Environmental Policy

1. Environmental Policy Water Pollution Air Pollution State & Local Issues Global Environment

2. Organic wastes Sewage, residuals from factories, pesticides, oil, detergent Inorganic substances Toxic metals, salts, acids, nitrates Non-material Radioactivity, heat Infectious agents Bacteria, viruses Point source vs. Non-point source Continuous vs episodic Persistent vs degradable Types of Water Pollutants

3. Initial burden was on states/localities EPA established in 1970 Federally set TBES State/local enforcement Municipal treatment subsidies Refuse Act (1899) Water Pollution Control Act (1948, 1956, 1972) Introduced TBES in 1972; moved away from AQ standards Loan subsidies for construction of water treatment facilities Zero discharge goal by 1985 Clean Water Act (1977) Fishable-swimmable goal Focus on toxic effluents Water Quality Act (1965, 1987) Converted water treatment subsidies to revolving loan fund Focus on non-point sources Water Pollution Policy

4. Technology-Based Effluent Standards • Effluent standard set at the level of emissions a source would produce if it used particular technologies • Best Practicable Technology (BPT) by 1977 • Best Available Technology (BAT) by 1983 • Best Conventional Technology (BCT) after 1984

5. Estimated Total Costs and Emissions from Sugar-Beet Plants Using Alternative Abatement Technology BPT = ? BAT = ? BCT = ?

6. Rivers and Streams Supporting Recreational Uses: With and Without CWA 632,552 Miles Analyzed during the mid-1990s If all point-source emissions are eliminated

7. Comparison of Point Source Water Pollution-Control Costs: TBES vs Least-Cost

8. Water Policy Innovations • Focus on Non-point sources • Design standards • No agricultural cultivation on steep slopes • Designs on urban storm sewers • Home builders must control run-off • Tax materials/activities leading to NPS • Fertilizers, chemicals • Total Maximum Daily Load program • Emission limits if TBES don’t achieve ambient standards • Tradable Discharge Permits • Fox River, Chesapeake Bay, Long Island Sound, Dillon Reservoir • Problems • Thin markets • Trading ratios EPA estimates 50%+ of water violations due to NPS

9. Air Pollution Policy

10. Ozone: filters out ultraviolet radiation Other gases provide for “greenhouse” effect 78% Nitrogen 21% Oxygen

11. Federal Air Pollution Control Laws • Early law was local in nature; focus on “nuisance laws” • Air Quality Act (1967) • Required states to established ambient standards for “criteria pollutants” • expanded grants to states for air pollution control plans • Clean Air Act (1963, 1966, 1970, 1977, 1990) • Established uniform NAAQS • Established TBES • Stationary vs mobile sources • SO2 tradable discharge permits

12. Criteria Pollutants • Particulate Matter • Health: breathing symptoms; aggravation of existing respiratory and cardiovascular disease; impairment of the body’s immune systems; damage to lung tissue; premature mortality • Welfare: damage to materials, soiling; visibility impairment • Sulfur Dioxide • Health: adverse effects on breathing; respiratory illness; alterations to lung’s defenses, aggravation of existing respiratory and cardiovascular disease • Welfare: foliar damage on trees and crops; contribution to acid rain; accelerated corrosion of buildings • Carbon Monoxide • Health: exposure to elevated levels causes impairment of visual perception, work capacity, manual dexterity, learning ability and performance of complex tasks; individuals with existing cardiovascular disease are at greater risk • Nitrogen Dioxide • Health: lung irritation, reduced resistance to respiratory infection; continued or frequent exposure may cause higher incidence of acute respiratory disease in children • Welfare: contributes to ozone formation and acid rain • Ozone • Health: reduced lung functioning; damage to lung tissue, increased sensitivity of the lung to other irritants • Welfare: reduction in crop yields; foliar damage to crops and trees, damage to ecosystem • Lead • Health: damage to kidneys, liver, nervous system, and blood forming organs; changes in fundamental enzymatic, energy transfer, and homeostatic mechanisms in the body; excessive exposure can cause neurological problems such as seizures, mental retardation, and/or behavioral problems

