The document discusses environmental economics as the study of economic impacts from environmental policies, emphasizing the interplay between ecological systems and economic activities. It highlights the importance of governmental involvement due to market failures and externalities, including the tragedy of the commons, and underscores the critical role of ecological services in human welfare and economic value. Furthermore, it outlines the environmental policy process in the U.S., detailing the roles of various stakeholders including government agencies, interest groups, and the legislative framework necessary for effective environmental governance.

1. ENVIRONMENTAL
ECONOMICS &
ENVIRONMENTAL
POLICY
Josefino Tulabing Larena,CPS,CPE,MPA

2. ENVIRONMENTAL ECONOMICS
- An area of economics that studies
the economic impact of
environmental policies.
- is a sub-field of economics that is
concerned with environmental
issues.

3. ENVIRONMENTAL ECONOMICS
National Bureau of Economic
Research Environmental Economics
program:

4. ENVIRONMENTAL ECONOMICS
- “ Environmental Economics
undertakes theoretical or empirical
studies of the economic effects of
national or local environmental
policies around the world. Particular
issues include the costs and
benefits of alternative environmental
policies to deal with air pollution,
water quality, toxic substances,
solid waste, and global warming. ”

5. APPROACHES AND APPLICATIONS
Approaches:
- Using “evolutionary thinking in
economics.”
- Evolutionary theory has been
central to economics for well over
one hundred years.

6. APPROACHES AND APPLICATIONS
- Occasionally, economists have
appealed directly to biological
evolution as a source of insight
into the workings of the economy.

7. APPROACHES AND APPLICATIONS
Darwinian biological Evolution
- gradual adaptation through natural
selection
- is a process consisting of three
component principles, namely;
- variation,
- heredity and
- individual selection

8. APPROACHES AND APPLICATIONS
Variation –
- Variety and diversity, whether fully
random or not, are essential
because without them there can be
no evolution whatsoever.

9. APPROACHES AND APPLICATIONS
- The neoclassical approach with
homogeneous/uniform agents is
incapable of addressing such
“variation evolution” in economics.
- The information driving evolution
in actual cases is the distribution
of variation in a given population.

10. APPROACHES AND APPLICATIONS
- Variation comes forth via mutations
and sexual recombination.
- Heredity means that selected units
have some degree of durability and
resilience, via a mechanism that
passes on characteristics to other
units.
- Individual selection is based on
competition between individuals in the
face of selection pressure (scarce
resources, space, mating partners,

11. APPROACHES AND APPLICATIONS
- Punctuated equilibrium (Eldredge
and Gould 1972) refers to a pattern
in natural history characterized by
relatively long periods of stasis
interrupted by bursts of rapid
change.

12. APPROACHES AND APPLICATIONS
- Sorting and selection is a
distinction proposed by Vrba and
Gould (1986) to elaborate the
notions of hierarchies of selection
and macroevolution.
- The term “selection” is reserved
for the traditional Darwinian cause-
effect mechanism of differential
survival of adaptive traits which
increase or maintain “fitness”

13. APPROACHES AND APPLICATIONS
- i.e.
“the expected relative frequency of
descendants in the next generation.”
- Selection is a gradual and marginal
process involving the adaptation of
species to a relatively stable
environment.

14. APPROACHES AND APPLICATIONS
- “Sorting” is a broader term
referring to differential survival, no
matter what the reason.
- Selection implies causality; a firm
or an organism survives because it
is more efficient or more fit.
- Sorting is merely a differential
outcome.

15. APPROACHES AND APPLICATIONS
- Lamarckian evolution means that
mutations or heredity can be
steered by the unit or some
external actor.
- This may be more appropriate as a
model for economic evolution than
for biological evolution,
- because economic actors can
consciously influence the direction
of economic evolution (Hodgson

16. APPROACHES AND APPLICATIONS
- Coevolution is a useful concept for
integrating evolutionary and
environmental economics.
- It refers to the simultaneous
evolution of relevant interactive
species, or species and
ecosystems, and analogously
economic activities and their
natural environments.

17. APPROACHES AND APPLICATIONS
Potential Application Areas
- Sustainable long-run development
- Evolutionary thinking can help
clarify the debate between advocates of
“weak” and “strong” sustainability.
- The standard economic approach to
sustainability, weak sustainability,
focuses on maintaining the total
capital stock necessary to insure that
net national product is no declining
(Pearce and Atkinson 1995).

