Environmental Economics Final

Nonpoint worldly examples

- Administrative costs (transaction costs) of nonpoint source pollution control. Compare options for cost effectiveness - P.436: McCann and Easter compare Minn. River alternatives - Target fertilizer input: tax on phosphorus fertilizer has lowest transaction costs ( only $1-$4 in 46 states compared to $150-$200 per ton price) - Education programs involved second highest costs and conservation tillage and conservation easements involve highest costs to administer.

Pollution Command and Control

1) Quantity of pollution allowed (Ambient or Emission Standard) is set by U.S. EPA. Example: parts per million every 8 to 24 hours Monitoring stations: https://www.epa.gov/castnet Emissions are not priced; one standard is set, no flexibility 2) Technology Standards: Requiring one technology does not account for different costs among different polluters. 3) Performance Standards -Restrictions on maximum emissions for output level. Examples: maximum emission rate per kwh, energy efficiency standards for buildings or appliances. There is flexibility in choosing how to meet standard.

Convention on Biodiversity and database of studies

12/2022: Goal by 2030: 30% of the world's land, water and marine areas protected and at least $200 billion US annually in domestic and international biodiversity-related funding (both public and private) So far, 1) inventory and monitor biological assets. 2) Sustainable conservation funds (funds from .8% of developed countries' annual GDP, an increase from .4%) 3) intellectual property rights for genetic material (Article 15,16,22) • -exception if nation agrees to profit-sharing mechanism with bioprospecting (pharmaceutical) company 158 countries signed, but not U.S. Addressing access, benefit sharing, compliance. Example: Madagascar has users of genetic resources financing research institutions and established a new arboretum of endemic species • While treaty is symbolic, it lacks: • Requirements for payment of conservation funds • Financial mechanisms to channel these funds • Enforcement to stop violations • Difficulty in assessing compliance

Catch shares

Allocate a portion of the total allowable catch to individuals, communities, or cooperatives. Include the following slides.

Performance Bonds

Alternative to development impact fees. Requires deposits that developers pay prior to initiating a project. To ensure predetermined on site quality levels are met. They are insurance. Brazil's Environmental Compensation Program

TURFs

An alternative to ITQs is to allocate rights to a specific area for a specific species of group of species, rahter than to a portion of the total allowable catch. PAGE 291 FOR MORE Allocate rights over space to group. (See Debate 12.1) A TURF system increases efficiency (less effort, lower costs, and higher profits). Fish move, so TURF may not cover entire space of fish. Implemented in shallow, near shore water (Japan, Chile to help more sedentary species). It's a way to restrict access and improve fish stock. Requirements: Group of fishers (cooperative) for excludability rather than open access, Coordinate Boundary Enforcement, Rules of Use, Security of Tenure, Monitoring Effort to stop rivalry that would drive down stock PAGE 293

Profit Taxes

Applied on profit for income taxes in year after decisions are made; no change in rotation length

Property Tax

Applied on underlying land value. Forest property might face lower tax rate than other land uses in order to keep land in forest acreage.

bioprospecting for pharmaceutical values

Bioprospecting is defined as a systematic and organized search for useful products derived from bioresources including plants, microorganisms, animals, etc., that can be developed further for commercialization and overall benefits of the society.

Tradeable Pollution Permits (Allowances)

Cap: set a limit on total quantity of pollution emitted. Q* in 14.2, •Cap and Trade: (Permits add up to the cap & can be traded) (similar to fish ITQs) Firms bid for permits in a market with price = marginal control cost + marginal damages (at Q*). All polluters face same marginal cost (emissions price for a permit): efficiency with full information. Firms that reduce emissions can sell off (trade) their excess permits to high control costs firms. 1977 Clean Air Act Amendments: Offset Plan-emissions trading between existing and new firms. Emissions bank: firms could deposit and access offsets.

Regional Green House Gas Initiative (RGGI)

Carbon dioxide (CO2) emissions of electric power sector: Reduce by 10% from 2009 (ratchet down cap over time) Moderate cap on emissions from the electricity sector 90% of permits are auctioned Offsets allowed. Maine: textbook highlights this state where RGGI lowers pollution costs through energy efficiency projects, example 14.2, but how about others? REGIONAL EXAMPLE: VA joined January 2021 and first auction of 2022 netted Virginia $200 million for flood protection and low-income energy efficiency programs (revenue generator!) • VA Dept of Conservation and Recreation receives 45% of the revenues • RGGI: 33% reduction! >10% goal • Fuel switching & economic downturn (2007-2008) reduced CO2 • Auctioned allowances help finance energy efficiency and renewable energy • Established price floor led to prices not collapsing but some unsold allowances

Development Impact Fees

Charges for developer to offset additional public service costs of new development and account for impacts on spatial margin. May cover utility related (electrical lines, roads, schools or environmental impact: open space mitigation fee)-Example: Kangaroo Rat fee in Riverside County, CA Paid before development happens, in application for permit

