Environmental Problems, Their Causes, and Sustainability 1

CharacteristicProduction emphasisNatural resourcesResource productivityResource throughputResource typeemphasizedResource fatePollution controlGuiding principlesUnsustainableEconomic GrowthQuantityNot very importantInefficient(high waste)HighNonrenewableMatter discardedCleanup(output reduction)Risk–benefitanalysisEnvironmentallySustainableEconomicDevelopmentQualityVery importantEfficient(low waste)LowRenewableMatter recycled,reused, orcompostedPrevention(input reduction)Prevention andprecautionFigure 26-5 Comparison of unsustainable economic growth and environmentallysustainable economic development according to ecological economists andmany environmental economists.processing, and using increasing amounts of variousnonrenewable mineral and energy resources can limittheir availability and that in some cases substitutesmay not be available.Highcurve crosses the supply curve is the point atwhich it no longer pays to remove the coal. Theoptimum level of coal mining is at or belowthat equilibrium point.You might think that pollution control isan all-or-nothing proposition—that the bestsolution is to clean up every last bit of anypollutant. In fact, there are optimum levelsfor various kinds of pollution, because themarginal cost of pollution control also goesup for each unit of a pollutant removed fromthe environment. Figure 26-7 shows variouspossible optimal levels of pollution control.In this case, clean-up costs are shown on theblue curve. This is the supply curve, becausethe service supplied is removal of pollutants.Note that it slopes up more sharply (costingmore) as we get closer to removing 100% ofthe pollutant in question.The red line in Figure 26-7 represents thedemand for cleanup by users of water or air.With their air or drinking water polluted, consumersare initially up in arms, but as the pollutantis removed, their concern is relievedand demand approaches zero. In other words,the marginal benefits of pollution control decreasewith each unit of pollution removed.At some point, the cost of removing thepollutant gets higher than what people arewilling to pay, as their demand for clean-uplessens. That point is the equilibrium point,or the optimum level for clean-up.How Do Economists Value PollutionControl and Resource Management? SomeAdvocate Using Market Prices While OthersDisagreeEconomists think about optimum levels ofpollution control and resource use, but there isconsiderable disagreement on how to arrive at thoselevels.An important concept in environmental economics isthat of optimum levels for pollution control and resourceuse. In the early days of a new coal mining operation,for example, the cost of removing coal is easy for developersto recover in sales of their product. However, aftermost of the more readily accessible coal has been removed,taking what is left can become too costly. In thiscase, the marginal cost of removal goes up with eachunit of coal taken. Figure 26-6 shows this in terms ofsupply, demand, and equilibrium. Where the demandCostLow0 25 50Coal removed (%)Optimum level ofresource use75 100Figure 26-6 The cost of mining coal (blue line) rises with eachadditional unit removed. Mining a certain amount of coal isprofitable, but at some point the cost of mining exceeds themonetary benefits (red line). That is, the marginal cost of miningincreases while the marginal benefits decrease as more coal isremoved. Where the two curves meet is theoretically the optimumlevel of resource use.588 CHAPTER 26 Economics, Environment, and Sustainability