Air Pollution and Human Health
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chapter_3.docxCHAPTER 3
Botkin, D. B., & Keller, E. A. (2014). Environmental science: Earth as a living planet (9th ed.). Hoboken, NJ: John Wiley & Sons, Inc.
3.1 Overview of Environmental Economics
Modern environmental law began in the 1960s with the start of the social and political movement we know as environmentalism. Its foundation is the “three E’s”: ecol- ogy, engineering, and economics.1 Economics plays an important role in environmental decision making. It is a factor in finding solutions that work, are efficient, and are fair. This is why we are devoting one of our early overview chapters to environmental economics.
Environmental economics is not simply about money; it is about how to persuade people, organizations, and society at large to act in a way that benefits the en- vironment, keeping it as free as possible of pollution and other damage, keeping our resources sustainable, and ac- complishing these goals within a democratic framework. Put most simply, environmental economics focuses on two broad areas: controlling pollution and environmental damage in general, and sustaining renewable resources— forests, fisheries, recreational lands, and so forth. Environ- mental economists also explore the reasons why people don’t act in their own best interests when it comes to the environment. Are there rational explanations for what seem to be irrational choices? If so, and if we can under- stand them, perhaps we can do something about them. What we do, what we can do, and how we do it are known collectively as policy instruments.
Environmental decision making often, perhaps even usually, involves analysis of tangible and intangible fac- tors. In the language of economics, a tangible factor is one you can touch, buy, and sell. A house lost in a mud- slide due to altering the slope of the land is an example of a tangible factor. For economists, an intangible factor is one you can’t touch directly, but you value it, as with the beauty of the slope before the mudslide. Of the two, the intangibles are obviously more difficult to deal with because they are harder to measure and to value economi- cally. Nonetheless, evaluation of intangibles is becoming more important. As you will see in later chapters, huge amounts of money and resources are involved in econom- ic decisions about both tangible and intangible aspects of the environment: There are the costs of pollution and the loss of renewable resources, and there are the costs of do- ing something about these problems.
In addition, environmental economics deals with the question: Who should pay for improving or protecting the environment? Those who produce the problem? Those who suffer from it? The government, through subsidies and direct financing of programs? Should the free market determine what aspect of the environment is to be valued, or should the voters in a democracy decide? Should deci- sions be left to those who know the most about science, economics, and other fields that influence public policy?
These are difficult questions to answer, and it is un- likely that the answer will be universal—that one ap- proach will work for every environmental problem.
Put another way, in every environmental matter, there is a desire on the one hand to maintain individual freedom of choice and on the other to achieve a specific social goal. In ocean fishing, for example, we want to allow every in- dividual to choose whether or not to fish, but we want to prevent everyone from fishing at the same time and bring- ing fish species to extinction. This interplay between private good and public good is at the heart of environmental issues.
3.2 public-Service Functions of Nature
A complicating factor in maintaining clean air, soils, and water, and sustaining our renewable resources is that eco- systems do some of this without our help. Forests absorb particulates, salt marshes convert toxic compounds to nontoxic forms, wetlands and organic soils treat sewage. These are called the public-service functions of nature. Economists refer to the ecological systems that provide these benefits as natural capital.
The atmosphere performs a public service by acting as a large disposal site for toxic gases. For example, car- bon monoxide is eventually converted to nontoxic carbon dioxide either by inorganic chemical reactions or by soil bacteria. Bacteria also clean water in the soil by decom- posing toxic chemicals, and bacteria fix nitrogen in the oceans, lakes, rivers, and soils. Since the Industrial Revo- lution, nitrogen fertilizers have been made artificially. But if we replaced natural bacterial production everywhere by producing nitrogen fertilizers artificially and transporting them ourselves, the cost would be immense—but, again, we rarely think about this activity of bacteria.