Point Source worldly examples

Clean Water Act (1977) National Pollutant Discharge Elimination System (emissions) - Maximum emission quantity standard (for industrial point sources) - Uniform standards implies marginal abatement costs are equalized across polluting firms. So, the program will not be cost-effective - Federal subsidies to cities for sewage facilities (Section 208 federal grants, VA DEQ Clean Water Revolving Loan Fund to help meet water standards) - Public warnings, limits on access to public waterways from monitoring by regulator Subsidies for Wastewater Treatment Before 1984, federal cost share: 75%. After 1984: 55% when state aid was added the municipal share was only 5%. Little incentives to minimize costs with the subsidies. And, program subsidized construction not operating costs, and only 50% of plants operated effectively in 1970s. The percentage of the population that is served by at least secondary treatment doubled between 1968 and 1996. Henrico County just settled lawsuit to invest $1 million to upgrade outdated sewer system and public warning system; > 66 million gallons of raw sewage into James River system 2016-2021 Total Maximum Daily Load (TMDL): pollution cap in waterway (flow). Across different sources. Ex. Chesapeake Bay TMDLs on Nitrogen, Phosphorus, Sediment for varied sources (urban wastewater discharges, stormwater, agricultural nonpoint sources). 2025 is deadline to meet TMDLs from starting in 2009 CWA Section 319, USDA, cost share subsidies to help finance pollution reduction of stormwater and agricultural nonpoint sources. Virginia, New York, Pennsylvania, Delaware, Maryland and West Virginia — and the District of Columbia in the Program As of 2022: reduced nitrogen by 42%, and phosphorus by 64%. upgrades to wastewater treatment plants lead reductions

CERCLA

Comprehensive Environmental Response, Compensation, and Liability Act -- otherwise known as CERCLA or Superfund -- provides a Federal "Superfund" to clean up uncontrolled or abandoned hazardous-waste sites as well as accidents, spills, and other emergency releases of pollutants and contaminants into the environment

CITES

Convention on International Trade in Endangered Species of Wild Fauna and Flora Look at slides for examples Fish Policy

Resource Recovery and Conservation Act- RCRA

EPA requires cradle to grave tracking of hazardous substances they identify • Current disposal of hazardous wastes. Puts burden of proof on firms to prove handling, shipping and disposal is safe. • • Facilities that treat, store, or dispose of hazardous waste are regulated under a safety standard that affects location. • Standards set with labelling and reporting to track movement of waste.

MPAs

EX: U.S. Marine Life Protection Act- bans fishing in National Marine Sanctuaries of U.S. (Marine Protected Areas- MPAs) -may protect spawning grounds (reef), feeding; fish that stay in area are safe but not those who move (tuna, etc) Biologists are involved in policy:

Ecological Footprint,

Ecological Footprint is a measure of the impact of human activities on the natural environment. It is a tool used to assess the environmental sustainability of human activity and is measured in terms of the amount of land, water, and other natural resources required to produce the goods and services consumed by an individual, community, or country. The Ecological Footprint concept was first introduced in the 1990s by Mathis Wackernagel and William Rees at the University of British Columbia. The Ecological Footprint measures the total area of land and water required to produce all the goods and services consumed by a particular group of people, expressed in hectares per person. It is calculated by considering a range of factors, including: Carbon footprint: the amount of carbon dioxide and other greenhouse gases emitted as a result of human activities. Land footprint: the amount of land required to produce the food, timber, and other products consumed by humans. Water footprint: the amount of water required for human activities, including irrigation, manufacturing, and household use. The Ecological Footprint is an important tool for assessing the sustainability of human activities and identifying areas where improvements can be made. It can be used to inform policy decisions and to encourage individuals and organizations to adopt more sustainable practices. For example, the Ecological Footprint can be used to compare the impact of different lifestyles on the environment, such as the environmental impact of living in a rural area versus a city, or the impact of consuming meat versus a vegetarian diet. It can also be used to assess the environmental impact of different industries or economic sectors, such as agriculture, manufacturing, or transportation. Overall, the Ecological Footprint is a valuable tool for promoting sustainable development and raising awareness of the environmental impact of human activities.

Certification

Enlisting the power of consumers in the cause of sustainable forestry. The process typically involves the establishment of standards for sustainable forestry, employing independent certifiers to verity compliance with these standards and allowing certified suppliers to display a lable designating compliance. Conditions: Certification process must be reliable and consumers must trust it, consumers must be sufficiently concerned about sustainable forestry to pay a price premium that is large enough to make certification an attractive option fo forestry companies Ex: The Forest Stewardship Council is an international, non-for-profit organization headquartered in Oaxaca, Mexico. It pursues the goal of being an independent third-party certifier of well-managed forests. It developed standards to assess the performance of forestry operations PAGE 263

Predator-Prey

Example: Tuna and Shark Quantity restriction on 2 types of sharks through the UN Convention on International Trade in Endangered Species (CITES) (2004) endangered sharks (basking, whale). See article below (March 2023 CITES case

Payments for ecosystem services

Examples: Remember New York City's agreement to pay Catskill's for watershed ecosystem services (purified water)? • A. Costa Rica's PSA Program- water users pay landowners to conserve forest (voluntarily). And a mandatory water tariff (tax) is in place too. Page 317 • B. Example: Los Negros arrangement in Bolivia • Downstream water users paying in beehives and honey production training upstream to stop deforestation activities. • C. Carbon Sequestration credits. United Nations REDD program.

