Home ADVANCED LEVEL TOPIC 11: ENVIRONMENTAL ECONOMICS ~ ECONOMICS FORM 5

TOPIC 11: ENVIRONMENTAL ECONOMICS ~ ECONOMICS FORM 5

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TOPIC 11: ENVIRONMENTAL ECONOMICS ~ ECONOMICS FORM 5

ENVIRONMENTAL ECONOMICS

DEFINITION;
-Environmental economics refers to as a form of progressive economics trying to account for various forms of market failure to better market in the future and lead to more widespread forms among people.
-Environmental economics looks a lot of environmental policies in a country and how they impact the local and global economics either positively or negatively.
-One major corner stone of environmental economics is examining on ‘’market failure’’
MARKET FAILURE
This refers to the situation in which a market fails to generate the greatest social welfare mostly due to imperfect knowledge among the members of market.
Market failure exists due to the man made between what private person does given market price and what a society might want him/her to do protect environment. This implies wastefulness or inefficiency. E.g. externalizes and failure to produce welfare goods.
ENVIRONMENTAL POLLUTION
POLLUTION; is the contamination or additional of destructive/ Unrequited material on the environment which may make environment not useful or less useful for human use.
Or
-Is the addition of pollutant to the environment which may destruct the environment.
POLLUTION
These are materials which are in liquid, solid, or gaseous form that pollute the environment by lowering or reducing its usefulness value or quality.
Generally pollutant can be grouped into four types which are solid, liquid, gaseous and radioactive materials. However all these are grouped into persistent and non persistent pollutant.
TYPES OF POLLUTANT
At national level pollution categorized into four main types these are;
  1. Land pollution
  2. Water pollution
  3. Air pollution
  4. Noise pollution
LAND POLLUTION
This refers to the disposal or introduction of unwanted substance on the soil which may term land less usefulness for supporting living organism both vegetation and animals. Soil can be polluted by liquid,soil,gaseous or radioactive materials.
CAUSES OF LAND POLLUTION
  1. Introduction or disposal of industrial wastes from industrial activities.
  2. Disposal of domestic wastes or the land this waste includes garbage and other waste products.
  3. Excessive use of chemical sprays and industrial fertilizers in agricultural activities.
  4. Falling of acidic rain on the land which adds acidic gases on the soil.
  5. Natural calamities such as soil erosion, earth quakes, mass wasting and weathering.
EFFECTS OF LAND POLLUTION
  1. Land pollution may cause death of soil living organisms which may cause poor soil, decomposition and low fertility
  2. Land pollution may cause water pollution if there is surface run off in polluted soil to the water bodies.
  3. Excessive land pollution may cause eruption of diseases such as cholera which may kill many people.
  4. Sometimes it may cause migration of people because people may abandon the polluted soil.
  5. Emission of bad smell which reduce comfort to the people.
WATER POLLUTION
This is the disposal or discharge or contamination of water by undesirable solid, liquid, gaseous or radioactive materials into water bodies like sea, ocean, rivers, swamp, ponds and springs.
CAUSES OF WATER POLLUTION
  1. Discharge of industrial wastes into water bodies due to industrial activities, this mostly occurs in urban area like Dar-es-salaam,due to the presence of many industries affected much by this factor
  2. Disposal of domestic waste in water bodies.This occurs in water bodies surrounded by human settlement,so people of that area may pollute water bodies.
  3. Oil spillage in water bodies like oceans, due to leakage of oil ship (tanker) and leakage of oil tank and pipe near or in the water bodies.
  4. Illegal and excessive fishing activities in water bodies,for example fishing method like use of poisons or explosive in getting fish.
  5. Disposal of radioactive and other chemical in water bodies due to testing of atomic bombs.
EFFECTS OF WATER POLLUTION
  1. It may kill aquatic living organisms like fish and vegetation.