Among the most important public-service providers are the pollinators, which include birds, bats, ants, bees, wasps, beetles, butterflies, moths, flies, mosquitoes, and midges (Figure 3.2.) It is estimated that pollinating ani- mals pollinate about $15 billion worth of crops grown on 2 million acres in the United States,2, 3 and about one bite in three of the food you eat depends on pollinators. Their total economic impact can reach $40 billion a year.4 The cost of pollinating these crops by hand would be exorbi- tant, so a pollutant that eliminated bees would have large indirect economic consequences. We rarely think of this benefit of bees, but it has received wide attention in recent years because of what is called Colony Collapse Disorder (CCD)—a situation where many of a hive’s worker bees disappear, the causes of which continue to be controversial. CCD affects agricultural practices, including the bottom line of many companies that provide bees to pollinate crops. As a result, food prices go up.5
Public-service functions of living things are estimated to provide between $3 trillion and $33 trillion in benefits to human beings and other forms of life per year.6 How- ever, current estimates are only rough approximations be- cause the value is difficult to measure.
3.3 The Environment as a Commons
Often people use a natural resource without regard for maintaining that resource and its environment in a renew- able state—that is, they don’t concern themselves with that resource’s sustainability. At first glance, this seems puzzling, but economic analysis suggests that the profit motive, by itself, will not always lead a person to act in the best interests of the environment. This chapter’s critical thinking exercise discusses the problem of making one of the world’s major fisheries, Georges Bank, in the Atlantic Ocean, sustainable.
In some situations, what a group of people from one time and one culture value and wish to have sustained another culture considers to be without value or undesirable. For example, many of the early settlers to the northeastern United States found themselves in vast areas of forests. They needed to clear land for farming, and, for them, forests were simply in the way—something to be gotten rid of. Large ar- eas of forests were cleared, sometimes with fire, sometimes by cutting or just girdling the trees. (Girdling means cut- ting all the way through the bark of a tree around the entire trunk. This prevents water and minerals from going up to the leaves and sugars and other products of photosynthesis from descending to feed the lower stem and roots.) To these settlers, there were plenty of forests for firewood and con- struction. So much in fact that it was commonly believed that America could never run out of forests—by the time one area of forest was cleared, another area would regrow. This, of course, is a very different valuation of forests than the one that predominates in 21st-century America.
A modern example of the difference in valuation is be- tween those who want to drill for oil in or near a national park, because the value and utility of the energy seem more important than the park, while environmentally oriented people value the national park more than an additional source of petroleum. Resolving this conflict in valuation is a major problem in a modern democracy, one in which an understanding of both economics and ecology are essential.
Another reason natural resources are not sustained has to do with what the ecologist Garrett Hardin called the tragedy of the commons.7 When a resource is shared, an individual’s personal share of profit from its exploita- tion is usually greater than his or her share of the resulting loss. A second reason has to do with the low growth rate, and therefore low productivity, of a resource.
A commons is land (or another resource) owned publicly, with public access for private uses. The term com- mons originated from land owned publicly in English and New England towns and set aside so that all the farmers of the town could graze their cattle. Sharing the graz- ing area worked as long as the number of cattle was low enough to prevent overgrazing. It would seem that people of goodwill would understand the limits of a commons. But take a dispassionate view and think about the ben- efits and costs to each farmer as if it were a game. Phrased simply, each farmer tries to maximize personal gain and must periodically consider whether to add more cattle to the herd on the commons. The addition of one cow has both a positive and a negative value. The positive value is the benefit when the farmer sells that cow. The negative value is the additional grazing by the cow. The personal profit from selling a cow is greater than the farmer’s share of the loss caused by the degradation of the commons. Therefore, the short-term successful game plan is always to add another cow.
Since individuals will act to increase use of the com- mon resource, eventually the common grazing land is so crowded with cattle that none can get adequate food and the pasture is destroyed. In the short run, everyone seems to gain, but in the long run, everyone loses. This prin- ciple applies generally: Complete freedom of action in a commons inevitably brings ruin to all. The implication seems clear: Without some management or control, all natural resources treated like a commons will inevitably be destroyed.
How can we deal with the tragedy of the commons? It is only a partially solved problem. Still, in trying to solve this puzzle, economic analysis can be helpful.
There are many examples of commons, both past and present. In the United States, 38% of forests are on publicly owned lands; as such, these forests are commons. Resources in international regions, such as ocean fisheries away from coastlines, and the deep-ocean seabed, where valuable mineral deposits lie, are international commons not controlled by any single nation.