subsidies and buybacks

Excess fleet capactiy of overcapitalization is prevalent in many commercial fisheries. Overcapacity encourages overfishing. Many subsidies exacerbate this efect by encouraging overcapacity and overcapitalization. Fuel subsidies, tax exemptions, fish price supports, and grants for new vessels are common forms of subsidies in fisheries. A different type of subsidiy is intended to discourage overfishing. If vessel owners do not have alternative uses for their vessles, they may resist catch restritions of other measures meant to help depleted stocks. Managementoptions have included buybacks or equivalently, decommissioning subsidies to reduce fishing capacity. Ex: 2004 US Government spend $100 million to buy out 28 of the 260 Alaskan snow crab fishery vessles. PAGE 296

ITQs

FQs reduce harvesters with most efficient buys others out. No incentive to overinvest in equipment (boats). Enhance efficiency TYPE OF IFQ 1) The quoatas entitle the holder to catch a specified share of the total authorized catch of a specified type of fish 2) THe catch authorized by the quotas held by all fishermen should be equal to the efficient catch for the fishery 3) The quotas should be freely transferable among fishermen and markets should send appropriate price signals about the value of the fishery Ex: PAGE 290

Point source pollution

From a specific source, oil spill etc An example of the Chesapeake Bay targetting point source pollution would be the Clean Water Act (1977). This set a maximum emission quantity standard for industrial point sources. The National Pollutant Discharge Elimination System permit program that was established through the Clean Water Act requires facilities that do discharge pollutants into the Bay to obtain permits. It also set limits for industrial plants and wastewater treatment plants.

Gross National Happiness

Gross National Happiness (GNH) is a measure of a country's progress and development that places greater emphasis on well-being and happiness than traditional economic measures like Gross Domestic Product (GDP). It was developed by the King of Bhutan in 1972 as a response to the shortcomings of GDP as a measure of well-being and development. GNH is based on four pillars: sustainable and equitable socio-economic development, environmental conservation, preservation and promotion of culture, and good governance. It emphasizes the importance of balancing economic development with social and environmental well-being. Two real-world examples of the use of GNH are: Bhutan: As the country where GNH was first developed, Bhutan has made it a priority to prioritize happiness and well-being in its policy-making. The country has implemented a range of policies to promote GNH, such as preserving traditional culture, protecting the environment, and providing free healthcare and education to its citizens. New Zealand: In 2019, the government of New Zealand introduced a Wellbeing Budget, which aimed to prioritize the well-being of its citizens over economic growth. The budget included investments in mental health, child welfare, and reducing poverty, among other things. The Wellbeing Budget was based on the principles of GNH and aimed to create a more sustainable and equitable society. Overall, GNH provides a unique perspective on measuring progress and development that emphasizes well-being and happiness. While it has primarily been used in Bhutan, it has also influenced policy-making in other countries, such as New Zealand.

Differnet types of capital

In environmental economics, there are typically four types of capital that are considered: natural capital, human capital, social capital, and physical capital. Natural capital refers to the natural resources and ecosystems that provide goods and services to society, such as forests, oceans, air, and water. These resources are critical for human well-being, but they are often undervalued or over-exploited, which can lead to negative environmental impacts. Human capital refers to the knowledge, skills, and abilities of individuals that contribute to economic and social development. This includes investments in education and training, as well as health and nutrition. Social capital refers to the networks, norms, and values that facilitate cooperation and collaboration among individuals and groups. This can include social trust, civic engagement, and community organizations. Physical capital refers to the infrastructure and equipment that support economic activity, such as roads, buildings, and machinery. Environmental economics recognizes that natural capital is a critical component of economic development and well-being. By considering the value of natural resources and ecosystems, environmental economists can better understand the costs and benefits of economic activities and promote sustainable development. For example, a company may want to build a factory in a natural area, which could provide economic benefits in terms of jobs and production. However, the environmental impact of the factory on the surrounding ecosystem may lead to negative externalities, such as air and water pollution, habitat destruction, and loss of biodiversity. By taking into account the value of natural capital, environmental economists can help to inform policy decisions that balance economic development with environmental sustainability.

Nontimber values

It's any product other than timber that is naturally produced in forests and can be harvested for human use without cutting down trees. Think food items, such as nuts, berries, mushrooms and seeds, or non-food items such as oils, perfumes and medicinal plants. These are all examples of what we call "NTFPs" for short

Liability Rule

Judicial court process for compensation of those injured by toxics may be long; cost and time of gathering evidence that damage occurred and tying cause to toxic substance. • The long process of seeking a legal settlement over Flint's water contamination has involved about 10 years • Liability law provides a method for internalizing the external costs to third parties. • Hazardous and toxic waste violations decrease by increasing the potential maximum of fines threatened by liability payouts. International Policy-Agreements for Toxics • Basel Convention on the Control of Transboundary Movements of Hazardous Waste (1992). 2020 as deadline for reduction • • Updates at Rotterdam and Stockholm Conventions for International Chemicals Management • Supply chain changes after pause in 2020-2021, need for vigilance with ongoing toxic production

