Economics and the Environment

Economics and the Environment

The environment and economic policies are related to each other in various ways. Many policies can have an effect on our environment in several aspects. According to the text book, our environment is in jeopardy when it comes to the pollution of air and water, the extinction of plants and animals, and the rise of overall temperatures due to global warming and the greenhouse effect. The decisions that are made regarding these topics can have small or large costs and benefits; however, I believe it is in out best interest to spend a good deal of our energy addressing these issues and others that effect our fragile environment. Through years of production and economic activity, our earth has suffered severe affects due to our limited knowledge and experience of the environment. Our environment will not fix its self and if our global society does not put effort into making efficient policies regarding the environment, I believe that more negative and irreversible consequences may occur.

One topic that everyone has heard about today is our problem with air pollution. The test book asks the question,” How clean is clean enough?” This is a good question. When it comes to the environment I think that it will never become clean enough. The goal of economic policies is to create an environment that is healthy to live in, but doesn’t require all of our resources to make it that way. The text refers to the marginal cost vs. marginal benefit curve. It explains the point where it no longer becomes efficient to improve the quality of the environment, due to the other things you could have done with that time and energy. The point at which the benefit of cleaning the environment is maximized would be exactly when marginal benefit equals the marginal cost.

An example of an economic decision based on the environment would be the creation of the EPA. This stands for the Environmental Protection Agency and was created by President Nixon (Crandall 1). After this came the first major federal attempt to regulate the environment, the Clean Air Act Amendments of 1970. Ever since these decisions have been put into act there have been growing regulations to local governments and the business community (Crandall 1). Since these laws such as the clean air act, there has been a reduced amount of pollutants released into the air. For example, the emission of lead has been reduced by 97 %, Sulfur Dioxide by 40%, and Carbon Monoxide by 25%. The trade off regarding pollution policies can be seen in the cost of production after all of the pollution controls have been met. These costs can be carried over to the consumer through higher prices for goods and services. Although we may have to pay a higher price for some things after the pollution is controlled, I believe it is a worthwhile investment because it will help preserve our air.

Other that the air that we breath, the environment can effect other animals and plants as well. One major topic addressed in the text book is the increasing numbers of animals and plants that are becoming extinct due to the poor quality and regulation of our environment. The role of economics in wildlife conservation is very important. Externalities include the pollution of habitats and reduction wildlife in certain habitats. Many environmentalists believe that the discipline of economics is an enemy to the environment. According to the text, the key in preventing the loss of animal and plants in our world is to prevent the loss of their habitat. Programs such as the endangered Species Act are an example of a policy used to help prevent extinction of our wildlife. These programs cost us a lot of money to maintain and sometimes they don’t work as well as people hope. Another example of a legislation decision to help maintain our environment is the Clean Air Act of 1990. This program combines efforts to protect both the wildlife, and their natural habitats. This legislation targets the production of acid rain. Acid rain is created when nuclear power plants burn high sulfur coal and the emissions mix in the atmosphere. This creates a small amount of diluted sulfuric acid in the air and when it rains, these chemicals travel to the earth and harm the plants and animals. The major problem areas include the death of trees and fish. The clean air acts purpose is to reduce the amount of sulfur burned at these sites and therefore reduces the amount of acid rain that the environment is exposed to. The only problem with this is that the companies have to spend more money on the low sulfur coal, and they may possibly be required o purchase more expensive equipment in order to reduce the amount of pollutants they produce. Another way around this that some companies practice is the purchase