The Arctic sea ice and the Arctic seas are commons (Figure 3.3), as is most of the continent of Antarctica, although there are some national territorial claims, and international negotiations have continued for years about conserving Antarctica and about the possible use of its re- sources. The atmosphere, too, is a commons, nationally and internationally, both in its use and as a place where people dump wastes.
In the 19th century, burning wood in fireplaces was the major source of heating in the United States (and fuel wood is still the major source of heat in many nations). Until the 1980s, a wood fire in a fireplace or woodstove was considered a simple good, providing warmth and beauty. People enjoyed sitting around a fire and watching
Arctic sea ice and polar bears, which live in many areas of the Arctic, are part of a commons.
the flames—an activity with a long history in human so- cieties. But in the 1980s, with increases in populations and vacation homes in states such as Vermont and Colo- rado, home burning of wood began to pollute air local- ly. Especially in valley towns surrounded by mountains, the air became fouled, visibility declined, and there was a potential for ill effects on human health and the en- vironment. Several states, including Vermont, have had programs offering rebates to buyers of newer, lower- polluting woodstoves.8 The local air is a commons, and its overuse required a societal change.
Recreation is a problem of the commons— overcrowding of national parks, wilderness areas, and other nature–recreation areas. An example is Voyageurs National Park in northern Minnesota. The park, within North America’s boreal-forest biome, includes many lakes and islands and is an excellent place for fishing, hiking, canoeing, and viewing wildlife. Before the area became a national park, it was used for motorboating, snowmo- biling, and hunting; a number of people in the region made their living from tourism based on these kinds of recreation. Some environmental groups argue that Voya- geurs National Park is ecologically fragile and needs to be legally designated a U.S. wilderness area to protect it from overuse and from the adverse effects of motor- ized vehicles. Others argue that the nearby million-acre Boundary Waters Canoe Area provides ample wilder- ness, that Voyageurs can withstand a moderate level of hunting and motorized transportation, and that these uses should be allowed. At the heart of this conflict is the problem of the commons, which in this case can be summed up as follows:
• What is the appropriate public use of public lands? • Should all public lands be open to all public uses? • Should some public lands be protected from people?
3.4 Low Growth rate and Therefore Low profit as a Factor in Exploitation
Another reason individuals tend to overexploit natural re- sources held in common is the low growth rate of many biological resources.9 For example, one way to view whales economically is to consider them solely in terms of whale oil. Whale oil, a marketable product, and the whales alive in the ocean, can be thought of as the capital investment of the industry.
From an economic point of view, how can whalers get the best return on their capital? Keeping in mind that whale populations, like other populations, increase only if there are more births than deaths, we will exam- ine two approaches: resource sustainability and maximum profit. If whalers adopt a simple, one-factor resource- sustainability policy, they will harvest only the net bio- logical productivity each year (the number by which the population increased). Barring disease or disaster, this will maintain the total abundance of whales at its cur- rent level and keep the whalers in business indefinitely. If, on the other hand, they choose to simply maximize immediate profit, they will harvest all the whales now, sell the oil, get out of the whaling business, and invest their profits.
Suppose they adopt the first policy. What is the maximum gain they can expect? Whales, like other large, long-lived creatures, reproduce slowly, with each female typically giving birth to a calf every three or four years. Thus, the total net growth of a whale population is likely to be no more than 5% per year and probably more like 3%. This means that if all the oil in the whales in the oceans today represented a value of $100 million, then the most the whalers could expect to take in each year would be no more than 5% of this amount, or $5 million. Until the 2008 economic recession, 5% interest was considered a modest, even poor, rate of return on one’s money. And meanwhile the whalers would have to pay for the upkeep of ships and other equipment, salaries of employees, and interest on loans—all of which would decrease profit.
However, if whalers opted for the second policy and harvested all the whales, they could invest the money from the oil. Although investment income varies, even a conservative return on their investment of $100 million would likely yield millions of dollars annually, and since they would no longer be hunting whales, this would be clear profit, without the costs of paying a crew, maintain- ing ships, buying fuel, marketing the oil, and so on.