Site Taxes

Lump sum access fee for harvest, increases rotation length from increasing costs of harvest (lowers net benefits)

Renewable Growth Function

Maximum Sustainable Yield Stock= S*= /2 Carrying Capacity = or K Maximum Sustainable Harvest = Growth G(S*) Minimum Viable Capacity= S The logistic curve in Figure 12.1 of the relationship between fish population and growth rate G(S) is an equation too: G(S)=rS(1-S/ ) Equation for change in population over time with logistic growth is: St+1 - St =rSt(1-St/ ) - Ht r=intrinsic growth rate St=variable population in time t PAGE 275-281

Net domestic product

Net Domestic Product (NDP) is a measure of the economic output of a country that takes into account the depreciation or wear and tear on capital goods, such as buildings, machinery, and equipment, used in the production process. It is calculated by subtracting the value of depreciation from the Gross Domestic Product (GDP). NDP is considered to be a more accurate measure of a country's economic output than GDP because it reflects the value of the capital that has been used up in the production process. For example, if a company produces goods worth $1 million in a year but has to replace its equipment that has depreciated by $200,000, then the NDP for that year would be $800,000. NDP is an important economic indicator because it provides information on the level of economic activity in a country that is sustainable in the long run. It can also help policymakers to determine the level of investment required to maintain and improve the country's productive capacity. However, NDP is not without its limitations. For example, it does not take into account non-monetary factors such as the value of leisure time or the impact of pollution on the environment. Therefore, it is often used in conjunction with other measures, such as the Human Development Index (HDI) or the Genuine Progress Indicator (GPI), to provide a more comprehensive picture of a country's economic well-being.

Command and Control Problems

No incentives to innovate to control pollution • EPA: Regulator needs private information from polluter (emissions, costs of control) to level of pollution control for each industry. May not obtain all needed! • Technical and ecological information is needed to set pollution standards. EPA enlists others to obtain this information (university scientists, etc) • Monitoring and Enforcement involves checking for technology. • Failure of equimarginal principle with differences in marginal abatement costs of same pollutants • Polluter pays only for pollution control, not damage

Targetting

Nonpoint source pollution emissions are hard to measure! Target other stages of pollution: Tax on Products: Ex. fertilizer per unit sold (bag) when sold at location of sale instead of emission runoff measure. Timed compliance of Ambient Concentration: Ex. Air quality Air monitoring stations are set up to measure ambient air and determine nonattainment areas: above pollution standard levels If pollution and damage relate directly, more feasible to carry out.

Carrying Capacity

On graph it is S hat

product and occupational safety

PAGE 461

royalty payments

Principle that nations containing biologically rich resources within their borders would be entitled to a stipulated royalty on any and all products developed from genes obtained from these preserves provides both an incentive to preserve the resources and some revenue to accomplish the preservation

Sulfur Allowance Program

Program was environmentally effective with SO2 emissions from electric power plants decreasing by 36% between 1990 and 2004 even though electricity generation from coal-fired power plants increased 25% over the same period. SEE PAGE 367

REgional CLean Air Incentives Market (RECLAIM)

RECLAIM is a revolutionary new approach to air quality regulation. This program has the potential to clean up our air more effectively than traditional regulations by harnessing the power of the marketplace. For businesses, RECLAIM means greater flexibility and a financial incentive to reduce air pollution beyond what clean air laws and traditional command-and-control rules require. For the public, RECLAIM means guaranteed annual reductions in air pollution until public health standards are achieved. Under RECLAIM, these allowable emission limits decline a specific amount each year. Companies are free to choose the most cost-effective, economical ways to reduce pollution. Companies that are innovative and can reduce emissions more than required can then sell excess emission reductions to other firms. Buyers of the emission reduction credits are companies that need more time to clean up or find the cost of buying credits cheaper than buying and installing new equipment.

Proposition 65 (1986)

Requires: (1) warning labels on all toxic products with carcinogenic health impacts (2) TRI information (3) worker warnings for prevention of exposure • Example of proposition 65 results beyond CA: Roundup-branded products and other glyphosate-based herbicides • Legal action (lawsuits) for not fulfilling (1),(2),(3) • Example 19.5 Lead • Ask: Is price for polluting high enough to stop and comply at a lower price?

Optimal rotation length

Rotation length of time to maximize wood harvest. Grow forest to peak volume (MAI) harvest and repeat process

Enforcement and monitorring

SEE FIGURE 19.1 Similar to hedonic pricing relating wages to risk that we saw weeks ago for valuation • Example 19.2: W. VA employer discriminates against hiring pregnant women to prevent their exposure to hazards rather than removing the hazard • Supreme Court ruled against the employer as not acceptable way to address toxic hazards • Penalty is key to reduce OSHA violations (Gray and Shimshack review of enforcement and monitoring literature) EX: AdvanSix (Honeywell, Allied Chemical) Hopewell, VA • Flagged 66 times for toxic releases (2015-2022) • Pattern of noncompliance since 1990 • Produce Caprolactam (Nylon 6) used in seat belts, tires, rugs, clothing • 3/24/22 release of 7.23 tons of sulfuric acid • 5/6/22 VA DEQ letter to discuss 390 tons sulfur dioxide (remember acid rain?) • 1966-1975 Kepone pesticide • >900 residents nearby (City Point) • 2022: fines =$50,000, income=$171 million • 2013:$3 million fines, 2014: $300,000

Transferable Development Rights

Set a cap on development within a region. Land owners who preserve can sell development rights to developers. Revenue from selling TDR compensates the owners for not developing their land and meets overall conservation goal for area. Price is determined by market demand and supply.

