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Berkeley A,RESEC C253 - PRINCIPLES OF ENVIRONMENTAL POLICYMAKING

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Department of Agricultural and Resource EconomicsUniversity of California at BerkeleyDavid Zilberman and Jennifer AlixPRINCIPLES OF ENVIRONMENTAL POLICYMAKINGTable of ContentsIntroduction 2Identifying the problem 2Global versus Local 4Causes 5ExternalitiesTragedy of the CommonsPublic GoodsMyopic BehaviorFailures of GovernanceTowards Policy Interventions 9Policy Objectives 9EfficiencyCost EffectivenessDistributional ObjectivesVariability ReductionEnvironmental and Health Quality ParametersPolicy Outcomes 14Behavior ModificationResource ReallocationResource and Capital AugmentationPolicy Tools 16IncentivesDirect ControlEstablishment of Property Rights and TradingEducation, Information and CommunicationImprovements in GovernanceA few words on Public GoodsConstraints on Policymaking and Implementation 23BudgetKnowledgeAbility to Enforce and MonitorDynamic Considerations 26Heterogeneity 26Political Economy 29References 292IntroductionFrom aqueducts to water treatment plants, wind-blown pollen to gene splicing, carriagesto electric cars, there seems to be no end to man’s ingenuity in designing technologies andimproving processes to minimize the time spent on satisfying basic needs. Nevertheless, even themost industrialized of countries have yet to invent food that doesn’t require earth, ozone-absorbing air, or self-cleaning water. All around the globe, we cannot escape the ties that bindour existence to that of the environment where we live and the natural resources we consume.Environmental problems present a particular challenge to policymakers, as their causesand manifestations occur on local, regional and global levels. In addition, the nature ofenvironmental policymaking requires close coordination between social and natural scientists.This paper develops a way to categorize some of these problems and think about their causes.This will be the basis for developing policy responses to them.Identifying the problemOne way of beginning to classify environmental problems is to divide them into threegroups:1) Pollution2) Resource Depletion and Extinction3) Resource Preservation and RestorationThe opposite side of these divisions is to view the environment as a provider of certainservices to society, including sustaining production of goods consumed by humans, being asource of recreational activities, and providing aesthetic or religious value. For example, peoplemay benefit from the existence of a forest for multiple reasons: wood to build houses, increasedproduction of carbon, shelter the woods provide to animals consumed by a village, religious valueassociated with burial places in the forest, and others. In this case, policy intervention iswarranted if one of these services is threatened.The manifestations of these problems vary in scale and intensity both within and betweennations. In more industrialized countries, resource depletion has inspired the formation ofpowerful environmental advocacy groups and extensive legislation protecting air and waterquality, as well as preserving resources for aesthetic and recreational value. In developingcountries, on the other hand, some of the most severe health problems result from environmentalmismanagement. Malaria and dengue are in large part pest problems, while typhoid, diarrhea andother water-borne diseases can been viewed as a pollution issue (associated with poverty and lack3of access to basic health care). In 1992, the Financial Times reported that 80% of all diseases and33% of all deaths in developing countries result from sorely inadequate access to clean drinkingwater and hygiene.Within regions of a country, the variation in environmental problems can be extreme. Inrural areas of developing countries, the interface between man and nature is even more immediate- survival for subsistence farm families often depends on favorable rains, the flow of a stream andfertile soil on a small parcel of land. According to the World Bank (2001), 70% of the world’sextremely poor live in rural areas. In general, this implies that their subsistence depends directlyupon agricultural and pastoral activities. Declining soil fertility, depleted aquifers and worseningwater quality have no easy solution, especially in areas where input-enhancing technologies arenon-existent or too expensive. Currently, according to the FAO, 70% of the earth’s land surfaceis degraded or subject to heavy degradation. While only 10% of the world’s population lives insensitive mountain areas, approximately 40% live in the watersheds they service (IFAD, 2002).In urban areas of developing countries, among the upper classes, we see concerns similarto those of the more industrialized world – in many places, environmental groups have formed toadvocate for the preservation of rainforests and other sensitive ecosystems. Indeed, much of theirconcern focuses on environmental quality issues having to do with pollution from vehicles orindustrial runoff, issues similar to those addressed by many policies in Europe and the UnitedStates. The urban poor, like the rural poor, often suffer most from urban environmentalproblems, since it is more likely that polluting firms will locate in poor rather than richneighborhoods. In addition, population density and crowding, both of which result in moreintense pollution problems, are likely to be worse in less affluent urban areas. This phenomenonhas led to a growing interest in understanding and demanding “environmental justice”.Many of the examples above are of point source pollution, that is, pollution whose sourcecan be readily identified; it may be a smokestack or a sewer pipe. Point source pollution isusually much easier to mitigate since the culprit is readily identifiable. Non-point sourcepollution, like agricultural runoff or auto emissions, on the other hand, is much more expensive tocontrol, and the incentives to do so are often weak, given that its effects are often felt on aregional or global level.There is a vast literature detailing poverty-environment linkages, some of which arereferenced at the end of this reading. New research has moved away from the simplisticconclusion that poverty causes environmental degradation towards recognition of theheterogeneity of poverty and unique solutions found by rural and urban communities to adapt to4resource degradation. However, it remains true that the poor are often forced to overexploitlimited local resources in order to satisfy immediate household


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Berkeley A,RESEC C253 - PRINCIPLES OF ENVIRONMENTAL POLICYMAKING

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