Clearly, if one considers only direct profit, it makes sense to adopt the second policy: Harvest all the whales, invest the money, and relax. And this seems to have been the case for those who hunted bowhead whales in the 19th and early 20th centuries (Figures 3.5 and 3.6).10 Whales simply are not a highly profitable long-term in- vestment under the resource-sustainability policy. From a tangible economic perspective, without even getting into the intangible ethical and environmental concerns, it is no wonder that there are fewer and fewer whaling com- panies and that companies left the whaling business when their ships became old and inefficient. Few nations sup- port whaling; those that do have stayed with whaling for cultural reasons. For example, whaling is important to the Eskimo culture, so some harvest of bowheads takes place in Alaska; and whale meat is a traditional Japanese and Norwegian food, so these countries continue to harvest whales for this reason.
Scarcity Affects Economic Value
The relative scarcity of a necessary resource is another factor to consider in resource use, because this affects its value and therefore its price. For example, if a whaler lived on an isolated island where whales were the only food and he had no communication with other people, then his primary interest in whales would be as a way for him to stay alive. He couldn’t choose to sell off all whales to maximize profit, since he would have no one to sell them to. He might harvest at a rate that would maintain the whale population. Or, if he estimated that his own life expectancy was only about ten years, he might decide that he could take a chance on consuming whales beyond their ability to reproduce. Cutting it close to the line, he might try to harvest whales at a rate that would cause them to become extinct at the same time that he would. “You can’t take it with you” would be his attitude.
If ships began to land regularly at this island, he could leave, or he could trade and begin to benefit from some of the future value of whales. If ocean property rights existed, so that he could “own” the whales that lived within a certain distance of his island, then he might consider the economic value of owning this right to the whales. He could sell rights to future whales, or mortgage against them, and thus reap the benefits dur- ing his lifetime from whales that could be caught after his death. Causing the extinction of whales would not be necessary.
From this example, we see that policies that seem ethically good may not be the most profitable for an in- dividual. We must think beyond the immediate, direct economic advantages of harvesting a resource. Economic analysis clarifies how an environmental resource can be and even perhaps should be used—what is perceived as its intrinsic value and therefore its price. And this brings us to the question of externalities.
3.5 Externalities
One gap in our thinking about whales, an environmental economist would say, is that we must be concerned with externalities in whaling. An externality, also called an indirect cost, is often not recognized by producers as part of their costs and benefits, and therefore not normally accounted for in their cost-revenue analyses.9 Put simply, externalities are costs or benefits that don’t show up in the 11 price tag. In the case of whaling, externalities include the loss of revenue to whale-watching tourist boats and the loss of the ecological role that whales play in marine eco- systems. Classically, economists agree that the only way for a consumer to make a rational decision is by comparing the true costs—including externalities—against the benefits the consumer seeks.
Air and water pollution provide good examples of ex- ternalities. For many years large smelters have produced nickel from ore at Sudbury, Ontario. The smelters have had serious environmental effects, including destroying forests and damaging lakes over a surprisingly large area. According to the Ontario Ministry of the Environment and Energy, 7,000 lakes encompassing more than 17,000 km2 have been affected.12 And this activity continues. In 2012 a new $1.8 billion (Canadian) smelter was announced.
Traditionally, the economic costs associated with pro- ducing commercially usable nickel from an ore were only the direct costs—that is, those borne by the producer in obtaining, processing, and distributing a product—passed directly on to the user or purchaser. In this case, direct costs include purchasing the ore, buying energy to run the smelter, building the plant, and paying employees. The externalities, however, include costs associated with degradation of the environment from the plant’s emis- sions. For example, prior to implementation of pollution control, the Sudbury smelter destroyed vegetation over a wide area, which led to increased erosion. Although air emissions from smelters have been substantially reduced and restoration efforts have initiated a slow recovery of the area, pollution remains a problem, and total recovery of the local ecosystem may take a century or more.12 There are costs associated with the value of trees and soil, with restoring vegetation and land to a productive state.
