Environmental Problems, Their Causes, and Sustainability 1

There are problems with the regulatory approach.One is that ecological economists, health scientists,and business leaders often disagree in theirestimates of the harmful costs of pollution. Even scientistsin the same field often have different estimatesof such costs because they lack data and hold differentassumptions.Also, many regulations are geared toward achievingoptimum levels of pollution over a large area suchas a whole state. Some critics raise environmental justicequestions about who benefits and who suffersfrom such regulations. Levels may be optimum for thestate, but not for the people living near or downwindor downriver from a polluting power plant, incinerator,or factory. They are being exposed to much higherlevels of pollution than are the majority of people inthe state. See the Guest Essay on this topic by RobertBullard on the website for this chapter.In addition, assigning monetary values to lostlives, ecosystems, and ecological services is difficultand controversial, and varies widely because of lack ofdata and different assumptions and value judgments.But assigning little or no value to such things meansthey will not be counted at all in determining optimumpollution levels.Figure 26-11 shows the evolution of several phasesof environmental management through regulation.The period between 1970 and 1985 can be viewed asthe resistance-to-change management era, during whichmany companies and government regulators developedan adversarial relationship, and companies resentedand actively resisted environmental regulations(Figure 26-11, left). In addition, many government regulatorsthought they had to prescribe ways for reluctantcompanies to clean up their pollution emissions. Mostcompanies responded by hiring outside environmentalconsultants (who usually favored end-of-pipe pollutioncontrol solutions) and by using lawyers to opposeor find legal loopholes in the regulations. They also lobbiedelected officials to have environmental laws andregulations overthrown, weakened, or changed to allowfor easy compliance.By 1985, most company managers accepted environmentalregulations and continued to rely mostly onpollution control. However, they placed little emphasison trying to find innovative solutions to pollutionand resource waste problems because the regulationswere too strict and the market rewards too low.In the 1990s, a growing number of company managersbegan to realize that environmental improvementis an economic and competitive opportunityinstead of a cost to be resisted. This was the beginningof the innovative management era, which environmentaland business visionaries project will gothrough several phases over the next 40–50 years (Figure26-11).During this time, many consumers began buyinggreen products. Some firms also recognized that theirshareholder value depends in part on having a goodenvironmental record. A growing number of firms beganlooking for innovative and profitable ways to reduceresource use, pollution, and waste (Figure 24-5,p. 537 and Individuals Matter, p. 538). As a result, theenvironment is becoming an important component ofbusiness strategic planning. And many corporationsnow routinely issue environmental and sustainabilityreports to their stockholders.This has been stimulated by the more than $2 trillionthat exists in environmentally and sociallyscreened investment funds and environmental andsustainability concerns of shareholders, insurancecompanies, bond-ranking agencies, and managers ofstate pension funds. In 2002, for example, institutionalinvestors managing over $4.5 trillion in assets wrotethe 500 largest global corporations asking them for fulldisclosure of the emissions of climate-changing gasesand their policies on reducing the risks from climatechange.Resistance-to-Change ManagementPhase 1 Phase 2Phase 3Innovation-Directed ManagementPhase 4Phase 5Phase 6Pollution controland confrontationAcceptance withoutinnovationTotal qualitymanagementLife-cyclemanagementProcessdesignmanagementTotal life qualitymanagementPollution preventionand increasedresourceproductivityProductstewardship andselling servicesinstead ofthingsCleantechnologyEcoindustrialwebs,environmentallysustainableeconomiesand societiesFigure 26-11 Solutions: evolution of environmental management.596 CHAPTER 26 Economics, Environment, and Sustainability