pollutants. Pollutants can cause disease including cancer, allergies, asthma
and etc. pollution can take various forms depending on the nature of pollutants
and the damage it caused to the environment. We can therefore identify
pollution to include that of air, water, land and noise pollution.
Economics of Pollution
Pollution
developed from the concept of externalities. Pollutants results from a
production or consumption process in which the conversion of inputs into
outputs is not efficient in a physical sense, that is some of the inputs become
waste products. Residuals from economic process enter into the environment and
damage it. The extent of this damage however, depends on the absorptive
capacity of the natural environment. Whenever the residuals outweigh the
absorptive capacity of the environment then, pollution occurs.
Economic Activity and Environmental
Pollution
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Economic
Activity
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Emissions
into the environment
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Absorption
into Harmless Form
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Non
Absorned Emissions
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Accumulation
of stock Pollutants
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Damage
to the Environment
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Economists
are concerned with the effects of pollution on welfare and are therefore
interested in the damage done to the environment as a whole as such pollution
can be defined as the net flows exceeding the absorptive capacity of the
environment and which have damaging effects upon human welfare and the
ecological system in general.
Pollution
affects the magnitude and size of environmental resources example it affects
the growth of plants, animals, as well as the quality of physical assets. It
can also affect the quality of Air and water that exist in the
environment.
Efficient Level of Pollution
Identifying
efficient level of pollution is very crucial in pollution abatement and
control. Existing technology cannot produce goods and services without pollution
and hence a tradeoff between production and pollution exists as undesirable ones (pollution) are created. Below summarises the argument.
Net
benefits of pollution = Benefits of outputs associated with pollution minus damages resulting
from pollution
Economic
Instruments and Pollution
Control
The
following are some of the policy tools of controlling pollution:
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Emission standards, this is a legal approach
in which the authorities impose emission standards on each source in economics,
this approach is referred to as “command-and-control approach.” An emission
standard is a legal limit on the amount of pollutant an individual source is
allowed to emit failure to abide
attracts charges.
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Transferable Emission Permits- Under this
system all sources are required to have permits to emit. Each permit specifies
how much a firm is allowed to emit and the permits are freely transferable and
can be bought or sold and any source exceeding the permit will cause severe
monetary sanctions.
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Product charges where it is not possible to
monitor the level of emissions, then the commodity that is most directly
responsible for pollution/emissions should be taxed. For example gasoline could
be taxes rather than the emissions, also fertilizer is taxed rather than the
contamination it did to the groundwater sources. The Irish have even tax
plastic bags to prevent littering; one limitation of this is that products are
taxes uniformly while they caused different level of emissions.
Irish Bag Policy In 2002 a tax of $15 per plastic bag
was charged it brought about 95% reductions in bags and the revenue earned is
used by Government to manage the environment. (see
http//:www.Golby.edu/~thtieten/litter.html/.)
Agriculture and the Environment
Introduction
Agriculture
is the science and art of tilling the soil and rearing of animals for the
purposes of
producing food for man and raw materials for industries, population growth and
the need for foreign exchange have stimulated agricultural practices and
development and hence
this prompted environmental change. The impact of agricultural practices on the
environment is dependent on the type of the natural environment (desert,
rainforest, or mountain
region).
Some
of the negative effects of agriculture on environment are deforestation, soil
erosion, salinization, bush burning and overgrazing.
Deforestation: is
the removal of vegetation cover and its consequences manifests itself in
several forms such as erosion, drought, firewood scarcity, sedimentation and
micro-climatic damages,
deforestation is caused by indiscriminate felling of trees and large scale extraction of wood for
furniture as well as paper and pulp manufacturing. The developing world
deforests 11.3 million hectres per year; some consequences of deforestation are
species extinction, loss of fixed carbon and reduced capacity of water
retention by soils.
Soil
Erosion: This is a situation where by top soil are removed or
lost from land surface it can be caused by bad agricultural practices such as
bush burning, deforestation and overgrazing. Soil is removed and also where the
sediments are deposited, soil erosion results to low productivity.
Salinization:
This is a form of environmental degradation associated with irrigation which
leads to reduction in crop productivity. Salinization connotes an increase in
the concentration of minerals due to inadequate drainage, and the groundwater becomes saline and
water logged the area, the affected land therefore becomes unsuitable for
production, since the present of salt and minerals in the roots of crops hinders their growth. Salinity also increased due
to high water loss were evaporation is rapid.
Bush
Burning: In developing world especially, fire is used to clear
virgin lands for agricultural purposes. This indiscriminate burning caused loss
of most Nitrogen, sulphur and carbon, elimination of seedlings to grow,
destruction of humus as well as adverse effects on soil micro-fauna and destruction of micro-flora. All of the above have adverse effects
on the environment and results to low productivity in agriculture.
Overgrazing:
This
is over exploitation of the grazing lands usually herdsmen and farmers; it
triggers soil erosion, desertification and other process of environmental
degradation. Productivity is diminished with a consequence on economy and the
welfare of people. Fertility of land will also decline since its botanical composition
has changed as more palatable and nutritious species are removed.