Superfund

Superfund: cleaning up abandoned dump sites; addresses damage to natural resources as well as cleanup (Superfund site in Portsmouth, VA for example) • Government collects money for Superfund in two ways: - Taxes on the chemical and petroleum industries - (oil and gas fund for spills, underground storage tanks) - Any party that disposed of waste at dump can be sued by the government to finance total cost of cleanup • Joint and several liability : Each sued party is potentially liable for up to the entire damage caused, regardless of the magnitude of its individual contribution. • Government enforces Superfund for responsible parties to clean up. • If site still needs cleanup, Hazardous Substance Response Trust Fund. Government seeks reimbursement from responsible parties.

Basel Convention

The Basel Convention is an international treaty that was created to address the issue of hazardous waste and its transboundary movement. The Convention aims to protect human health and the environment from the harmful effects of hazardous waste by minimizing its generation and ensuring its environmentally sound management. The Convention was adopted in 1989 and came into force in 1992. It has been ratified by 187 countries, including most of the world's major economies. Some real-world implications and examples of the Basel Convention include: Ban on Export of Hazardous Waste: The Convention bans the export of hazardous waste from developed countries to developing countries, as the latter often lack the resources and infrastructure to safely manage the waste. This has helped to prevent environmental pollution and human health problems in developing countries. Prior Informed Consent Procedure: The Convention requires that countries be notified of any proposed shipment of hazardous waste into their territory and give their prior informed consent before the shipment can be made. This helps to ensure that countries are aware of the risks associated with the waste and can take appropriate measures to protect their populations and environment. Waste Management Standards: The Convention sets standards for the environmentally sound management of hazardous waste, including the disposal of waste in an environmentally safe manner. This has led to the development of new technologies and practices for the treatment and disposal of hazardous waste. Overall, the Basel Convention has been successful in raising awareness of the risks associated with hazardous waste and has helped to promote environmentally sound waste management practices around the world.

Convention on biological diversity

The Convention on Biological Diversity, known informally as the Biodiversity Convention, is a multilateral treaty. The Convention has three main goals: the conservation of biological diversity; the sustainable use of its components; and the fair and equitable sharing of benefits arising from genetic resources.

Environmental Kuznets Curve

The Environmental Kuznets Curve (EKC) is a hypothesis that suggests that environmental degradation initially increases as a country experiences economic growth, but eventually decreases once it reaches a certain level of income. The theory is based on the Kuznets Curve, which describes the relationship between income inequality and economic growth. The EKC suggests that as countries develop and become wealthier, they may begin to prioritize environmental protection and sustainability. For example, they may invest in renewable energy technologies, implement environmental regulations, and support conservation efforts. This leads to a decrease in environmental degradation and an improvement in environmental quality. The curve typically takes the shape of an inverted U, with environmental degradation increasing at low levels of income and decreasing at higher levels of income. However, the EKC is not universally supported, and the shape and existence of the curve may vary depending on the type of environmental impact being measured and the specific context of the country in question. Critics of the EKC argue that it may give a false sense of security and justify continued environmental degradation in the short term. Additionally, they point out that the curve may not hold for all types of environmental impacts and that the income threshold at which environmental degradation begins to decrease may be too high for many developing countries to achieve.

Genuine Progress Indicator

The Genuine Progress Indicator (GPI) is a measure of economic progress that goes beyond Gross Domestic Product (GDP) by incorporating social, economic, and environmental factors. The GPI takes into account factors such as income distribution, household work, volunteer work, and the value of natural resources. It aims to provide a more comprehensive and accurate picture of a society's well-being by accounting for both positive and negative impacts on economic, social, and environmental factors.

Human Development Index

The Human Development Index (HDI) is a composite statistical measure of human development in a country that takes into account three dimensions of human well-being: a long and healthy life, access to knowledge, and a decent standard of living. It was created by the United Nations Development Programme (UNDP) in 1990 as a way to shift the focus of development economics from economic growth to human development. The three dimensions of the HDI are measured using the following indicators: Life expectancy at birth: This measures the average number of years a person is expected to live at birth. Education: This is measured by the mean years of schooling and the expected years of schooling. Gross national income (GNI) per capita: This measures the average income per person in a country. The HDI is calculated by combining the three indicators into a single index that ranges from 0 to 1, with 1 representing the highest level of human development. Some real-world examples of the use of the HDI include: Policy Making: The HDI is used by policymakers to identify the areas in which their country needs to improve in order to enhance human development. By examining the individual indicators that make up the HDI, policymakers can identify the strengths and weaknesses of their country's education system, healthcare system, and economy. International Comparisons: The HDI is used to compare the level of human development between countries. This allows policymakers to identify countries that are performing well and learn from their policies and practices. It also helps to draw attention to the countries that are struggling and in need of support. Accountability: The HDI is used to hold governments accountable for their development policies and outcomes. By measuring progress over time, it helps to ensure that governments are working towards improving the well-being of their citizens. Overall, the HDI is a valuable tool for measuring human development and identifying areas in need of improvement. It has helped to shift the focus of development economics towards a more people-centered approach, and has played an important role in advancing the global development agenda.