Problem number one: What is the true cost of clean air over Sudbury? Economists say that there is plenty of disagreement about the cost, but that everyone agrees that it is larger than zero. In spite of this, clean air and water are in the large traded and dealt with in today’s world as if their value were zero. (As we will see in Chapter 20, this is no longer the case in all situations for greenhouse gases.) How do we get the value of clean air and water and other environmental benefits to be recognized socially as greater than zero? In some cases, we can determine the dollar value. We can evaluate water resources for power or other uses based on the amount of flow of the rivers and the quantity of water storage in rivers and lakes. We can evaluate forest resources based on the number, types, and sizes of trees and their subsequent yield of lumber. We can evaluate mineral resources by estimating how many metric tons of economically valuable mineral material ex- ist at particular locations. Quantitative evaluation of the tangible natural resources—such as air, water, forests, and minerals—prior to development or management of a par- ticular area is now standard procedure.
Problem number two: Who should bear the burden of these costs? Some suggest that environmental and eco- logical costs should be included in costs of production through taxation or fees. The expense would be borne by the corporation that benefits directly from the sale of the resource (nickel in the case of Sudbury) or would be passed on in higher sales prices to users (purchasers) of nickel. Others suggest that these costs be shared by the entire society and paid for by general taxation, such as a sales tax or an income tax. An open question is whether externalities can be internalized, and how. This depends on particular resources, activities, and other factors. The question is whether it is better to finance pollution con- trol using tax dollars or a “polluter pays” approach.
3.6 Valuing the Beauty of Nature
The beauty of nature—technically termed landscape aesthetics—is an environmental intangible that has prob- ably been important to people as long as our species has existed. We know it has been important since people have written, because the beauty of nature is a continuous theme in literature and art. Once again, as with forests cleaning the air, we face the difficult question: How do we arrive at a price for the beauty of nature? The problem is even more complicated because among the kinds of scen- ery we enjoy are many modified by people. For example, the open farm fields in Vermont improved the view of the mountains and forests in the distance, so when farming declined in the 1960s, the state began to provide tax in- centives for farmers to keep their fields open and thereby help the tourism economy. As another example, about 5 million people visit the Grand Canyon every year, to see the view, hike through it, or take mule rides down into it. Would you consider the scenery of the Grand Canyon an externality? (Figure 3.7).
One of the perplexing problems of aesthetic evaluation is personal preference. One person may appreciate a high mountain meadow far removed from civilization; a secondperson may prefer visiting with others on a patio at a trail- head lodge; a third may most want to visit a city park; and a fourth may seek the austere beauty of a desert. If we are going to consider aesthetic factors in environmental analysis, we must develop a method of aesthetic evalu- ation that allows for individual differences—another yet unsolved topic.
One way the intangible value of landscape beauty is determined is by how much people are willing to pay for it and by how high a price people will pay for land with a beautiful view, compared with the price of land without a view. As apartment dwellers in any big city will tell you, the view makes a big difference in the price of their unit. For example, in mid-2009, The New York Times listed two apartments, both with two bedrooms, for sale in the same section of Manhattan, one without a view for $850,000 and one with a wonderful view of the Hudson River estu- ary for $1,315,000 (Figure 3.8).
Some philosophers suggest that there are specific characteristics of landscape beauty and that we can use these characteristics to help us set the value of intangibles.
Some suggest that the three key elements of landscape beauty are coherence, complexity, and mystery—mystery in the form of something seen in part but not completely, or not completely explained. Other philosophers suggest that the primary aesthetic qualities are unity, vividness, and variety.13 Unity refers to the quality or wholeness of the perceived landscape—not as an assemblage but as a single, harmonious unit. Vividness refers to that quality of a landscape that makes a scene visually striking; it is related to intensity, novelty, and clarity. Variety refers to the amount of different things illustrated. For example, forest trees only will appear to most people less fascinating than trees with an animal in it, or trees around a pond. People differ in what they believe are the key qualities of landscape beauty, but again, almost everyone would agree that the value is greater than zero.
3.7 how Is the Future Valued?
The earlier discussion of whaling—explaining why whal- ers may not find it advantageous to conserve whales— reminds us of the old saying “A bird in the hand is worth two in the bush.” In economic terms, a profit now is worth much more than a profit in the future. This brings up the economic concept important to environmental issues: the future value of something compared with its present value.
