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Environmental policy Essay

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“Environmental policy can’t be based solely on efficiency arguments. Issues of ethics are at least as important.” Discuss

The above statement is true to a certain extent and in the course of this essay a balanced discussion will be presented in the hope that the outcomes will prove this to be true. To begin, the thoughts of some Russian intellectuals will be put forwards on the subject of Utilitarianism and why efficiency is self-destructive in the long run, thus supporting the statement “Environmental policy can’t be based solely on efficiency arguments.” To lead on from this there will be a dialogue as to the problems faced by old command and control (hence forth referred to as CAC) policies such as direct regulation and emissions fees from an efficiency and ethical viewpoint.

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Then, these methods of environmental policy and the ideas of Ronald Coase will be highlighted as an example of ethical influence in possible environmental policy as well as from an efficiency standpoint. Following this will be an outlining of the development of the U.S Tradable permits approach to air pollution control and the ethical influences therein. Taking the ethical issues point raised in the title statement one step further then leads onto the idea of ethical considerations. These have been based around an anthropocentric perspective, thus far and so at this point some views from an eco-centric stance will be considered. To do this, A. Leopold’s ‘The Land Ethic’ will be looked at. The rights of nature will be brought under the umbrella of Ethical issues and discussed from a policy perspective.

What economists mean by “economic efficiency”, is that “in an ideal economic system, goods worth more than they cost to produce get produced, goods worth less than they cost to produce do not.” (D. Friedman. 2004) This holds firm throughout this discussion, along with the idea of efficiency as it is defined as both: “The production of the desired effects or results with minimum waste of time, effort or skill,” (dictionary.com 2004) and as “A measure of effectiveness; specifically, the useful work output divided by the energy input in any system” (dictionary.com 2004). In different aspects of environmental policy, these different definitions of efficiency hold true, though it is clear that they all have the same thing in mind when referring to efficiency. As it Stands, Utilitarianism (the theory of Jeremy Bentham) is an example of efficiency if it were to be applied to policy. Valdimir Odoevsky, “one of the most brilliant and influential representatives of progressive thought [in Russia]” (A. Frolova 1998) of his time, produced a development of the utilitarian theory of J. Bentham, which is illustrated in Alla Frolova’s article ‘Ecological reasoning: Ethical alternatives’.

The utilitarian approach to life as put across by Odoevsky, who states that “utility is an essential driving force of all human actions,” (A. Frolova 1998) it is said to be the driving force for all laws, legislations, activities and morals. It is also suggested that under the notion of utilitarianism, utility should be allowed to take the place of all notions of so called consciousness, so called inborn feeling, all poetical dreams and fantasies. This is a very powerful tool for the representation of efficiency as the sole driver of any policy decisions, even environmental ones, however it is a valid viewpoint where ethics is not taken into consideration. Odoevsky talks of a civilization called Benthamia where under the concept of utility everything runs in a sustainable way. However it is when a new civilization is founded outside of Benthamia that the problems associated with a system void of ethics emerge.

Through the use of political intrigues, deceit, and bribery, as well as organizing quarrels among any rival civilizations that emerge in order to weaken them for the benefit of Benthamia, the Benthamites extend their power. After they have sufficiently weakened a civilization to the point where that civilization is of no further use to Benthamia, the weakened civilization is taken into full possession either by the acquisition of it (at the cheapest efficient price) or by the use of force.

All of these points are seen to be ethically wrong in today’s world where ethics is “A set of principles of right conduct” (A. Frolova 1998) and even when there is a call for utilization of “deserted islands” (A. Frolova 1998) rather than taking over the crushed neighbors of Benthamia, the suggestions are condemned and those who put them forwards are said to be “idle dreamers” (A. Frolova 1998). In Odoevsky’s vision of utilitarianism, Benthamia is torn apart from within due to different self interests associated with differing social situations throughout the growing civilization and as it is put by Odoevsky “One day glorious Benthamia ceased to exist.” (A. Frolova 1998) Odoevsky perceives nature as sensitive and responsive in regard to human morals and this representation of efficiency as the sole driver of decision making shows that ethics are important in every aspect of what we do.

Less extreme examples of efficiency in environmental policy can be seen when looking at cases such as the policy relating to dealing with the inefficiencies associated with the production of steel. Classic approaches to the problem of the externalities of steel production include direct regulation by the government based on telling the steel industry how much they can pollute, as well as emission fees (called Pigouvian taxes). Emission fees are based around the concept of charging steel companies for the damage done by its pollution. The idea of direst regulation is seen to be an inefficient environmental policy whereas emission fees are said to produce an efficient amount of steel as well as an efficient amount of pollution control. In the real world however emission fees policy is not efficient as it is difficult to measure what the damage caused is as well as it being inefficient to spend time looking for the damage caused.

