Economics and environmental policies
One sign of a sustainable economy is when the costs of environment and health caused by economic growth have been added to consumer prices and when economic policy instruments support sustainable development. Environmental policies should supplement economic instruments. Environmental policies involve certain measures aimed at achieving a sound environment. They are usually developed in the context of public policy, based on economic theory, which focuses more on the level of costs and benefits associated with the implementation of environmental policies than on the quality of the environment. When governments propose and subsequently implement strict standards, sectors that pollute the environment will have to take measures, and this cannot be achieved without incurring extra costs. Polluting industries are, therefore, often keen to highlight the likely costs they have to incur due to the proposed environmental measures. Environment Management 54 In other words, the immediate benefits resulting from environmental policies are extremely difficult to assess. As a consequence, the costs of environmental measures are often paid more attention than the benefits resulting from the implementation of the policy. The definition of the property rights of natural resources plays a vital role in the distributional effects of environmental policies. The implementation of strict standards and regulations will effect a change in the definition of property rights. For example, industries polluting the rivers will be confronted with regulations that prevent them from, or reduce their opportunities for, using the rivers. However, throughout the process of formulating the regulations, polluting industries will try to influence and stifle the policies. (Note that we will discuss some of the industrial policies as they pertain to the environment in Subsection 2.1.2.) Let us now consider below a few examples of sectoral economic policies that influence the environmental policies directly or indirectly: Agricultural sector: Virtually the entire food cycle attracts huge direct or indirect subsidies, at a cost to taxpayers and consumers. These subsidies, more often than not, send farmers far more powerful signals than do the small grants, usually provided for soil and water conservation. They encourage farmers to occupy marginal land and to clear forests and woodlands, make excessive use of pesticides and fertilisers, and use underground and surface waters in irrigation indiscriminately. We will discuss the policies of the agricultural sector in detail in Subsection 2.1.3. Forestry sector: The pressures on forests throughout the world vary greatly in both developed and developing countries, which are reinforced by government policies. The logging and Unit 2: Policy and Legal Aspects of EM 55 forestry industry attracts a variety of direct and indirect subsidies. The perverse incentives that encourage the over harvesting of temperate as well as tropical forests also mark world-trade in forest products. Transport sector: This sector, especially motor vehicles, also benefits from economic policies that are ecologically perverse. Fuel taxes in many jurisdictions, for example, still fail to distinguish between the environmental effects of different types of fuel (e.g., petrol or diesel, leaded or unleaded). The tax and tariff structure, and direct and indirect subsidies, encourage heavier and more energy-intensive vehicles and road freight, as opposed to rail transport in many countries. In addition, in some countries, private vehicle expenses can be deducted from taxable income. Energy sector: The major obstacle to energy efficiency is the existing framework of incentives for energy exploration, development and consumption. These incentives underwrite coal, oil and gas, ignore the costs of air, land and water pollution and seem to favour inefficiency and waste. While industrialised countries have been spending billions to distort the market and consumer prices in ways that actively promote acid rain and global warming, they have been spending only a few million on measures to promote energy efficiency. As long as pollution problems are mainly national, there is a need for a strong national authority. However, environmental problems are becoming increasingly international or global. This complicates the environmental policies considerably. On the one hand, international co-operation in the fighting of environmental problems is absolutely necessary. On the other hand, different countries have different economic interests. Furthermore, polluting sectors are not evenly distributed among countries. Environment Management 56 Economic based environment policies have been designed to facilitate economic growth and allow business while ensuring the sustainability of the environment and achieve economic efficiency.
One sign of a sustainable economy is when the costs of environment and health caused by economic growth have been added to consumer prices and when economic policy instruments support sustainable development. Environmental policies should supplement economic instruments. Environmental policies involve certain measures aimed at achieving a sound environment. They are usually developed in the context of public policy, based on economic theory, which focuses more on the level of costs and benefits associated with the implementation of environmental policies than on the quality of the environment. When governments propose and subsequently implement strict standards, sectors that pollute the environment will have to take measures, and this cannot be achieved without incurring extra costs. Polluting industries are, therefore, often keen to highlight the likely costs they have to incur due to the proposed environmental measures. Environment Management 54 In other words, the immediate benefits resulting from environmental policies are extremely difficult to assess. As a consequence, the costs of environmental measures are often paid more attention than the benefits resulting from the implementation of the policy. The definition of the property rights of natural resources plays a vital role in the distributional effects of environmental policies. The implementation of strict standards and regulations will effect a change in the definition of property rights. For example, industries polluting the rivers will be confronted with regulations that prevent them from, or reduce their opportunities for, using the rivers. However, throughout the process of formulating the regulations, polluting industries will try to influence and stifle the policies. (Note that we will discuss some of the industrial policies as they pertain to the environment in Subsection 2.1.2.) Let us now consider below a few examples of sectoral economic policies that influence the environmental policies directly or indirectly: Agricultural sector: Virtually the entire food cycle attracts huge direct or indirect subsidies, at a cost to taxpayers and consumers. These subsidies, more often than not, send farmers far more powerful signals than do the small grants, usually provided for soil and water conservation. They encourage farmers to occupy marginal land and to clear forests and woodlands, make excessive use of pesticides and fertilisers, and use underground and surface waters in irrigation indiscriminately. We will discuss the policies of the agricultural sector in detail in Subsection 2.1.3. Forestry sector: The pressures on forests throughout the world vary greatly in both developed and developing countries, which are reinforced by government policies. The logging and Unit 2: Policy and Legal Aspects of EM 55 forestry industry attracts a variety of direct and indirect subsidies. The perverse incentives that encourage the over harvesting of temperate as well as tropical forests also mark world-trade in forest products. Transport sector: This sector, especially motor vehicles, also benefits from economic policies that are ecologically perverse. Fuel taxes in many jurisdictions, for example, still fail to distinguish between the environmental effects of different types of fuel (e.g., petrol or diesel, leaded or unleaded). The tax and tariff structure, and direct and indirect subsidies, encourage heavier and more energy-intensive vehicles and road freight, as opposed to rail transport in many countries. In addition, in some countries, private vehicle expenses can be deducted from taxable income. Energy sector: The major obstacle to energy efficiency is the existing framework of incentives for energy exploration, development and consumption. These incentives underwrite coal, oil and gas, ignore the costs of air, land and water pollution and seem to favour inefficiency and waste. While industrialised countries have been spending billions to distort the market and consumer prices in ways that actively promote acid rain and global warming, they have been spending only a few million on measures to promote energy efficiency. As long as pollution problems are mainly national, there is a need for a strong national authority. However, environmental problems are becoming increasingly international or global. This complicates the environmental policies considerably. On the one hand, international co-operation in the fighting of environmental problems is absolutely necessary. On the other hand, different countries have different economic interests. Furthermore, polluting sectors are not evenly distributed among countries. Environment Management 56 Economic based environment policies have been designed to facilitate economic growth and allow business while ensuring the sustainability of the environment and achieve economic efficiency.
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