13. National Primary and Secondary Ambient Air-Quality Standards (NAAQS) Source: http://www.epa.gov/air/criteria.html

14. Stationary Source Control: TBES • Non-Attainment Areas • Existing Sources: RACT (Reasonably Available Control Technology) • New Sources: LAER (Lowest Achievable Emission Rate) • Prevention of Significant Deterioration (PSD) Areas • Existing Sources: None • New Sources: BACT (Best Available Control Technology) Note: New Source Bias • Creates incentives to hold onto older, dirtier, factories • Creates incentives for older factories to produce to capacity whereas newer factories may have excess capacity

15. Cap-and-Trade (CAP) Program • 1990 CAA: reduce SO2 emissions by 40% from 1990 levels • Phase I: 1995 – 2000 • 110 power plants in 21 eastern/midwestern states • # permits = (Avg Btu of fuel used) x (2.5 lbs SO2/million Btus) • Phase II: 2000 – present • Covers all power plants in US (approx. 1000) • # permits = (Avg Btu of fuel used) x (1.2 lbs SO2/million Btus) • Overall cap of 8.95 million permits in 2010 • Trading Rules • Participants: corporations, individuals, green groups, speculators • EPA tracks all trades, monitors emissions • $2581 fine for excess SO2

16. Clean Air Markets in Action • Affected Sources • Allowance Prices • Trends in SO2 Emissions • Cross-State Air Pollution Rule • AEP Muskingum River Plant • 98,515 tons of SO2 in 2010 • 4 coal-units producing 840 MW • 159 full-time workers • AEP Dresden • Natural gas unit producing 580 MW • 25 full-time workers

18. Mobile Source Emissions • Federal focus has been on emissions per mile • Equimarginal principle suggests all RHS factors should be balanced • New Car Emission Standards • VOC, NOx, CO, PM • “Technology forcing” • Inspection and Maintenance programs • Technology Standards • Reformulated fuels • Alternative fuels: methanol, natural gas, hydrogen • Clean cars: electric vehicles, hybrids Number of Vehicles Average Miles Traveled Emissions per Mile Total Emissions x x = Massachusetts v US EPA: Supreme Court rules 5-4 that CO2 is a pollutant and the EPA is responsible for its regulation

19. Stationary and Mobile Sources of Criteria Pollutants in the US Source: Table 15.1, Field and Field (5e), p302

21. Estimated Impacts of 1990 Clean Air Act Source: Table 15.2, Field and Field (5e), p302

22. State & Local Issues Municipal Wastes Land Use Control

23. Disposal Options Landfills Incineration Recycling NIMBY Municipal Solid Waste Media switching?

24. Municipal Solid Waste Source: http://www.epa.gov/epawaste/nonhaz/municipal/pubs/msw_2010_data_tables.pdf

25. Source: http://www.epa.gov/epawaste/nonhaz/municipal

26. Source: http://www.epa.gov/epawaste/nonhaz/municipal

27. Source: http://www.epa.gov/epawaste/nonhaz/municipal

28. Economics of Recycling • Producer and Consumer Decisions • Private costs versus social costs

29. Reasons to Recycle 1. Feels good? 2. Saves energy? 3. Saves money? 4. Creates good jobs? 5. Saves trees? 6. Improves environment? 7. Saves landfill space?

30. Producer Decisions $ S1 Increase reuse ratio? • Raise q1, hold q0 S2 Public curbside collection • Reduce q0, hold q1 PV + t Reduce overall demand PV • do both! Increase PV thru tax D q1 q2 q0 Materials With S1: q1 units will be recycled; reuse ratio = q1/q0 Minimum content standards? Cost Effectiveness?  Taxes or TDP?