Suppose you are dying of thirst in a desert and meet two people. One offers to sell you a glass of water now, and the other offers to sell you a glass of water if you can be at the well tomorrow. How much is each glass worth? If you believe you will die today without water, the glass of water today is worth all your money, and the glass tomor- row is worth nothing. If you believe you can live another day without water, but will die in two days, you might place more value on tomorrow’s glass than on today’s, since it will gain you an extra day—three rather than two.
In practice, things are rarely so simple and distinct. We know we aren’t going to live forever, so we tend to value personal wealth and goods more if they are avail- able now than if they are promised in the future. This evaluation is made more complex, however, because we are accustomed to thinking of the future—to planning a nest egg for retirement or for our children. Indeed, many people today argue that we have a debt to future genera- tions and must leave the environment in at least as good a condition as we found it. These people would argue that the future environment is not to be valued less than the present one (Figure 3.9).
Since the future existence of whales and other endan- gered species has value to those interested in biological conservation, the question arises: Can we place a dollar value on the future existence of anything? The future valuedepends on how far into the future you are talking about. The future times associated with some important global environmental topics, such as stratospheric ozone deple- tion and global warming, extend longer than a century. This is because chlorofluorocarbons (CFCs) have such a long residence time in the atmosphere and because of the time necessary to realize benefits from changing energy policy to offset global climate change.
Another aspect of future versus present value is that spending on the environment can be viewed as diverting resources from alternative forms of productive investment that will be of benefit to future generations. (This assumes that spending on the environment is not itself a produc- tive investment.)
A further issue is that as we get wealthier, the value we place on many environmental assets (such as wilderness areas) increases dramatically. Thus, if society continues to grow in wealth over the next century as it has over the past century, the environment will be worth far more to our great-grandchildren than it was to our great-grandparents, at least in terms of willingness to pay to protect it. The implication—which complicates this topic even more—is that conserving resources and environment for the future is tantamount to taking from the poor today and giving to the possibly rich in the future. To what extent should we ask the average American today to sacrifice now for richer great-great-grandchildren? How can we know the future usefulness of today’s sacrifices? Put another way, what would you have liked your ancestors in 1900 to have sacrificed for our benefit today? Should they have increased research and development on electric transpor- tation? Should they have saved more tall-grass prairie or restricted whaling?
Economists observe that it is an open question whether something promised in the future will have more value in the years to come than it does today. Future economic value is difficult enough to predict be- cause it is affected by how future consumers view con- sumption. But if, in addition, something has greater value in the future than it does today, then that leads to the mathematical conclusion that in the very long run, the future value will become infinite, which of course is impossible. So in terms of the future, the basic issues are (1) that since we are so much richer and better off than our ancestors, their sacrificing for us might have been inappropriate; and (2) even if they had wanted to sacri- fice, how would they have known what sacrifices would be important to us?
As a general rule, one answer to the thorny questions about future value is: Do not throw away or destroy some- thing that cannot be replaced if you are not sure of its fu- ture value. For example, if we do not fully understand the value of the wild relatives of potatoes that grow in Peru but do know that their genetic diversity might be helpful in developing future strains of potatoes, then we ought to preserve those wild strains.
3.8 risk-Benefit Analysis
Death is the fate of all individuals, and almost every activ- ity in life involves some risk of death or injury. How, then, do we place a value on saving a life by reducing the level of a pollutant? This question raises another important area of environmental economics: risk-benefit analysis, in which the riskiness of a present action in terms of its possible outcomes is weighed against the benefit, or value, of the action. Here, too, difficulties arise.
With some activities, the relative risk is clear. It is much more dangerous to stand in the middle of a busy highway than to stand on the sidewalk, and hang gliding has a much higher mortality rate than hiking. The effects of pollutants are often more subtle, so the risks are harder to pinpoint and quantify. Table 3.1 gives the lifetime risk of death associated with a variety of activities and some forms of pollution. In looking at the table, remember that since the ultimate fate of everyone is death, the total life- time risk of death from all causes must be 100%. So if you are going to die of something and you smoke a pack of cigarettes a day, you have 8 chances in 100 that your death will be a result of smoking. At the same time, your risk of death from driving an automobile is 1 in 100. Risk tells you the chance of an event but not its timing. So youmight smoke all you want and die from the automobile accident first.