These two policies are based around the idea of efficiency in the steel industry (as an example), though with the insight of R. Coase and the introduction of what many have dubbed “Coase Theorem” social cost can be associated with efficiency to create a better overall way of viewing the problem of externalities through the introduction of property rights. Rather than a system whereby the government defines the measures that need to be taken by industry or where it is left to the polluter to deal with the control methods as with the previously mentioned CAC policies, the idea of Coase’s theorem defines a policy where, “if transaction costs are zero – if, in other words, any agreement that is in the mutual benefit of the parties concerned gets made, then any initial definition of property rights leads to an efficient outcome” (D. Friedman. 2004)

The way that his argument is put across in the article entitled ‘the Swedes get it right’ is based around the cost of abatement of pollution in a steel factory Vs. the cost of changing downwind land use from a resort to a timber forest. The article, written by D. Friedman, puts forwards a very efficient environmental policy whereby the distribution of property rights leads to the internalization of externalities and the most cost effective outcome on a social level. Under the notion of Coase theorem, if it is cheaper for the resort to pay the factory for the cost of pollution abatement rather than change his own land use then this should be done, producing a situation where everybody is happy and the overall conditions are more desirable.

This efficiency based policy is seen to be an advancement of old efficiency based policy though there are still problems associated with it due to the fact that ethics are not considered. One of the largest problems noted by Coase is the idea of the “Public Good Problem” (D. Friedman. 2004). If there are many different people living downwind of a factory and they contribute to the abatement of the pollution, then if one person does not pay because doing so wont make a difference to whether the abatement is paid or not and the abatement does go through, then that person is seen to be a “free rider” (D. Friedman. 2004) getting abatement for free. This is why air pollution in Southern California still persists, as there are millions of people living in the area it is hard to get a situation where everyone pays for the abatement of pollution and it is not possible to re-locate this vast number of people. Coase argues that it is not the externalities that essentially create the problem, but that it is the transaction costs.

A policy approach to the environment that has taken ethical issues into consideration can be seen in the US formation of a tradable permit approach to air pollution control. In the discussion about the US system ethical consideration is defined in either of two contexts: “(1) when the decisions seem to reflect altruistic concerns which transcend self-interest and (2) when the decisions seem to provide special treatment to ‘rights’ which seem to have a special moral justification” (T. Tietenberg. 1998). The emissions trading program is set out as a straight forwards, flexible market based policy where the trading of permits is allowed and efficiency is increased due to the self interests of the participating industries. Through the acquisition of an “emission reduction credit (ERC)” (T. Tietenberg. 1998) this trading can take place and to acquire this ERC a company must lower its emissions to a point below the required level put forwards by the Clean air act. Further efficiency is established by the way that the ERC system allows new firms to come into the market, thus, “by introducing the offset policy EPA [the Environmental protection agency] allowed economic growth to continue whilst insuring progress toward attainment.” (T. Tietenberg. 1998)

The efficiency of the tradable permits system can be seen by analysis, which concluded that “the proposed 0.01 g per leaded gallon (gplg) standard would result in $36 billion ($1983) in benefits (from reduced adverse health effects) at an estimated cost to refining industry of $2.6 billion.” (T. Tietenberg. 1998) As well as being implemented at a national level. Tradable permit systems have also been applied at a regional scale, with air pollution in California being an example of this. RECLAIM (Regional Clean Air Incentives Market) shifts the burden of identifying the appropriate control strategies from the control authorities to the polluter (a point that made direct regulation an inefficient policy based solution, as previously mentioned), and thus the system again proves to be effective due to the fact that now, pollution prevention is given an economic underpinning. Along with these examples off efficiency, the tradable permits system, when compared to emissions charges and emission standards comes out as a far more effective environmental policy.

Ethics can be observed in the Tradable permits approach however, and evidence seen in the paper ‘Ethical influences on the evolution of the US tradable permit approach to air control’ suggests that ethical considerations have played a role in shaping the environmental objective, the choice of instruments, the definition of the tradable commodity, the treatment of shutdown credits, the relationship to traditional regulation and the rules governing permit trades. Thus it is the opinion of the author T. Tietenberg, that ethical influences on the evolution of the US tradable permit approach have been “blended with pragmatic and political concerns to forge a compromise approach” (T. Tietenberg. 1998).