31. Consumer Decisions • Which goods to buy? In what quantities? • Should I recycle? • Worksheet on Landfill vs Recycling • Mandatory recycling • Disposal taxes • Deposit Refund

32. 40 60 30 (20) 50 (10) 20 10 30 (20) 20 (30) 20 30

33. Global Environmental Issues Ozone Depletion Global Warming Biodiversity

34. Global Warming • Climate Sensitivity • Doubling of CO2  + 1°C • Feedback effects • Water vapor: + 1.7°C • Clouds ??? 280ppm  560ppm: + 1°C 560ppm  1120ppm: + 1°C

35. “Hockey Stick” graph

37. IPCC Report • Temperature increases caused by (human generated) CO2 increases • 0.5°C (1° F) over last 100 years • 1.5° - 4.5°C over next 100 years • rising sea levels on coastal societies • rapid change does not allow for evolutionary changes • agricultural and forestry changes Stern Review Critique of Stern Review

38. Global Warming Policy • Kyoto Protocol (1997) • Prescribed emission reduction targets for 6 GHGs • Signatories must reduce GHG 5% below 1990 levels by 2008-2012 • Technical Responses • Increase earth’s absorption abilities • Reduce emissions • Stern Review • Damage estimates: 5-20% loss in annual global GDP • Annual mitigation costs: 1% global GDP to meet 550ppm target • Policy Options • Differences in control costs suggests incentive-based strategies • Tradable discharge permits • Emissions tax • Differences in contributing factors complicate global agreements between nations Total CO2 Production = pop x (GDP/pop) x (energy/GDP) x (CO2/energy)

39. Source: Table 20.3, Field and Field (4e)

40. Stern Review “Climate change is the greatest market failure the world has ever seen” • CO2 target = 550ppm • Choice: • Costs of strong and early action (1% GDP) • Costs of not acting (5% - 20% GDP) • 3 Elements of Policy • Pricing of carbon: taxes, cap-and-trade, regulation • Support innovation and deployment of low-carbon technologies • Remove barriers to energy efficiency (inform, educate, persuade) • International response is required • Emissions trading • Technology cooperation • Reduced deforestation • Adaptation Requires emissions 25% below current levels by 2050 Kyoto Protocol (1997)

41. Stern Critique: Overestimated MD $ MDStern MACStern • Demographics: assumes rapid pop. growth and low income growth in low latitudes • Discount rate • Low discount rate (r = 1.4%) use for evaluating the cost of future damages • Mitigation costs are evaluated using r ≈ 4% • Adaptation is not taken into account • Extreme weather events increase: from 0.2 percent of GDP to 5% of GDP • Non-market damages suffer from sampling bias • Equity: extra weight given to damages suffered by poor people MDMendelsohn t* CO2e E* 550 PV of damages = $85 per ton of CO2 ($300 per ton of carbon)

42. Stern Critique: Underestimated MAC $ MACMendelsohn MDStern MACStern • Must reduce emissions by 25% below current level by 2050 • Renewable energy sources (42%) • Nuclear power (15%) • Carbon capture (15%) • Energy efficiency (27%) • Ignores value of lost fossil fuels • Ignores impact of renewables on land usage/prices MDMendelsohn t* CO2e 550 E**

43. Global Warming Policy Source: Gapminder.org

44. Copenhagen Consensus “What would be the best ways of advancing global welfare, and particularly the welfare of the developing countries, illustrated by supposing that an additional $75 billion of resources were at their disposal over a four-year initial period?”

45. Global Warming Policy Source: Gapminder.org United Nations Climate Change Conference from Durban, South Africa

46. Biodiversity • Types • Genetic material • Species • Ecosystems • Species Stock • Random mutations • Extinction rates • Over-exploitation • Habitat destruction • Introduction of non-native species

47. Policy Approaches • Endangered Species Act (1973) • 1,967 species have been listed as endangered or threatened • Prohibition on takings • Protection of habitats • CITES (1975) • Export/import controls • 5000 animals/28,000 plants • Coase Theorem Alternative? • Zimbabwe’s CAMPFIRE • Costa Rica and Merck 51 species have been removed 23 have been recovered 12 listed in error or due to taxonomic change 10 have gone extinct 6 discovery of new populations