One of the striking things about Table 3.1 is that death from outdoor environmental pollution is compar- atively low—even compared to the risks of drowning or of dying in a fire. This suggests that the primary reason we value lowering air pollution is not to lengthen our lives but to improve the quality of our lives. Consid- ering people’s great interest in air pollution today, the quality of life must be much more important than is generally recognized. We are willing to spend money on improving that quality rather than just extending our lives. Another striking observation in this table is that natural indoor air pollution is much more deadly than most outdoor air pollution—unless, of course, you live at a toxic-waste facility.
It is commonly believed that future discoveries will help to decrease various risks, perhaps eventually allowing us to approach a zero-risk environment. But complete elimination of risk is generally either tech- nologically impossible or prohibitively expensive. So- cieties differ in their views of what constitutes socially, psychologically, and ethically acceptable levels of risk for any cause of death or injury, but we can make some generalizations about the acceptability of various risks. One factor is the number of people affected. Risks that affect a small population (such as employees at nuclear power plants) are usually more acceptable than those that involve all members of a society (such as risk from radioactive fallout).
In addition, novel risks appear to be less acceptable than long-established or natural risks, and society tends to be willing to pay more to reduce such risks. For ex- ample, in the late part of the 20th century, France spent about $1 million each year to reduce the likelihood of one air-traffic death but only $30,000 for the same re- duction in automobile deaths.14 Some argue that the greater safety of commercial air travel versus automobile travel is in part due to the relatively novel fear of flying compared with the more ordinary fear of death from a road accident. That is, because the risk is newer to us and thus less acceptable, we are willing to spend more per life to reduce the risk from flying than to reduce the risk from driving.
People’s willingness to pay for reducing a risk also var- ies with how essential and desirable the activity associated with the risk is. For example, many people accept much higher risks for athletic or recreational activities than they would for transportation or employment-related activities (see Table 3.1). People volunteer to climb Mount Everest even though many who have attempted it have died, but the same people could be highly averse to risking death in a train wreck or commercial airplane crash. The risks associated with playing a sport or using transportation are assumed to be inherent in the activity. The risks to human health from pollution may be widespread and linked to a large number of deaths. But although risks from pol- lution are often unavoidable and unseen, people want a lesser risk from pollution than from, say, driving a car or playing a sport.
In an ethical sense, it is impossible to put a value on a human life. However, it is possible to determine how much people are willing to pay for a certain amount of risk reduction or a certain probability of increased lon- gevity. For example, a study by the Rand Corporation considered measures that would save the lives of heart- attack victims, including increasing ambulance services and initiating pretreatment screening programs. Accord- ing to the study, which identified the likely cost per life saved and people’s willingness to pay, people favored government spending of about $32,000 per life saved, or $1,600 per year of longevity. Although information is in- complete, it is possible to estimate the cost of extending lives in terms of dollars per person per year for various actions (Table 3.1). For example, on the basis of direct ef- fects on human health, it costs more to increase longevity by reducing air pollution than to directly reduce deaths by adding a coronary-ambulance system. Also, a general trend is that costs to reduce risks of death increase very rapidly as the risk is greatly reduced—generally speaking, costs increase exponentially as the average risk of death is decreased. For example, one study showed that reducing carbon monoxide to 15 parts per million in automobile exhaust would cost in the tens of thousands of dollars to increase average longevity by a few days; reducing it further to 3.4 parts per million would cost in the tens of millions of dollars and increase average longevity by just a few minutes.
Such a comparison is useful as a basis for decision making. Clearly, though, when a society chooses to re- duce air pollution, many factors beyond the direct, measurable health benefits are considered. Pollution not only directly affects our health but also causes ecologi- cal and aesthetic damage, which can indirectly affect hu- man health (see Section 3.4). We might want to choose a slightly higher risk of death in a more pleasant environ- ment rather than increase the chances of living longer in a poor environment—spend money to clean up the air rather than increase ambulance services to reduce deaths from heart attacks.