Montreal Protocol

The Montreal Protocol on Substances that Deplete the Ozone Layer is the landmark multilateral environmental agreement that regulates the production and consumption of nearly 100 man-made chemicals referred to as ozone depleting substances (ODS). When released to the atmosphere, those chemicals damage the stratospheric ozone layer, Earth's protective shield that protects humans and the environment from harmful levels of ultraviolet radiation from the sun. Adopted on 16 September 1987, the Protocol is to date one of the rare treaties to achieve universal ratification. The Montreal Protocol phases down the consumption and production of the different ODS in a step-wise manner, with different timetables for developed and developing countries (referred to as "Article 5 countries"). Under this treaty, all parties have specific responsibilities related to the phase out of the different groups of ODS, control of ODS trade, annual reporting of data, national licensing systems to control ODS imports and exports, and other matters. Developing and developed countries have equal but differentiated responsibilities, but most importantly, both groups of countries have binding, time-targeted and measurable commitments. The Protocol includes provisions related to Control Measures (Article 2), Calculation of control levels (Article 3), Control of trade with non-Parties (Article 4), Special situation of developing countries (Article 5), Reporting of data (Article 7), Non-compliance (Article 8), Technical assistance (Article 10), as well as other topics. The substances controlled by the treaty are listed in Annexes A (CFCs, halons), B (other fully halogenated CFCs, carbon tetrachloride, methyl chloroform), C (HCFCs), E (methyl bromide) and F (HFCs). The treaty evolves over time in light of new scientific, technical and economic developments, and it continues to be amended and adjusted. The Meeting of the Parties is the governance body for the treaty, with technical support provided by an Open-ended Working Group, both of which meet on an annual basis. The Parties are assisted by the Ozone Secretariat, which is based at UN Environment Programme headquarters in Nairobi, Kenya.

Total Allowable Catch

The maximum quantity of fish that can be caught each year Ex: The Common Fisheries Policy is the fisheries policy of the European Union. It sets TAC for member states. Each country receives a national quota based on a percentage of the TAC. PAGE 291 Ex. Iceland: as a fixed % of biomass Ex. New England cod daily catch limits: 700 pounds

Pollution Havens

The pollution haven hypothesis posits that, when large industrialized nations seek to set up factories or offices abroad, they will often look for the cheapest option in terms of resources and labor that offers the land and material access they require. Two real-world examples of pollution havens include: China: In recent decades, China has become a major manufacturing hub, attracting industries such as electronics, textiles, and plastics. Many of these industries are known for producing high levels of pollution, and China has been criticized for having weaker environmental regulations and enforcement than many other developed countries. Southeast Asia: Several countries in Southeast Asia, such as Indonesia, Malaysia, and Vietnam, have become popular destinations for companies in the palm oil industry. However, the production of palm oil is often associated with deforestation, habitat destruction, and greenhouse gas emissions, and these countries have been accused of having weak environmental regulations and enforcement.

Income-environmental relationship

The relationship between income and the environment is complex and multifaceted. On one hand, economic growth and higher incomes have historically been associated with increased environmental degradation, particularly in developing countries. As countries become wealthier, they tend to consume more resources and generate more pollution and waste, leading to negative environmental impacts such as air and water pollution, deforestation, and climate change. However, there is also evidence to suggest that as countries become wealthier, they may begin to prioritize environmental protection and sustainability. This is known as the environmental Kuznets curve (EKC), which suggests that environmental degradation increases initially with economic growth but eventually decreases as income reaches a certain threshold. Additionally, higher incomes can provide individuals and communities with the resources and technologies needed to adapt to and mitigate the impacts of environmental change. For example, wealthier countries may invest in renewable energy technologies, implement environmental regulations, and support conservation efforts. Overall, the relationship between income and the environment is complex and context-dependent. While economic growth and higher incomes can lead to increased environmental degradation in the short term, there is also evidence to suggest that as countries become wealthier, they may begin to prioritize environmental sustainability.

