In modern times where globalization wins the headlines of the media, it seems to show us an apparent lack of interest towards the conservation of the environment, but in reality it is not like that, a true economic integration must go hand in hand with the implementation of Regulatory measures that do not restrict economic activity and that contribute to sustainable development, in addition to environmental management where citizens are involved, not as a pressure group, but as participants in making decisions with environmental consequences.
It is precisely in this general scheme where environmental economics arises to seek or at least propose favorable ways that lead to optimization in the exploitation of natural resources, whose reserves are scarce but with different uses for which it is necessary to choose.
Environmental economics encompasses the study of environmental problems using the vision and tools of economics. Currently, there is a misconception of economics, since the first thing you think is that its field of study is entirely on business decisions and how to obtain returns in the capitalist mode of production. But the Economy focuses on the decisions that economic actors make about the use of scarce resources.
To start the study on environmental economics, let's first define it in the economic space:
Economics -> Microeconomics -> Study of the company and the consumer -> Welfare economics -> Environmental economics
Environmental economics: optimization in the exploitation of resources, means of environmental management and instruments to achieve sustainable development.
An economic perspective
From the third division of labor in the primitive community, it is possible to start an evaluation of the impact of man on his environment, from the perspective of an economic development whose purpose is to seek quality of life and satisfy needs. But to achieve these objectives the human being causes the destruction of his environment; but only in modern times has a timely rescue begun in the safeguarding of natural resources.
But a first idea that should be questioned is why cause the deterioration of the environment? In order to answer, it is possible to refer to various causes, the most common being due to a lack of respect implicit in the culture of society, the lack of of ethics, or the simple position of "doing nothing." The care of natural resources does not require a passive attitude, but an active and immediate work, by means that really propose solutions and do not aggravate the current condition.
The best proposals to achieve the protection and preservation of the environment, is in the awareness of people in their areas of consumption, and of the inherent responsibility of private and public institutions to create incentives that lead consumers to make decisions in one direction determined.
Companies must implement strategic measures that evaluate the social, technological - cultural, economic and ecological effects, which allow the creation of an environmental culture, and forget about profits that are obtained at the expense of the environment. Just as large corporations establish a social cost, they should begin to consider an environmental cost, where the activities are in favor of the environment and even complementary.
On the other hand, not only companies are a source of pollution, individual consumers contribute to this problem in a potential way, a citizen does not have an accounting record that allows him to know the profit or loss caused by polluting, but he does know the consequences of doing so.
Any economic structure will produce a destructive environmental impact if incentives are not aimed at avoiding it. The incentive is an additional profit that influences the behavior of people, for example a person who is used to throwing aluminum waste on the street, suddenly realizes that it is more profitable to collect it and sell it for recycling. Other aspects that influence people's behavior are psychological factors such as self-esteem or the satisfaction of having taken a positive action.
But an economic incentive has more salient implications, since these represent microeconomic and macroeconomic problems. In the first case, it has to do with the behavior of individuals or micro-businesses, polluting firms and environmental impact regulatory firms. In the macroeconomic case, it refers to the structural reforms reflected in the development of the country seen as a whole. These two aspects are of vital importance in order to issue environmental policies that are consistent with the economic situation.
Another aspect that has gained importance in the field of environmental economics is the correlation of the impacts of economic growth on environmental quality. This problem has serious infiltrations in the behavior of consumers and in family economic planning. One of the main forums where these issues are critically and objectively evaluated is at the United Nations, both by developed and dependent and backward underdeveloped countries.
Quality of life Vs. environmental quality?
We cannot speak of true economic development if we do not first review environmental policies; society must be committed to seeking democratic representation that clearly exposes the deficiencies they share and that commonly worsen over time.
Society does not approve legislative measures that partially solve problems of reality, we cannot speak of quality of life, measured by GDP per capita, if we do not speak of environmental impact measures that seek better environmental quality, it must be understood that both objectives are not rivals, but complementary.
Currently, the role of the economist has gained importance in the resolution of controversies by applying analysis methods such as risk, cost-benefit and cost-effectiveness.
- Cost-effectiveness analysis: This is simply an analysis in which the most economical way to achieve a specific environmental quality objective is observed or, expressed in equivalent terms, to achieve the maximum improvement of a certain environmental objective for a specific expenditure of resources. Cost-benefit analysis: In this type of analysis, as its name indicates, the benefits of the proposed action are calculated and compared with the total costs that society would bear if said action were carried out. But it is relevant to say that environmental groups are usually profit-oriented and business groups usually focus on costs. Risk Analysis: The two essential elements in risk analysis are to identify and quantify these risks. Identification depends,largely from the information available; for example, the actual cost to undertake a certain activity. The evaluation depends on a combination of mathematics with the subjective judgment of the analyst.
Who should pay?
Within the environmental problem, one of the biggest controversies arises, who should pay the costs for increasing environmental quality? At first you would think whoever throws the garbage should pick it up; This would work if there were only two people in the world, but the population is increasing day by day, so it is necessary to find solutions that cover this latent demand. But the problem is not based on the textuality of the questioning, but on what is not written, in the first place one should bet on preventing instead of solving, on winning instead of paying.
Companies can consider passing the cost to the price of the product, or in the reduction of salaries of their employees, or in transferring it to the profits of the shareholders, but nothing would be solved, it would be paid permanently for what is not stopped destroying. Strategic planning that includes compliance with environmental laws, implementation of corrective measures, permanent environmental audits and an adequate environmental impact assessment, would be initial costs of an investment whose profits would not be diminished.
