This multimedia product and its contents are protected under copyright law. The following are prohibited by law: • any public performance or display, including transmission of any image over a network; • preparation of any derivative work, including the extraction, in whole or in part, of any images; • any rental, lease, or lending of the program. Chapter Seven: The Environment ‹#› ‹#› Overview Chapter Seven examines the following topics: The meaning and significance of ecology The traditional business attitudes toward the environment The moral problems underlying business’s abuse of the environment The costs of environmental protection The methods for pursuing environmental goals Some deeper questions of environmental ethics Moral Issues in Business Chapter 7 ‹#› Introduction The effects of environmental recklessness by manufacturing, industry, and consumers are now being seen. Humankind has scarred the globe, polluted the air, contaminated the soil, and used up the resources. What are the responsibilities of businesses regarding the environment, plants and animals, and all other resources? Moral Issues in Business Chapter 7 ‹#› “A home that was flooded with toxic sludge following the coal-ash spill at the Kingston Fossil Plant in Tennessee. Even if an environmental calamity like this does not directly affect our lives, should it still be a cause of concern?” ‹#› Business and Ecology Definition of ecology: The science of the interrelationships among organisms (especially humans) and their environments. Ecosystems: A total ecological community, both living and nonliving, webs of interdependency structure ecosystems – a change in one element can have ripple effects through the system. Business inevitably intrudes into ecosystems as it produces the things we want – but not all or all kinds of intrusions are justifiable. Moral Issues in Business Chapter 7 ‹#› Business’s Traditional Attitudes Toward the Environment Traditionally, business has regarded the natural world as a free and unlimited good – pollution and the depletion of natural resources is the result. The “tragedy of the commons”: Damage to the environment can also be explained as the result of a situation in which each person’s or business’s pursuit of self-interest can make everyone worse off – the reverse of Adam Smith’s invisible hand. Moral Issues in Business Chapter 7 ‹#› Business’s Traditional Attitudes Toward the Environment Spillover: Unintended costs to third parties from transactions; also called “externalities” In viewing things strictly in terms of private industrial costs, business overlooks spillover So business often derives a profit from a product without considering the overall social cost – the damage the product or the production process has caused to the environment and human populations Moral Issues in Business Chapter 7 ‹#› Th ...

1. This multimedia product and its contents are protected under
copyright law. The following are prohibited by law:
• any public performance or display, including transmission of
any image over a network;
• preparation of any derivative work, including the extraction,
in whole or in part, of any images;
• any rental, lease, or lending of the program.
Chapter Seven:
The Environment
‹#›
‹#›
Overview
Chapter Seven examines the following topics:
The meaning and significance of ecology
The traditional business attitudes toward the environment
The moral problems underlying business’s abuse of the

2. environment
The costs of environmental protection
The methods for pursuing environmental goals
Some deeper questions of environmental ethics
Moral Issues in Business
Chapter 7
‹#›
Introduction
The effects of environmental recklessness by manufacturing,
industry, and consumers are now being seen.
Humankind has scarred the globe, polluted the air, contaminated
the soil, and used up the resources.
What are the responsibilities of businesses regarding the
environment, plants and animals, and all other resources?
Moral Issues in Business
Chapter 7
‹#›

3. “A home that was flooded with toxic sludge following the coal-
ash spill at the Kingston Fossil Plant in Tennessee. Even if an
environmental calamity like this does not directly affect our
lives, should it still be a cause of concern?”
‹#›
Business and Ecology
Definition of ecology: The science of the interrelationships
among organisms (especially humans) and their environments.
Ecosystems: A total ecological community, both living and
nonliving, webs of interdependency structure ecosystems – a
change in one element can have ripple effects through the

4. system.
Business inevitably intrudes into ecosystems as it produces the
things we want – but not all or all kinds of intrusions are
justifiable.
Moral Issues in Business
Chapter 7
‹#›
Business’s Traditional Attitudes Toward the Environment
Traditionally, business has regarded the natural world as a free
and unlimited good – pollution and the depletion of natural
resources is the result.
The “tragedy of the commons”: Damage to the environment can
also be explained as the result of a situation in which each
person’s or business’s pursuit of self-interest can make
everyone worse off – the reverse of Adam Smith’s invisible
hand.
Moral Issues in Business
Chapter 7
‹#›

5. Business’s Traditional Attitudes Toward the Environment
Spillover: Unintended costs to third parties from transactions;
also called “externalities”
In viewing things strictly in terms of private industrial costs,
business overlooks spillover
So business often derives a profit from a product without
considering the overall social cost – the damage the product or
the production process has caused to the environment and
human populations
Moral Issues in Business
Chapter 7
‹#›

6. The Ethics of Environmental Protection
The “free rider” problem: Protecting the environment is in
everyone’s self-interest, but a company may rationalize
(unfairly) that the little bit it adds to the total pollution problem
doesn’t make any difference.
So, it benefits from the efforts of others to prevent pollution but
“rides for free” by not making the same effort itself.
Some philosophers maintain that every human being has a right
to a livable environment.
Moral Issues in Business
Chapter 7
‹#›
The Ethics of Environmental Protection
Questions about the costs of pollution control:
What kind of environment do we want?
What is required to bring about the kind of environment we
want?
The costs of pollution control: Determining the cost of pollution
control requires cost-benefit analysis – which is difficult
because it involves controversial factual assessments and value
judgments.