International trade and environment

The relationship between international trade and the environment is complex and multifaceted. While trade can bring economic benefits and promote growth, it can also have negative environmental impacts. Here are some examples: Carbon emissions: International trade can lead to the relocation of carbon-intensive industries from countries with strong environmental regulations to countries with weaker regulations, resulting in an increase in global carbon emissions. For example, the production of steel and cement in China has increased significantly in recent years due to demand from other countries, leading to a rise in carbon emissions. Resource depletion: International trade can also contribute to the depletion of natural resources. For example, the demand for palm oil in the global market has led to extensive deforestation in Southeast Asia, contributing to habitat destruction and the loss of biodiversity. Marine pollution: The transportation of goods through shipping can contribute to marine pollution through accidental spills and routine discharge of waste into the ocean. Additionally, the demand for cheap seafood has led to unsustainable fishing practices and overfishing in many parts of the world. Trade in environmentally friendly products: On the positive side, international trade can also promote the growth of environmentally friendly products, such as renewable energy technologies and energy-efficient appliances. Overall, the relationship between international trade and the environment is complex and depends on a variety of factors, including the regulatory framework in different countries, consumer demand, and technological innovation.

Deforestation sources

Three activities lead to tropical deforestation (FAO, 2010). 1)Timber Use (Asia & South America) 2)Fuel Use (sub-Saharan Africa & mountainous Asia) 3)Agriculture (Latin America, Asia)

Toxic Release Inventory

Toxic Release Inventory (TRI) (1989): data for public on chemical releases from sources using 10,000 or > pounds per year • Have you seen this? http://www.epa.gov/tri/tridata/modrule/phase2/index.htm • TRI database prompts polluters to internalize externalities. Releases of the 17 most toxic chemicals fell by 51% from 1988 to 1994 (Davies and Mazurek, 1997). • Also, from 2003 to 2011 air releases of carcinogens decreased by 50% (EPA). Helps accountability and informing the public. Public reputation matters. • But, need more action and information to prevent toxics; Policy to address past and future toxics

Trust funds for habitat preservation

Trust funds are moneys that are legally restricted to be used for a specific purpose. They are administereed by trustees to assure compliance with the terms of the trust. Many nations that harbor biodiversity preserves cannot afford to spend the resources necessary to protect them. One possibility is sto tap into foreign demands for preservation. Ex: Blize the revenue comes from a "conservation fee" charged to all arriving foreign visitors. The inital fee, $3.75 was bassed by Belize's parliament in January 1996 raising $500,000 in revenues each year for the trust fund. These fees, along with grants and donations, provide the Protected Areas Conservation Trust (PACT) with a sustainable source of funding for protected areas.

Liability

Type of incentive regulation

Clean Air Act

U.S. 1990 Clean Air Act-Sulfur Allowance Program: Auctioned to utilities; withheld 10 million tons to force reduction in SO2. Wider participation: Other nonproducers (American Heart Association) can buy and retire allowances • https://ampd.epa.gov/ampd Air Markets Program Data • Grandfathering of permits has exempted old plants • Ex. 15.2: Review of Sulfur Allowance program. • Human health dominate ecological benefits • 100% compliance • Allowance banking means intertemporal abatement cost allocation • Trading limited to within states 13

IFQs

a property right for fish harvested. A fixed quantity of TAC for a specific time. National quotas are distributed (auctioned) amongst fishers. Individual fishing quotas (IFQs) are used or traded Ex: Catch Share Programs in the United States PAGE 291 policy implementation (cost to monitor and enforce IFQ system) Restrictions on discarding fish remove incentive for "highgrading" to obtain the % of TAC in New Zealand, Iceland See example 12.2 Comparison: IFQs in Canada versus quantity controls in U.S. for scallop fishery in Georges Bank. Differences between the countries: IFQs result in better stock and revenues in Canada

EU Carbon Markets

a. European Union Emissions Trading b. RGGI The market price of the permit helps with a carbon price

Bycatch

a. Gear restrictions. Bycatch are part of foodweb. HI Longline Association no longer uses wire so that white tip shark can bite their way out of net for tuna. (March 2023 article below) b. ITQs have reduced "ghostfishing", harmful to bycatch. Still need to address. Ghostfishing: discarded gear in ocean ensnaring sealife. 46% of Pacific Garbage Patch gyre is ghost gear. Two current examples focused on Bycatch Seychelles Fishing Authority: 15-20% bycatch in fisheries. Requirement to bring the bycatch to the Authority. And the EU has agreement to help. The EU will bypass suppliers who don't comply. The species affected are marlin, dorado, kingfish, other pelagics. Canada Ghost GearFund (2021) $8.3 million through Federal Dept. of Fisheries and Oceans to 26 projects for lost and discarded gear recovery (63 tons every few months) (9600 feet of rope as an example)

Carbon pricing

a. Tax-British Columbia since 2008 per metric ton b. 1990s-Finland, Sweden, Norway

Conservation Easements

andowner paid to use and manage land only for conservation purposes; permanent restrictions and transferable upon sale of the land.

Demand side policy

bans and labels to avoid bycatch and overfishing Certification and labelling of fish for environmental and social performance of seafood production around the globe. https://certificationandratings.org/sustainable-seafood-a-global- benchmark/ Includes certifiers: Aquaculture Stewardship Council, Marine Stewardship Council, Monterey Bay Aquarium Seafood Watch and Fair Trade USA. Marine Stewardship Council (MSC): 20 years of certifying fisheries.