18. APPROACHES AND APPLICATIONS
- Near-perfect and reversible
substitution between “natural
capital” and human created
capital (“machines and
knowledge”) is assumed.
- This view reduces
“sustainability” to sustaining
economic growth (Solow 1992).

19. APPROACHES AND APPLICATIONS
- Environment and Technology
- Much of the general research on
evolution and technology, based
on neo-Schumpeterian analysis
(Dosi et al. 1988) and Nelson and
Winter (1982), is directly applicable
to technological change as
discussed in environmental
economics.

20. APPROACHES AND APPLICATIONS
- Some work has already been done
in this direction (Ayres and Miller
1980; Faber and Proops 1990;
Kemp 1997).
- Important focal points of this
research is as follows.
- The lock-in of non-optimal
technologies creates
environmental and other social
costs.

21. APPROACHES AND APPLICATIONS
- Biological Evolution, Ecosystems,
Resilience and Biodiversity
- The newer concepts of
“resilience” and “biodiversity”
from contemporary ecology can
be used to examine the long-run
evolution of socio-economic
systems (Levin et al. 1998).

22. APPROACHES AND APPLICATIONS
- Spatial Evolution
- Consideration of the spatial and
international dimensions of
environmental economics
problems has increased over the
last decade.
- Attention has been given to the
relationship between
environmental factors,
environmental regulation and
international trade, and location of

23. APPROACHES AND APPLICATIONS
- Most of these are based on
neoclassical theory that regards
international issues in terms of
allocation and externalities.

24. ENVIRONMENTAL POLICY
OVERVIEW
- Environmental policy refers to the
commitment of an organization to the
laws, regulations, and other policy
mechanisms concerning
environmental issues.
- These issues generally include air and
water pollution, solid waste
management, biodiversity, ecosystem
management, maintenance of
biodiversity, the protection of natural
resources, wildlife and endangered

25. ENVIRONMENTAL POLICY
RATONALE
- The rationale for governmental
involvement in the environment is
market failure in the form of forces
beyond the control of one person
(externality), including the free
rider problem and the tragedy of
the commons.

26. ENVIRONMENTAL POLICY
- An example of an externality is a
factory that engages in water
pollution in a river. The cost of
such action is paid by society-at-
large, when they must clean the
water before drinking it and is
external to the costs of the factory.

27. ENVIRONMENTAL POLICY
- The free rider problem is when the
private marginal cost of taking
action to protect the environment
is greater than the private marginal
benefit, but the social marginal
cost is less than the social
marginal benefit.

28. ENVIRONMENTAL POLICY
- The tragedy of the commons is the
problem that, because no one
person owns the commons, each
individual has an incentive to
utilize common resources as much
as possible.
- Without governmental
involvement, the commons is
overused.
- Examples of tragedies of the

29. ENVIRONMENTAL POLICY
- Policies concerning energy or
regulation of toxic substances
including pesticides and many
types of industrial waste are part of
the topic of environmental policy.

30. ENVIRONMENTAL POLICY
- This policy can be deliberately
taken to direct and oversee human
activities and thereby prevent
harmful effects on the biophysical
environment and natural
resources, as well as to make sure
that changes in the environment do
not have harmful effects on
humans.

31. EQUITY AND RESOURCES
Efficiency versus equity
- we need to remember that even
when an efficient solution occurs,
it might not be desirable.
- Recall that the fundamental
theorem of welfare economics says
nothing about the distribution of
resources in an efficient solution.

32. EQUITY AND RESOURCES
- Equity issues are also important.
Policymakers need to consider
how various groups will be
impacted.
- This can be complicated in
environmental economics.
- For example, how should the
welfare of future generations be
weighed when making global
warming policy?

33. EQUITY AND RESOURCES
Note that there are two types of
economic analysis:
Positive economics
– studies how the economy actually
functions. It is purely descriptive.
e.g.: how do people respond to
higher energy prices?

34. EQUITY AND RESOURCES
Normative economics
– the study of whether or not the
economy produces socially desirable
results. Requires value judgments,
e.g.: What is the best way to reduce
gasoline consumption (e.g. tax,
CAFÉ, oil import tariff)?

35. EQUITY AND RESOURCES
Resources used:
- Government resources such as
financial, human and even powers
are critical to a successful
implementation of environmental
policy.
- Environmental policy instruments
are tools used by governments to
implement their environmental
policies.

36. EQUITY AND RESOURCES
- Governments may use a number of
different types of instruments.
- For example, economic incentives
and market-based instruments
such as taxes and tax exemptions,
tradable permits, and fees can be
very effective to encourage
compliance with environmental
policy.