  2. It may cause occurrence of diseases and death of many people in an area, due to the use of contaminated water e.g. cholera
  3. It may cause irritation of human skin due to skin cancer by washing their bodies in polluted water and reduce comfort ability to the people.
  4. It may cause decline of tourism activities e.g beach tourism
AIR POLLUTION
This is the pollution caused by introduction or emission of unwanted substance in atmosphere which occurs mostly in urban areas.
CAUSES OF AIR POLLUTION
  1. Emission of gases in atmosphere due to excessive use of fossil fuel such as charcoal, firewood which lead to emission of oxidized carbon dioxide, Nitrogen oxide in atmosphere.
  2. Emission of dust and soot from mining activities which may pollute atmosphere
  3. Emission of smoke and gases from volcanic eruption this means volcanically may emit gases and other waste in atmosphere which may cause air pollution.
  4. Construction activities which may cause emission of dust in the air.
  5. Emission of fumes and gases like Nitrogen gases from a moving vehicle such as aeroplanes, cars, train due to burning of fuel
EFFECTS OF AIR POLLUTION
  1. Air pollution may cause destruction of ozone layer due to the emission of gases such as chlorofluorocarbon(CFFC’S) and Nitrogen oxide which may cause depletion of ozone layer.
  2. Air pollution may cause global warming in an area. This is an increase in average temperature on the earth’s surface due to ozone layer depletion and green house effects which may cause sun rays to penetrate direct on the earth’s surface but protected be reflected back.
  3. It may cause occurrence of acidic rain. This occurs when the emitted gases in atmosphere(acidic gas) mix with water droplets which may cause acidic rainfall.
  4. It may cause death of both plants and animals due to excessive rise in temperature(global warming) and acidic rainfall which may cause death of living organisms.
NOISE POLLUTION
Noise is any disorganized sound or unpleasant sound to people’s ear.
Noise pollution is the emission of unpleasant sound or undesirable noise in the atmosphere which may harm people by causing trouble in people’s ears.
CAUSES OF NOISE POLLUTION
  1. Excessive or unpleasant noise from industrial activities such as iron and steel industries.
  2. Noise emission from quarrying and mining activities,this noise emitted from machine and explosive.
  3. Noise emission from music halls. This occurs for those halls which has no sound proof mechanism.
  4. Excessive noise from moving vehicles. These vehicles include motorcycles, cars and an aeroplane.
  5. Noise emitted from natural disasters like thunderstorms.
  6. Construction activities which cause eruption of unpleasant sound like road construction.
EFFECTS OF NOISE POLLUTION
Noise pollution may cause the following effects in a country;-
  1. It may affect human health e.g. destruction of eardrums to the people
  2. It may affect people’s comfort,for example people may fail to sleep at night or day due to unpleasant sound.
  3. It may disturb wild animals’ habitats which may cause the migration of animals and birds from one place to another.
  4. Excessive noise may cause skin irritation and headache to the people.
METHODS OF DEALING WITH POLLUTION AT NATIONAL LEVEL
There are several methods used by local or national government in controlling pollution and effects of pollution. All these approach grouped into;
  • Pollution taxes
  • Quartos on pollution ‘’Tradable emission allowance’’
  • Direct control
  • Other measures
  1. Pollution taxes on tariffs
-These are special taxes imposed to those who pollute environment this tax imposed on production or consumption which cause pollution or products if considered as a source of pollution in environment.
-A pollution tax which is considered as an advantage is that it reduces pollution to the socially ‘’optimal’’ level would be set at a such level that pollution occurs at the level where it benefits to the society (greater production) exceeds the cost.
b.)Quartos on pollution ”trad able emission allowance’’