Mean Annual Increment

divide cumulative volume by cumulative time

Nonpoint source pollution

from a variety of sources (diffuse, not end of pipe point sources) • Oil spills, wastewater: point sources • agricultural runoff, stormwater: nonpoint source • Shared waterways with externalities, public bads from local to global scales To tackle and combat nonpoint sources, it established water quality standards for not only Chesapeake Bay but also its tributaries. States in the watershed through this act are required to create Total Maximum Daily Loads for pollutant that impair water quality. Additionally, through section 319 cost share subsidies were established to help finance pollution reduciton of stormwater and agricultural nonpoint sources. Anoter policy that may not be exactly related to the Chesapeake Bay but target nonpoint water pollution are the taxes, for example targetting phosphorus fertilizer having the lowest transaction cost in some states and education programs. In the presentation the link to "Clean Water and Climate-Smart Investments" presented many different ways to tackle nonpoint pollution, they include: cover crops (reduce nutrient runoff from agricultural fields), nutrient management (using soil tests to determine fertilizer application rates), streamside buffers (filter out nutrients and sediment from agricultural runoff), conservation tillage (no-till or reduced tillage, which can reduce soil erosion and increase soil health), and lastly precision agriculture (variable rate fertilization and irrigation to reduce nutrient runoff and improve crop yields). The report heavily emphasizes a comprehensive approach to reducing nonpoint source pollution from agriculture in the Chesapeake Bay and its surrounding watershed

Endangered Species Act

listing of species as threatened or endangered, requires Ecosystem Habitat Conservation Plan for size of habitat to change status from threatened or endangered.

Safe Harbors Act

no additional requirements for landowners with endangered species habitat • Removes the incentive to degrade habitat prior to form ESA

Open Access

overharvest from everyone racing to fish. With open access noone invests in fish stock management for regrowth over time. The future is discounted with a high discount rate.

Land Conservation Banks

permanently protected lands that contain natural resource values. These lands are conserved and permanently managed for species that are endangered, threatened, candidates for listing, or are otherwise species-at-risk. Developers purchase credits from private and publicly owned conservation banks. • Australia has Biobanking besides the U.S

Bid Rent Function

relationship between "distance from center" on horizontal axis and "net benefits per acre" on the vertical axis. Downward sloping bid rent function as cost of moving away from center lowers net benefits per acre for more distant locations

Sprawl

shallow slope of the bid rent function of residential property and price change over distance Leads to low density spread of population

Maximum Sustainable Yield

the size of a natural population at which it produces a maximum rate of increase, typically at half the carrying capacity. PAGES 275-280, 282, 284

Yield Taxes

ubtract from price on sold timber, increases rotation length • A tax on each cubic foot of wood harvested raises the marginal cost of harvesting and lowers net benefits of harvest.

Debt for Nature swaps

urchase debt of a forested country (often less developed). The buyer is often a nongovernmental organization (such as the Nature Conservancy) or another country The buyer offers to carry the debt (cancelling it for the debtor country) in return for preserving nature by the debtor country. DNS has values for members through membership fees in the Nature Conservancy to help pay the debt. Started in 1987 in Bolivia. Tropical Forest Conservation Act (1998) helps developing countries reduce debt owed while also generating funds in local currency to support tropical forest conservation activities. Nature Conservancy helps in public private partnerships of relieving debt for establishing the swap. Madagascar: Between1989 and 1996 Conservation International, the Missouri Botanical Garden and the World Wildlife Fund negotiated nine DNSs. The Philippines have a couple DNSs

Zoning

used to restrict land conversion to protect environmental and public interest. Not only use but density matters. Examples include: • Lot Size limit • Remove minimum lot size limits • Housing square footage (vertical versus horizontal) • Mixed use (residential/commercial spaces)

Incentive Regulation

• Basic Ideas: - Make polluting an expensive activity - Lower costs of pollution control if polluters decide how to reduce pollution (industry) Promotes more cost-effective regulation in the short run rather than through technology forcing rules Provides better incentives for firms to seek out new technologies to lower pollution control costs in the long run Ex: Assess damage costs to set tax= marginal damage cost • Set Q (from graph 14.2) • Tax (charge, fee): Tie tax directly to pollution (tax per unit of emissions). Tax is a price paid by a polluter for emissions. • Figure 14.4 Emissions charge • Emissions may be hard to monitor! So target tax on inputs or outputs related to emissions= flexible target on pollution • Examples: gas, electricity, air travel, batteries • Fertilizer, plastic bags, link polluting input and output

Targetting tax examples

• Superfund (1980): tax of $0.097 per barrel of crude oil, $0.22 to $4.87 per ton of chemicals, and .12 percent on corporate taxes, for hazardous substances cleanup. • Oil spill (1989): charges a tax of $0.05 per barrel of crude oil, with funds dedicated to the Oil Spill Liability Trust Fund • Leaking Underground Storage Tanks (1986): taxes all nonpropane fuels at $0.001 per gallon to replace leaking tanks. • Ozone-depleting (OD) chemicals(1990): tax per pound multiplied by ozone depleting potential and increases each year, starting at $1.37 to $3.10 by 1995. Baseline OD is 1 for CFC and 10 for halon. The tax increased by $0.45 per pound per year from 1996, bringing it to $17.50 per pound in 2022.