37. ECONOMIC VALUE OF EARTH’S ECOSYSTEM
Economic Value of Earth’s
Ecosystem
- The services of ecological systems
and the natural capital stocks that
produce them are critical to the
functioning of the Earth’s life-
support system.
- They contribute to human welfare,
both directly and indirectly, and
therefore represent part of the total

38. ECONOMIC VALUE OF EARTH’S ECOSYSTEM
- We have estimated the current
economic value of 17 ecosystem
services for 16 biomes, based on
published studies and a few
original calculations.
- For the entire biosphere, the value
(most of which is outside the
market) is estimated to be in the
range of US$16–54 trillion per year,
with an average of US$33 trillion
per year.

39. ECONOMIC VALUE OF EARTH’S ECOSYSTEM
- Because of the nature of the
uncertainties, this must be
considered a minimum estimate.
- Global gross national product total
is around US$18 trillion per year.

40. ECONOMIC VALUE OF EARTH’S ECOSYSTEM
- Because ecosystem services are
not fully ‘captured’ in commercial
markets or adequately quantified in
terms comparable with economic
services and manufactured capital,
they are often given too little
weight in policy decisions.

41. ECONOMIC VALUE OF EARTH’S ECOSYSTEM
- The economies of the Earth would
grind to a halt without the services
of ecological life-support systems,
so in one sense their total value to
the economy is infinite.

42. ENVIRONMENTAL POLICY PROCESS AND APPROACHES

43. ENVIRONMENTAL POLICY PROCESS AND APPROACHES
Organizational
Assessment
Fleet
Assessment &
Environmental
Baseline
Define
Goals
Identification of
Key
Stakeholders
Develop
Strategy
Communications
Strategy
Assess
Achievement
Ongoing
Measurement &
Management
Process

44. ENVIRONMENTAL POLICY PROCESS AND APPROACHES
Agenda
Setting
Option
Formulation
Decision
Evaluation
Implementation

45. ENVIRONMENTAL POLICY PROCESS & APPROACHES
Forms of Government Actions
MARKETS INFORMATION
RIGHTSRULES
LAWS SERVICES
DO
NOTHING

46. ENVIRONMENTAL POLICY PROCESS & APPROACHES
PROCESS FLOW AS A “GAME”
1.What are the structure & rules of
the game and how do they affect the
outcome?
2.Who are the players?
3.What tools do the players have to
influence the game?
4.Where in the game are players
most influential?

47. STRUCTURE OF THE ENVIRONMENTAL POLICY “GAME” IN
THE U.S.
•Fragmentation of Authority
•Federalism
–National Government
–State Government
–Local Government
•Separation of Powers
–Executive
–Legislative
–Judiciary
•Checks & Balances

48. STRUCTURE OF THE ENVIRONMENTAL POLICY “GAME” IN
THE U.S.
•Political Power is Widely Dispersed
& Fluid
–Pluralism
–Elections
–Rights
•Diverse Interests & Values Survive
Political Loss

49. IMPLICATIONS
•Many “access points” to government
•Policy requires broad political
consensus to advance
•Easier to stall policy than it is to make it
•Policy change tends to be incremental
–Crises
–Issues of Low political salience
•Environmental Policy = ∑many policies
–Duplication & Overlap
–Inconsistency & Conflict

50. PLAYERS IN THE ENVIRONMENTAL POLICY GAME
– CHIEF EXECUTIVES
• Chief Executive
–White House Staff
–CEQ
–OM
• Executive Agency Chiefs
–Political appointees
•Dept. Secretaries
•Deputy & Assistant
Secretaries

51. PLAYERS IN THE ENVIRONMENTAL POLICY GAME
•Tools
–Executive Authority
•Decision-making
•reorganization
•Executive orders
•Hire & fire
–Agenda setting

52. PLAYERS IN THE ENVIRONMENTAL POLICY GAME
- BUREAUCRACY
•Many Agencies
–EPA –DA
–DOI –DC
–USACE
•Agency Personnel
–Political Appointees
–Professional staff

53. PLAYERS IN THE ENVIRONMENTAL POLICY GAME
- BUREAUCRACY
•Sub-agencies
–Dept. of Interior
•F&WS
•NPS
•BLM
–Dept. of Agriculture
•Forest Service
•NRCS (SCS)