Control of Adverse Agricultural
Practices on Environment
Deforestation
can be controlled by an effective forest policy, afforestation programmes and
tree planting campaigns. Policies should however be continues and sustainable. Soil erosion can be
converted by counter ploughing, mixed and intercropping, establishment of
vegetation cover, adoption of suitable land use measures and measures of early
detection so as to deter
its occurrence. Salinization can however be reversed by creating canals, to
allow free passage of water and by appropriate agricultural practices. Bush
burning can be converted first by the introduction of leguminous plants to help
conserve soils nutrients by enhancing the process of nitrogen build-up in the
soil, and secondly by promulgating a law to stop it. Lastly overgrazing can be
controlled through collaborating on the local people and those involved limiting
their action on frequent and heavy grazing of lands.
(Discuss other feasible
measures of controlling the above problems in your local communities)
ENERGY
INDUSTRIALIZATION AND ENVIRONMENT
Introduction
As
society expands and become complex the need for various sources/types of energy
to support both domestic and industrial activities also expands,
industrialization is associated with the utilization of one form of energy or
another, since it converts raw materials into finished goods. Extraction of
mineral resources that yield energy is associated with environmental
degradation this can be in the forms of health risks, acid leached into streams
from mine operations as well as air pollution due to burning of fossils fuels.
In most cases the environmental damage is not borne by the owner and hence not
compensated as such is not part of the extraction decisions of the energy
source.
In
areas where minerals are extracted for energy purposes the environment changes
and the change relates to the way and manner the energy sources are being
extracted. The extraction of energy source may be in form of open cast, quarrying, or deep cast, in case of oil and natural gas, it is deep
drilling.
Mining
of mineral/energy resources cause considerable environmental changes as
sometimes it is
many kilometers deep and wide. It creates ponds and pits that accelerate
erosion rates disrupt local drainage networks and since it cannot supports
vegetation cover, then it paves way for desertification and desert encroachment
especially when it happens in savannah regions.
Another
environmental effect is that a lot of villages have to be relocated for the
mining activity to take place and hence farmlands as well as other ecological
assets will be lost forever. The relocation of people will however lead to
migration to urban areas and increasing the urban population. The lost of
sceneric value as well as recreational facilities. Sometimes collapse of rock
and accidents occur and a lot of people lose their lives. The collapse can occur in
working and abandoned mines.
A
more disastrous effect of energy on the environment is seen from the pollution
generated in the course if utilizing the energy source. It results to
destruction of soil, aquatic and atmospheric quality. The use of fossil fuels is of most significantt here the inputs of these energy sources are
being accelerated when they are used in industrial process. The mining of coal
as well as radioactive elements for energy purposes have succeeded in polluting
groundwater as well as damaging both the flora and fauna.
The
use of fossil fuels began with industrial relocation, concerned was mainly on
the increase in concentration of cloro-fluoro carbons and green house gasses which affects
the climate. The deposition of the gasses is one of the most causes of aquatic
and terrestrial acidification, it has also rendered water supply unportable. These
gasses may also pose threat to human health which include lead pollution from
automobiles and industrial process.
Stored carbon from biomass and fossils is rapidly being transformed to atmosphere.
Increasing concentration of CO2 into atmosphere due to emission of unburned
hydrocarbons could damage plants health and hence negatively affects
productivity and can also lead to global warming.
The
release of gasses into the atmosphere as a result of industrialization may also
lead to acidification as precipitation because it is more acidic and hence lead to decline in fish stock and other water resources. Acid
rains occur and it corrodes paints and destroys other structures the formation
of acid rain can be demonstrated below:
So2+H2O→H2SO3 ↔H++HSO3
As
sulphurous acid can be oxidized by various oxidants.
Oxidant
So2 → So3 and can therefore
form a weak sulphuric acid as below:
So3+H2O→H2SO4 ↔H++HSO4↔2H++SO42- . The
same applies to form nitrogen acids.
Other
environmental problems occur with the cracking and utilization of radioactive material/elements
to speed of the energy requirement of industrial process. Two major
environmental problems are
(i)
Nuclear accidents and
(ii)
Storage of radioactive wastes
In
the course of energy
production,
radioactive elements releases waste to the environment inform of heat and toxic
substances that damaged the environment, where these accidents do not occur,
the management and storage of the waste is another problem as is not easy to
end the nuclear cycle for example uranium onces used contain thorium 230 which
decays with half life of 78, 000 years to a Radon 222. Also strontium-90 and
cesium-137 decayed after approximately 1, 000 years as such once used today
they affect not only the current generation but the succeeding ones.
Lastly
industrialization is associated with the generation of toxic waste water as
well as solids that harmfully affects lives and properties as well as other
environmental assets. An example is the koko
waste that was
once deposited in the southern part if Nigeria.
Examine how do the following forms of
energy damage the environment:
Hydroelectricity, Wind energy, Solar energy, Photovoltaic and Bio-fuel (ethanol
generation). Is the synthesiss of bio-fuel economically feasible?
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