Lecture 11 - Managing environmental quality PDF

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Business Government and Society Lecture 11 – Managing Environmental QualityWhy is the environment in danger? Benefit from the environment in 3 ways: Amenity to be enjoyed Source of primary products Place to dump waste Free market cannot ensure all 3 uses are balanced Natural resources are non-exclu...

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Business Government and Society Lecture 11 – Managing Environmental Quality Why is the environment in danger? Benefit from the environment in 3 ways: 1. Amenity to be enjoyed 2. Source of primary products 3. Place to dump waste Free market cannot ensure all 3 uses are balanced   

Natural resources are non-exclusive (people can’t be prevented from using them) No one can be charged for using the resources No price = no economic incentive to use the resources sparingly

Without government intervention, the environment will deteriorate Regulating Environmental Risk 2 types of externalities created by businesses: 1. Pollution 2. Resource depletion  

Government mitigates the externalities by using environmental regulations Comparing costs to benefits is crucial when deciding whether a regulation should be passed

Cost-benefit Analysis = systematic calculation and comparison of the costs and benefits of a proposed action Costs include: -

Enforcement costs Capital and compliance costs to industry Potential job losses Higher consumer prices Reduced productivity

Benefits include: -

Ecological Health

Measuring the Benefits of Environmental Regulation 2 types of methods of calculating monetary benefits of environmental regulation Environment: contingent valuation This is used to measure the monetary value of ecosystem goods Health: the value of a statistical life This is used to measure the monetary value of better health due to reduced pollution

Criticisms of Cost-Benefit Analysis   

Many benefits are long-term, most impact assessments in the UK use an appraisal period of 10 years Cost-benefit approaches compromise ecosystems...