This means that even if ethical issues are considered they do not hold as much weight as efficiency arguments and result in efficiency bias compromises. This can be seen in the case of shut down credits. Among the various ways of creating credits this has been the most controversial point. It is controversial, ethically, because the economic incentive should be targeted at positive actions to reduce pollution through the investment of new control equipment and not through shut-down (which is where a factory is shut down to create a large number of tradable ERC’s). As a result the compromise has produced a situation whereby “all shut-down credits either revert to the control authority or they could be freely transferred to buyers” (T. Tietenberg. 1998). This is a result that doesn’t stop the process of shut-downs (as would be ethically acceptable) but allows the process to continue but with efficient outcomes rather than hoarding of ERC’s.

The ethical issues that have been represented in the case study of Tradable permits in the US have been examples of human-centric ethics focusing on welfare. Some environmentalists, such as A. Leopold focus more on eco-centric ethics and present an argument that through social evolution the land itself should be considered as a member of the community which is taken into account in environmental policy. Leopold, in his article, ‘The Land Ethic’ explains his concept and the problems associated with achieving this goal. It is said to be the case that our educational and economic system is heading away from, rather than towards “an intense consciousness of land” (A. Leopold. 1949) . Leopold shows through the use of specific examples how there are essentially two different types of conversationalists, as Leopold puts it there are the “economic value grabbers” (A. Leopold. 1949) and those that see “land as biota” (A. Leopold. 1949) and worry about the secondary functions of things such as forests. Leopold gives a good illustration of this through the use of sport and meat.

Group A, the economic value grabbers, when presented with the idea, will think efficiently about the subject, being satisfied with the thought that these are things that ‘come from’ nature. Group B however, worries about biotic side issues, for example the cost in predators of producing a game crop. Whereas the ideas associated with Coase’s theorem are related to the health issues and other things that affect humans living downwind of the factory, it is the conclusion of Leopold that, “A land ethic, then, reflects the existence of an ecological conscience, and this in turn reflects a conviction of individual responsibility for the health of the land” (A. Leopold. 1949). This view holds that the land is to be conserved or protected as some sustainability policies are currently leading towards. It is the opinion of Leopold that sustainability policy should be based around ideas of eco-centric ethics rather than being based around the idea that it is a necessity to promote sustainable policies from a human centric point of view.

To conclude it can be said that efficiency is still the main focus of environmental policy making however over time the emergence of ethics in policy has emerged, though ethical issues are not considered to be at least as important as efficiency arguments. It has been said that “without some kind of ethic (a theory of right and responsibility) and some kind of axiology (or value theory) we lack guidance and direction for tackling problems, whether global, environmental, or otherwise” (R. Attfield. 1999). The discussion in this essay has led towards an outcome that supports the statement to a certain degree. It has been shown through the use of the utilitarian argument and some CAC policy methods that efficiency is not the only thing that has to be considered in environmental policy making, and the US case-study supports the notion that a certain amount of ethics has to be involved.

But the nature of the ethics that is applied is essentially Human-centric and to consider ethical issues in environmental policy to be as important as efficiency the idea of a land ethic is an important one. As Leopold says himself the idea of a land ethic is not yet public opinion and in fact is only being kept alive by a minority who has revolted against modern trends of efficiency and human-centric ethics. Ethical issues are not as important as efficiency arguments in environmental policy though if the land ethic were to become a popular opinion through re-education and a shift in social thinking then there is a hope that in time the statement will be completely justified.


A. Leopold (1949) The Land Ethic. In: A Second County Almanac. Oxford University Press. Oxford.

Alla Frolova (1998) Ecological reasoning: Ethical alternatives. Ecological Economics, 24. p.169-182.

Dictionary.com (2004) http://dictionary.reference.com/

David Friedman The Swedes get it right. http://www.daviddfriedman.com/Libertarian/The_Swedes.html (2004)

Robin Attfield (1983) The Ethics of Environmental Concern. Basil Blackwell. Oxford.

Robin Attfield (1998) Existence value and intrinsic value. Ecological Economics, 24. p. 163-168

Robin Attfield (1999) The Ethics of the Global Environment. Edinburgh University Press. Edinburgh.

Robert Elliot (1995) Environmental Ethics. Oxford University Press. Oxford.

Tom Tietenberg (1998) Ethical influences on the evolution of the US tradable permit approach to air pollution control. Ecological Economics, 24. p. 241-257.

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