Comparisons like these may make you uncom- fortable. But like it or not, we cannot avoid making choices of this kind. The issue boils down to whether we should improve the quality of life for the living or extend life expectancy regardless of the quality of life.15
The degree of risk is an important concept in our legal processes. For example, the U.S. Toxic Substances Control act states that no one may manufacture a new chemical substance or process a chemical substance for a new use without obtaining clearance from the EPA. The act establishes procedures for estimating the hazard to the environment and to human health of any new chemical before its use becomes widespread. The EPA examines the data provided and judges the degree of risk associated with all aspects of the production of the new chemical or process, including extraction of raw mate- rials, manufacturing, distribution, processing, use, and disposal. The chemical can be banned or restricted in either manufacturing or use if the evidence suggests that it will pose an unreasonable risk to human health or to the environment. 16
But what is unreasonable? us back to Table 3.1 and makes us realize that decid- ing what is “unreasonable” involves judgments about the quality of life as well as the risk of death. The lev- el of acceptable pollution (and thus risk) is a social- economic-environmental trade-off. Moreover, the level of acceptable risk changes over time in society, depend- ing on changes in scientific knowledge, comparison with risks from other causes, the expense of decreasing the risk, and the social and psychological acceptability of the risk.
When adequate data are available, it is possible to take scientific and technological steps to estimate the level of risk and, from this, to estimate the cost of reduc- ing risk and compare the cost with the benefit. How- ever, what constitutes an acceptable risk is more than a scientific or technical issue. The acceptability of a risk involves ethical and psychological attitudes of individu- als and society. We must therefore ask several questions: What risk from a particular pollutant is acceptable? How much is a given reduction in risk from that pollutant worth to us? How much will each of us, as individuals or collectively as a society, be willing to pay for a given reduction in that risk?
The answers depend not only on facts but also on so- cietal and personal values. What must also be factored into the equation is that the costs of cleaning up pollutants and polluted areas and the costs of restoration programs can be minimized, or even eliminated, if a recognized pollut- ant is controlled initially.
SUMMARY
• Economic analysis can help us understand why envi- ronmental resources have been poorly conserved in the past and how we might more effectively achieve conser- vation in the future.
• Economic analysis applies to three different kinds of en- vironmental issues: the use of desirable resources (fish in the ocean, oil in the ground, forests on the land); the minimization of pollution; and ownership of land, resources, and rights to action.
• Resources may be common property or privately con- trolled. The kind of ownership affects the methods available to achieve an environmental goal. There is a tendency to overexploit a common-property resource and to harvest to extinction nonessential resources whose innate growth rate is low, as suggested in Har- din’s tragedy of the commons.
• Future worth compared with present worth can be an important determinant of the level of exploitation.
• The relation between risk and benefit affects our will- ingness to pay for an environmental good.
• Evaluation of environmental intangibles, such as landscape aesthetics, is becoming more common in environmental analysis. Such evaluation can be used to balance the more traditional economic evaluation and to help separate facts from emotion in complex environmental problems.
• Societal methods to achieve an environmental goal include moral suasion, direct controls, market processes, and gov- ernment investment. Many kinds of controls have been applied to pollution and the use of desirable resources.
• People sometimes are not interested in sustaining an environmental resource from which they make a living. When the goal is simply to maximize profits, it is some- times a rational decision to liquidate an environmental resource and put the money gained into a bank or an- other investment. To avoid such liquidation, we need to understand economic externalities and intangible values.
• How do we value the environment, and when can we attach a monetary value to the benefits and costs of en- vironmental actions? People are intimately involved with nature. While we seek rational methods to put a value on nature, the values we choose often derive from intangible benefits, such as an appreciation of the beauty of nature.
• One of the central questions of environmental econom- ics concerns how to develop equivalent economic valu- ation for tangible and intangible factors. For example, how can we compare the value of timber with the beau- ty people attach to the scenery, with trees intact? How can we compare the value of a dam that provides irriga- tion water and electrical power on the Columbia River with the scenery without the dam and the salmon that could inhabit that river?
