Environment
Is Environment Getting Better or
Worse?
• Improvements in local and national air and
water quality in US and other developed
countries.
• But other problems worsening: over fishing,
deforestation, global warming, etc.
What is the difference?
• “Tragedy of the Commons”
In economic terms
• Pollution, species extinction, environmental
problems, generally an “externality”
• costs not born by producers
• Role of govt.: correct the destructive
economic incentives
Global Warming
• CO2 and other gasses form “greenhouse
effect”
Consequences
- raising sea levels, causing droughts and storms, and
disrupting ecosystems, crop productivity, ocean
acidification
- self-sustaining processes:
- melting polar ice-caps cool less and reflect less light/heat
- thawing permafrost releases more g.h. gasses
water shortage
Kyoto
• 1997 Kyoto Protocols, formally in effect
since 2004
- U.S. and other developed countries were to reduce g.h.
gasses below 1990 levels by 2012
• 1997-‟01 Senate fails to ratify the treaty
• 2001 Bush dismisses Kyoto Protocols
• cites insufficient evidence, too great costs
• Developing countries, like China and India exempted
California jumps in
• “pavley law”
• 30% reduction of car GHG by 2016
• Detroit and Bush attack in court
Clean Air and Bush Admin
• 1970 Clean Air Act requires clean technology
for new power plants
• 1977 “New Source Review”
- requires existing plants to phase in pollution control
improvements over time, when plants are expanded
• 1999 Clinton admin files suits against non-
compliant plants
• 2001 Bush admin dismisses suits
• 2002 Bush admin undoes “New Source
Review” replaces with scheme based on
tradable “pollution allowances”
Efficiency: The Rise and Fall of CAFÉ
• Corporate Average Fuel Economy--passed
by Congress in 1975, after “oil crisis”
• Required manufacturers to double car fuel
efficiency to 27 mpg
• saved billions of gallons of gas
• Decreasing fuel efficiency since „87
- “Light truck loophole”
- Static CAFÉ standards
Should We Raise CAFÉ standards?
• Yes
• But, this is not the best solution--“rebound effects:”
- fuel efficiency creates incentive to drive more
- more expensive fuel efficient cars creates incentive to hold on to
older, less efficient and more polluting, cars longer
• Better answer: increase gas tax
- generates revenue, incentives to drive less, manufacturers to innovate,
compact development, etc.
• But politically unpopular/dangerous
Other landmark legislation
• Clean Water Act 1972
• EPA working with state and local bodies set limits on effluents and
wetlands destruction
• Bush admin—Congress can only regulate “navigable waterways”
• Endangered Species Act 1973
• Forbids hunting and habitat destruction for “endangered species”
• Pombo bill—compensating landowners for restricted development