But what happens if the approach is even more complicated, and we put into view the externalities, defined as costs or benefits of an economic transaction that fall on people who do not participate in the transaction, which are the result of the lack of property rights. It is in 1960 when Ronald Coase raises what is known as the Coase Theorem, which is the proposition that if property rights exist and if transaction costs are low, private transactions are efficient. This applies if the agents involved are small, but what happens in reality, it is not possible for all citizens of a country to negotiate the best on the Pacific Ocean.
And it is precisely here where the State can intervene through various mechanisms that allow to regularize a behavior on something that lacks property rights, one is the charges for emissions, tradable permits (through cost-benefit analysis) and taxes.
Environmental management
Environmental Management is understood to be the set of actions aimed at achieving maximum rationality in the decision process related to the conservation, defense, protection and improvement of the Environment, based on coordinated multidisciplinary information and on the participation of citizens whenever it is necessary. possible. By means of this methodology in decision-making a new understanding of man about nature is given, seeing himself as responsible for the protection of the environment. This new general vision must be directed towards human development, but with an environmental quality and achieve ecological balance.
The principles of Environmental Management are:
- Regulation of the absorption capacity of the environment to impacts. Forecasting and prevention of environmental impacts. Ordering territorial planning. Monitoring reports of environmental conditions.
An additional aspect that should be considered within Environmental Management is environmental education, if there is awareness from an early age, many of the serious environmental problems that afflict us today can be prevented.
All these measures and instruments have the sole objective of Sustainable Development, which refers to the adequate use of resources that allows the satisfaction of present basic needs of the inhabitants, but without compromising the resources of future generations.
In this new global order, the socio-economic planning of the available resources is the option to solve the problems that advance due to social needs (inequality to achieve a quality of life above poverty levels). Because environmental problems are not limited to the borders of each country and therefore, it is crucial in determining the development or backwardness of a nation.
Therefore, the most relevant thing is to find economic and regulatory instruments that allow the efficient and effective use of resources in production and exploitation; the incorporation of costs together with these measures, since this will fulfill a protection function against the indifference of those who do not intend to reach the levels of demand set internationally.
Trade and environment in the international framework
Currently, various international organizations are concerned with seeking economic growth with "quality", have stipulated within their regulations the creation of special commissions or organizations in the environmental field, some of these organizations are GATT, UNCTAD, UNEP and the OECD.
The GATT / WTO established the Committee on Trade and Environment.
UNCTAD seeks the interaction between trade and environment policies, through consensus of its member countries.
UNEP focuses on international environmental law, ecological economics, and environmental and scientific information.
The OECD establishes principles and guidelines (not mandatory) that help Member States to integrate environmental and economic policies. She has conceived the "polluter pays principle" and the "user pays principle".
The WTO is about to hold its ministerial meeting from September 10 to 14, 2003 in the City of Cancun, Quintana Roo, Mexico. It established in 1995 a Committee on Trade and Environment, whose mandate is contained in the Marrakesh Ministerial Decision. But it is important to emphasize that although what is sought is sustainable development, it cannot arise with the purpose of restricting intersectoral economic relations, because it would lack objectivity. How is the case of low-polluting technology transfer from developed countries to dependent and backward underdeveloped countries.
NAFTA is the first treaty to include a broad section on the environment. Creating the Parallel Agreement on Environmental Cooperation (NAAEC).
Among the aspects contemplated are the following criteria:
- Countries should implement the agreement in a manner compatible with environmental protection and promote sustainable development Recognition of international environmental conventions in the context of trade agreements No country can reduce its level of environmental protection in order to attract Investments A commitment by the countries to apply their environmental legislation, and the possibility of imposing fines is contemplated in the event that one of the parties persistently fails Flexible attitude towards harmonization of standards Environmental cooperation in techniques and strategies to prevent pollution, methods to comply with and enforce laws, eco-labeling, environmental audits, etc.The countries undertake to use the settlement mechanisms established in the Treaty for disputes related to environmental and conservation agreements. A high degree of involvement of external experts in conflict resolution.
The environmental issue does not have a formality in MERCOSUR because it is commercial in nature; however, rooms such as the Specialized Meeting on the Environment (REMA) have been created to incorporate environmental issues into the discussion tables.
The European Union has very advanced internal environmental legislation for the bloc. In addition, consumers are highly aware of the protection of nature and prefer to consume environmentally friendly products. That is why terminologies such as the contingent method emerge to explain the correlation of aggregate demand with environmental quality.
In APEC there are treated on issues associated with the environment that are related to the natural resources available to the region, with a greater interest in the marine resources of the member economies.
It is because of this general scope that it is necessary to take into consideration the preservation and mitigation of environmental impacts, with the various economic actors having a joint responsibility to seek to achieve this sustainable development.
The environment should be a subject for discussion and agreements aimed at environmental management in accordance with economic reality, and not as an excuse to seek to implement protectionism and commercial acts contrary to international cooperation.
We must take into consideration that it is a task for everyone and not for some to plan and execute environmental programs, that is why society must be interested and participate in this decision-making that ultimately involves them as consumers.
An environmental policy should be discussed as soon as possible in an international forum and continue with the plans presented at the Johannesburg summit in South Africa, only in this way will developed and underdeveloped countries see a convergence on the environmental issue.
Reflection and change in the behavior of society, through adequate environmental education, become necessary and essential to achieve the objectives of environmental management.
It's time to do something… but to do it right.
Bibliography
- Barry C. Field. Environmental economics. Colombia: Ed. MChill. 1995 Coase, Ronald. The Social Cost Problem.Demsetz, Harold. Towards a theory of property rights. McCloskey HJ Ethics and Politics of Ecology. Fund of Economic Culture. 1988.
Other inquiries:
Institutional Economics, Journal of the Faculty of Economics of the Externado de Colombia University.