54. PLAYERS IN THE ENVIRONMENTAL POLICY GAME
- BUREAUCRACY
•Tools
–Information
–Professional/analytic staff
–Implementation power
(client contact)

55. PLAYERS IN THE ENVIRONMENTAL POLICY GAME
- LEGISLATIVE BRANCH
•House & Senate
–Leadership
•Majority party
•Minority party
–Membership
–Committees & staffs

56. PLAYERS IN THE ENVIRONMENTAL POLICY GAME
- LEGISLATIVE BRANCH
•Tools
–Law-making power
–Budgetary power
–Investigative power
–Standing committees & staff
–Approval of senior agency
appointments

57. PLAYERS IN THE ENVIRONMENTAL POLICY GAME
- JUDICIAL BRANCH
•Courts
–Federal courts
–Appellate courts
–Supreme Court
•Tools
–Constitutional authority
–Insulation from electoral politics
–Case selection & legal
methodology

58. PLAYERS IN THE ENVIRONMENTAL POLICY GAME
- STATES
•Duplicate Federal “Cast of
Characters”
•States Rights to Define Policy
•Federal Policy Implementation
Roles

59. PLAYERS IN THE ENVIRONMENTAL POLICY GAME
- INTEREST GROUPS & NGOS
•Non-Governmental Organizations
–Industry & Trade associations
•Nat’l. Assoc. of Home Builders
•American Mining Association
• Teamsters
–Environmental Groups
–Property Rights & Wise Use Groups
•Media
•Public

60. PLAYERS IN THE ENVIRONMENTAL POLICY GAME
- INTEREST GROUPS & NGOS
•Tools
–Membership & Organization
–Professional & analytic staff
–Information
–“Votes”
–Money

61. IMPLICATIONS
•Many diverse interests and values in
policy process
–Many are not directly concerned
with environmental problem
solving
•Decision-making institutions &
organizations are not monolithic

62. IMPLICATIONS
•Information & analysis are widely
dispersed
•Decision-making influence (power)
& tools vary among players

63. THE LEGISLATIVE MAZE I
HOUSE
Sub.com
Committee Committee
Sub.com Sub.com

64. THE LEGISLATIVE MAZE I
SENATE
Sub.com
Committee Committee
Sub.com Sub.com

65. THE LEGISLATIVE MAZE II
President
Committee Committee
Bi-
Cameral

66. SUBCOMMITTEE SETTING
Majority Staff
Report
Witness
Testimony
Member
Interests
Interest
Groups
Outside
Experts
Agencies
Events
Public
Opinion
Partisan
Politics
Minority Staff
Report
Subcommittee
Hearings
Report to Committee

67. RULE-MAKING IN THE BUREAUCRACY
•Enabling Law & Statutory Authority
•Administrative Procedures Law
•Science & Technology Data
•Organizational Mission/Health

68. RULE-MAKING IN THE BUREAUCRACY
Witness
Testimony
Enabling
Law
Agency
Studies
Interest
Groups
Outside
Experts
Agency
Interests
Events
Court
Rulings
Other
Agencies
Regulatory
Hearing
Subcommittee
Hearings
Publication of Rules
Public
Comment

69. COURTS
•Legality
–Does the law authorize this
action?
•Constitutionality
–Does the Constitution allow this
action?
•Rationality
–Does this action make sense?
•“Hard look” at administrative

70. JUDICIAL REVIEW
•No Authority to Initiate Action
–Must wait for cases
•Standing
–Parties bringing suit must suffer
direct harm

71. JUDICIAL REVIEW
•Judicial Philosophy
–Judicial activism
•Making policy by broad
interpretations of what the law
intended.
–Strict Constructionism
•Ruling on merit of the specific
case as read in the context of the
precise wording of the law.

72. ENVIRONMENTAL POLICY PROCESS & APPROACHES
The most critical consideration in
coming up with good Environmental
Policy, besides of having passed
through rigorous processes, is the
appreciation or acceptance of
political leaders. Although, they must
come up in the identification of
stakeholders.

73. ENVIRONMENTAL POLICY PROCESS & APPROACHES
The norm is,
“LOBBYING”

74. REFLECTION
If I am the Chief Executive, especially
in a local government unit, perhaps I
should consider Environmental
Protection as the top priority
program.

75. REFLECTION
As there are surmounting concerns
in the environment that are
impacting so much on the needs of
the people;
- Food Productions
- Water supply
- increasing temperature
- Energy

76. THANK YOU!!!
Enroll now BS.
Enviromental
Management
St. Paul University
Dumaguete