Unit 5: Environmental Management

 Unit 5: Environmental Management

a) Economics and environmental Quality:( Environmental and Economic indicators, Internal and External costs, Full cost pricing)

 

Ii

Environmental economics is a discipline of economics that studies the economic effects of environmental policies around the world. Its main focus is on the efficient allocation of environmental and natural resources and how alternative environmental policies deal with environmental damage, such as air pollution, water quality, toxic substances, solid waste, and global warming.

·         Environmental economics is an evolving discipline that developed as a result of environmental damage caused by economic activities and the pursuit of sustainable development.

·         It is concerned with the design of environmental policies and their implementation.

·         Environmental economics was premised on the neoclassical approach dealing with a number of issues, such as inefficient natural resource allocation, market failure, negative externalities, and management of public goods.

 

·  External costs vs
Internal costs

 

Internal costs are easy to see and explain. They are costs that a business bases its price on. They include costs like materials, energy, labour, plant, equipment and overheads.

External costs are costs that are NOT included in what the business bases its price on. These include:

• the cost of disposing of the product at the end of its useful life
• the environmental degradation caused by the emissions, pollutants and wastes from production
• the cost of health problems caused by harmful materials and ingredients
• social costs associated with increasing unemployment due to increasing automation

Even though external costs are not included in the price of the product they still have to be paid. It is society as a whole that ends up paying external costs through taxes, accident compensation, medical payments, insurance payments, as well as through losses in environmental quality and natural capital.

Products and services that include external costs (e.g. organic produce, clean technology, natural products, renewables) are usually more expensive than those that don’t. Consumers will tend to buy the cheapest goods so clean, sustainable products are at a price disadvantage.

One way to include external costs is for governments to add a tax directly to those products or activities that have them. The restructuring of taxes, which is often called ‘tax shifting’, would mean that good things are not taxed whilst bad things (like pollution) are. 

e.g

Taxing external costs to society is not new. Cigarettes for example are taxed to cover their external health and social costs. Smokers and cigarette companies rail against these taxes but most people agree that it isn’t fair for society to pay these external costs. External costs should be directed at the users.

As well as paying the external cost the other important benefit of adding a tax to harmful and destructive practices (including cigarettes, alcohol, pollution and greenhouse gases) is that it is a financial disincentive. In theory the harmless, non-destructive option, which is much more sustainable, will become the same price or cheaper

 

Environmental and Economic indicators

An economic indicator is a metric used to assess, measure, and evaluate the overall state of health of the macroeconomy. Economic indicators are often collected by a government agency or private business intelligence organization in the form of a census or survey, which is then analyzed further to generate an economic indicator.

An economic indicator is a statistic about an economic activity. Economic indicators allow analysis of economic performance and predictions of future performance. One application of economic indicators is the study of business cycles. Economic indicators include various indices, earnings reports, and economic summaries: for example, the unemployment rate, quits rate (quit rate in American English), housing starts, consumer price index (a measure for inflation), Inverted yield curve,^[1] consumer leverage ratio, industrial production, bankruptcies, gross domestic product, broadband internet penetration, retail sales, price index, and money supply changes.

 

Proponents of environmental indicators have used various rationale to justify their development

.  We suggest that they can play at least five roles.  First,they can help policy makers and the public to understand better the nature of environmental problems in their country.  Second, they can facilitate analyses of causes of environmental problems and the environmental consequences of policy and institutional changes.  Third, they allow cross-country comparisons of the  impacts of trade and other policy reform.  Fourth, environmental indicators can be used to help identify transnational environmental problems so that international efforts can be carefully targeted.  Finally,  environmental indicators can guide further data collection efforts, especially when based on a sound conceptual framework

c) Environmental Impact Assessment ( Significance, EIA process)

Environmental Impact Assessment (EIA) may be defined as a formal process used to predict the environmental consequences of any development project. EIA thus ensures that the potential problems are foreseen and addressed at an early stage in the projects planning and design.

WHY DO WE NEED EIA?

EIA is essentially a planning tool for preventing environmental problems due to an action.  

It seeks to avoid costly mistake in project implementation,  either because of environmental damages that are likely to arise during project implementation or  because of modifications that are required subsequently in order to make the action environmentally acceptable to government and community. 

EIAs have two roles - legal and educational. 

 The legal one is quite straight forward: to ensure that development projects has a minimal impact on the environment in its entire 'lifecycle”. 

 The educational one is equally important and probably a forerunner to the legal role - to educate everyone one involved - professionals and users included 

Purposes of EIA

 modify and improve design 

  ensure efficient resource use

  enhance social aspects 

  identify measures for monitoring & managing impacts

  informed decision-making  provide justification for a proposal  

Who is involved in the EIA process? 

. EIA is generally the responsibility of the project proponent

  It is often prepared with the help of external consultants or institutions, i.e., the EIA practitioners. 

  The EIA study should be carried out by a multidisciplinary team comprising civil engineers, water supply and sanitation engineers, planners, chemists, life scientists, and socioeconomists. 

  The agency responsible for receiving the impact assessment report and taking any subsequent action.  will usually indicate how the study is to be carried out and how the results should be used in the decision-making process.   

 Apart from all these agencies, the general public is also involved in the process of EIA. 

  Ideally public opinion should be solicited through public hearings arranged for the purpose of discussing the impacts of the project.

  Public participation as a component of EIA is practiced as a requirement in only a few countries, including INDIA

An environmental audit is a tool which companies use to evaluate and quantify their environmental performance in order to identify compliance or management system implementation gaps. The scale and intensity of the audit is dictated by which type of environmental audit a company conducts

Environmental audit is defined as basic management tool which comprises a systematic, documented, periodic and objective evaluation of how well organization, management systems and equipments are performing.