7. Moral Issues in Business
Chapter 7
‹#›
The Ethics of Environmental Protection
Ecological economics: A new discipline, which attempts to
expand the boundaries of environmental cost-benefit analysis.
It calculates the value of an ecosystem in terms of what it would
cost to provide the benefits and services it now furnishes us.
For example, the worth of a wetland in terms of the cost of
constructing structures that provide the same flood control and
storm protection that natural wetlands do.
Moral Issues in Business
Chapter 7
‹#›

8. The Ethics of Environmental Protection
Who should pay the cost? This is a question of social justice.
Two popular answers are currently in circulation:
Those responsible for causing the pollution ought to pay
Those who stand to benefit from protection and restoration
should pick up the tab
Moral Issues in Business
Chapter 7
‹#›
The Ethics of Environmental Protection
Those responsible: Business has profited greatly from treating
the environment as a free good, but consumers have paid lower
costs for products.
Some would blame consumers, not businesses, for pollution
because they create demand for products whose production
impairs the environment.

9. But, this argument fails to recognize the deep-rooted causes of
pollution – population growth, increasing urbanization, and
rising affluence.
Moral Issues in Business
Chapter 7
‹#›
The Ethics of Environmental Protection
Those who would benefit: Critics of this argument point out that
every individual, rich or poor, and every institution, large or
small, stands to benefit from environmental protection and
restoration, albeit not necessarily to the same degree.
The problem: If pollution concerns all of us to a different
degree, how would we determine the amount individuals and
companies should pay, based on the degree to which they
benefit?
Moral Issues in Business
Chapter 7
‹#›

10. Achieving Our Environmental Goals
Regulations: The use of direct public (state and federal)
regulation and control in determining how the pollution bill is
paid. Four drawbacks:
Requiring firms to use the strongest feasible means of pollution
control is problematic.
Although regulations treat all parties equally, this often comes
at the cost of ignoring the special circumstances of particular
industries and individual firms.
Moral Issues in Business
Chapter 7
‹#›

11. Achieving Our Environmental Goals
3) Regulation can take away an industry’s incentive to do more
than the minimum required by law.
(No polluter has an incentive to discharge less muck than
regulations allow. No entrepreneur has an incentive to devise
technology that will bring pollution levels below the registered
maximum.)
(4) Regulation can also cause plants to shut down or relocate.
Moral Issues in Business
Chapter 7
‹#›
Achieving Our Environmental Goals
Incentives: A widely supported approach to the problem of cost
allocation for environmental improvement through government
investment, subsidy, and general economic incentive (e.g. by
means of tax cuts, grants or awards).
The advantage is that it minimizes regulatory interference and
coercion.
The disadvantage is that it moves slowly, pays polluters not to
pollute, and is not always cost-effective.
Moral Issues in Business
Chapter 7

12. ‹#›
Achieving Our Environmental Goals
Pricing mechanisms: Also called effluent charges, they spell out
the cost for a specific kind of pollution in a specific area at a
specific time. Prices are tied to the amount of damage caused so
may vary from place to place and time to time.
Pollution permits: Allow companies to discharge a limited
amount of pollution or trade pollution “rights” with other
companies.
Critics argue that this approach entails an implicit right to
pollute, and reject this as immoral.
Moral Issues in Business
Chapter 7
‹#›

13. Delving Deeper Into Environmental Ethics
To satisfy its disproportionate consumption of nonrenewable
resources, America turns to foreign lands.
This raises two critical moral questions:
How is the continued availability of foreign resources to be
secured?
Does any nation have a right to consume the world’s
irreplaceable resources at a rate so grossly out of proportion to
the size of its population?
Moral Issues in Business
Chapter 7
‹#›
“The U.S. represents 4.6 percent of the world’s population and
consumes 30 percent of the world’s refined oil. Is the U.S.
obligated to reduce its oil consumption?”

14. ‹#›
Delving Deeper Into Environmental Ethics
Obligations to future generations: A broader view of
environmental ethics considers our duties to other societies and
upcoming generations.
Some say we must respect the right of future generations to
inherit an environment that is not seriously damaged.
Others argue that by putting ourselves in the “original
position,” we can balance our interests against those of our
descendants.
Moral Issues in Business
Chapter 7
‹#›

15. Delving Deeper Into Environmental Ethics
The value of nature: A radical approach to environmental ethics
challenges the human-centered assumption that preserving the
environment is good only because it is good for us.
Adopting a naturalistic, non-anthropocentric ethic would change
our way of looking at nature, but many philosophers are
skeptical of the idea that nature has any intrinsic value.
Moral Issues in Business
Chapter 7
‹#›
Delving Deeper Into Environmental Ethics
Our treatment of animals: Business affects the welfare of
animals very substantially.
One way is through experimentation and the testing of products
on animals.
Critics such as Peter Singer contend that most experiments and
tests are unjustified on moral grounds because animals have

16. moral rights.
Utilitarians stress the moral necessity of taking into account
animal pain and suffering.
Moral Issues in Business
Chapter 7
‹#›
Delving Deeper Into Environmental Ethics
Factory farming: Business’s largest and most devastating impact
on animals is the production of animal-related products—in
particular, meat.
The economizing of the meat and animal-products industries
leads to their treating animals in ways that many reject as cruel
and immoral.
Is it wrong to eat meat? The answer depends on whether animals
have moral rights, and whether and to what extent these rights
are on a par with human rights.
Moral Issues in Business
Chapter 7
‹#›