-It is advocated that pollution reductions should be achieved by way of trad able emissions permits which freely traded may ensure reduction in pollution are achieved at least cost in theory trad able quotas are allowed, then firms would reduce cost and its own pollution load only if doing so would reduce cost, less than paying someone else to make same reduction therefore firms may change technique or inputs which may be able to reduce cost.
c.)Direct control
– This is the total ban policy where by government use direct method of controlling environmental pollution by establishing strict laws and policy which restricts environmental pollution.
d.)Provision of environmental education to the people on the importance/significance of environment and ways of environment at conservation.
e.)Government should establish laws and policies which completely ban and control pollution and source of pollution.In these methods government may restrict raw materials which cause pollution e.g the use of firewood and use of soft plastic bags.
f.)Introduction and the use of methods of conserving environment like the use of recycling of wastes and Anti pollution equipments i.e production process such as sound proof, coal burning power station, desulphunsation plants.
g.)Government and NGO’s should advice producers to produce and market environmental friendly products and making assessment on impact of product/production on environment so as to make right decision on either to allow or
restrict investment
h.)The use of improved state of technology in production. This means producers should use efficient technology and technique which minimize pollution on the environment.
i.)Population control policy, government and NGO’s should promote on reduction of population because rapid population growth is the main cause of pollution especially in urban areas like Dar-es-salaam.
j.)Efficient town planning with good sewage system and dumping areas and provision of incentives schemes i.e government should provide incentives and awards to those who make proper environmental conservation so as to
encourage others.
k.)Better defined property rights
-According to coarse theorem state that assigning property right will lead to an optimal solution, regardless of who receive them if transaction costs are retrieval and the nudes negotiating are limited because property rights identify who has a right to clean the environment or factory has a right to pollute, then either factory could pay factory not to pollute environment.
SUSTAINABLE DEVELOPMENT
Sustainable development refers to pattern of resources use that aimed to meet human needs while preserving the environment so that these needs be met not only in the present but also for generations to come.
Or
Sustainable development also defined as ‘’development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
The concept of sustainable development can be conceptional broken into three parts/types;
  1. Environmental sustainability
  2. Economic sustainability
  3. Sociology-political sustainability
Environmental sustainability
-This is the situation/process of making sure current process of interaction with environment (economic activities) acting environment re perused with the idea of keeping or protecting environment as pristine as naturally possible.
Economic sustainability
-This emphasizes people to change from old sector centered ways of doing business to new approach that involves gross sectoral coordination and integration of environmental and social concerned all development process in short it deals with balanced economic growth and performance
Social sustainability
-This emphasizes integration and interaction between economic activities and environment so as to bring both environmental and economic sustainability in association with creating social equity. Therefore social sustainability achieved by creating equitable economic growth with arable environmental situation.
Generally sustainable development deal with the methods of economic growth and development that does not adversely affects future growth potential.
MEASUREMENTS /INDICATORS OF SUSTAINABLE DEVELOPMENT
Generally sustainable development measured by looking into four main indicators either in local, regional, national even internationally. These indicators are;

i.) Economic performance

-Economic performance include things like increase in GNP, balanced trade and balanced of payment, and other economic aspects, therefore a country with sustainable development experience high growth of GNP and good position of balance of trade and payment.
ii.) Social equity/ Justice
-This relate with things like level of poverty, literacy rate, life expectancy, availability of social services and income equity in an economy. Country with sustainable development has lowest level of poverty, high literacy rate and life expectancy, there is improved social services and equal income distribution and development.
iii.) Environmental protection
-This indicator include things like environmental degradation, water pollution, forest reserve and other environmental issues. Country which experience sustainable development has high level of environmental protection and minimum environmental problems
iv.) Institutional capacity
-This includes International cooperation and integration, research and development, sustainable development, sustainable development of institution like financial institutions.
SUSTAINABLE DEVELOPMENT AND DEVELOPING.(AFRICAN.) COUNTRIES LIKE TANZANIA (APPLICATIONS OF SUSTAINABLE DEVELOPMENT)
Sustainable development integrate a multidisciplinary capacities and interprets socially, economically and environmentally, it emphasize that healthy environment is essential to support a growing economy therefore economic activities and decisions on use of resources should be done to create continued economic development without affecting the environment negatively.
Research shows that economic growth is the best that may help developing countries to conserve their National resources and environment in general since economic growth is associated with technological advancement that may create a catalyst for large scale production improvement of social services at minimum environment problem i.e low pollution.
The following are applications of sustainable development in Tanzania;
  1. Sustainable development applied in fishing and water bodies management. This concept used in creating fishing laws and regulations that prohibit fishing of immature fishes and the use of bad fishing methods such as use of explosives, small nets, gunpowder and other methods that has impact to resources in water bodies(fish.) that will limit availability of resources for the coming generation.
  2. It is applied in formation of economic growth and development strategies. When government formulates growth strategies it considers environmental protection and long run benefits as sustainable development needs. Under this government formulate regulatory standards like environmental act i.e laws of protecting environment and NEMC as a strategy of reducing pollution, social cost and other environmental effects.
  3. Sustainable development applied in tourism and wild life management- Government use the concept of sustainable development in establishing laws and regulations in tourism activities and wild life management such as Afforestation and restrict deforestation and massive tourism that may cause environmental problems avoiding illegal hunting, so as to protect plants and animals and possibility of experiencing drought, which may bring negative impact for the future generation.
  4. It is applied in agricultural activities- The concept of sustainable development used in conducting agricultural activities which protect soil fertility and other natural resources for future generation in implementing this, all bad farming method like cultivation along slope, are avoided and crop rotation, application of fertilizers, terracing are applied also avoiding overgrazing and nomadic pastoralism in order to protect soil and environment for future generation (use).
  5. Although sustainable development has application in developing economies like Tanzania.Research shows that sustainable development is an indicator of developed countries and not suitable for developing countries like Tanzania economists believe that developed countries are polluted enough/ significantly during their development, so it is suitable for them to emphasize and implement sustainable development because they now maintain high level of development rather than struggling for growth and development
  6. Sustainable development is said to set limits on growth and development strategies in third world countries like Tanzania because sustainable development emphasize on pollution reduction and environmental conservation for future generation. This encourages developing countries like Tanzania to reduce pollution which sometimes reduce growth because environmental protection means low production which is against growth and development strategies which needs developing countries to produce and invest more in order to stimulate economic growth that lead to environmental pollution and unsustainable development.
  7. Still other researchers view environmental and social challenges as opportunities for development action. This idea is true because it may create individual enterprise and global opportunities or needs for innovation and entrepreneurial solution.
  8. Some economists consider that, implementation of sustainable development would mean reversion to per-modern lifestyles and according to Mary Jo Anderson ‘’The real purpose of sustainable development is to contain and limit economic development in developing countries (like Tanzania) and in so doing control population.
EXTERNALIZES
In economics point of view externalizes are the costs or benefits not transmitted through the prices incurred by a party who did not agree to the action.
Or
Externalize are those advantages or disadvantages people may get without involving in the activities which result in that cost or benefits.
Externalize are alternatively called spillover. In this case in a competitive market price do not reflect the full cost or benefits of producing or consuming products or services, producers and consumers may either not bear all of the costs or benefits of the economic activities and too much or too little of the goods will be produced or consumed in terms of overall cost or benefits to the society
For example; manufacturing that cause pollution imposes cost on the whole society while fire proofing a home improves the fire safety of neighbors considered as externalize.
TYPES OF EXTERNALIZES
There are two main types of externalize, these are;
  1. Positive external
  2. Negative external
POSITIVE EXTERNALITY
-These are benefits or advantages people enjoy without incurring any cost (payment). In this case positive externalize increase utility of the third party at no cost to them.
In positive externalize social welfare increase but producers has no way of monitoring the benefits. Positive externalize are also called external benefits or spill over benefits
Examples of positive externalize are education, health initiatives, law enforcement, environmental conservation etc.
Illustrative example of positive externalize
  1. When a person plant trees which results into conducive weather condition which make people to enjoy such condition freely without any cost.
  2. Factory located in a certain area may bring benefits to the people of that area through enjoying improved infrastructure or getting employment.
NEGATIVE EXTERNALIZES
These are costs or disadvantages incurred by a party who did not agree to the action causing the cost. Negative externalize are considered as disadvantages people incur without their will mostly caused by a production process sometime even consumption.
Negative external is also called spill over cost or public bad.
Illustrative examples of negative external
  1. When an industry cause pollution in production process,this is considered as negative external because the pollution impose cost/disadvantage to whole society e.g disease
  2. Another example of negative external is when there is discharge of polluted or unclean water in water bodies from industries which results into the loss of living organism while there is no compensation claimed for the loss occurred.
IMPLICATIONS OF EXTERNALIZES
Standard Economic theory state that’’ Any voluntary exchange is beneficial to both parties involved in trade if it does not benefit both,however an exchange can cause an additional effects on third parties from the perspective of those affected these effects may either be positive (positive external) or negative(negative external) Welfare economics has shown that those who suffer from externalize implies no voluntary exchange in an economy.

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