Identifying Environmental Problems PDF

Identifying The Environmental Problems Mark Antony B. Perello Instructor  Environmental Problem Environmental problems refer to disruptions in the natural functioning of ecosystems, often caused by human activities or natural events. These issues arise when the...

Identifying The Environmental Problems Mark Antony B. Perello Instructor  Environmental Problem Environmental problems refer to disruptions in the natural functioning of ecosystems, often caused by human activities or natural events. These issues arise when the balance of the environment is disturbed, leading to harmful effects on both the biological and physical aspects of the ecosystem. Environmental problems encompass a wide range of issues that threaten the health of ecosystems and the well-being of all living organisms, including humans. Addressing these problems requires a comprehensive understanding of their causes and effects, as well as collaborative efforts to implement sustainable solutions. Environmental problems can be caused by a combination of natural causes and human impact. Human activities that can cause environmental problems include using and modifying the natural world, which we depend on for food, clothing, shelter, water, and air.  Five Major Environmental Problems Climate Change Climate change is one of the most pressing environmental issues, driven primarily by greenhouse gas emissions from fossil fuel combustion, deforestation, and industrial activities. It leads to global warming, resulting in extreme weather events, rising sea levels, and disruptions to ecosystems and agriculture. Climate change refers to the long-term changes in temperature, precipitation, and other weather patterns caused by human activities such as burning fossil fuels. These activities have increased the number of greenhouse gas emissions released; these emissions trap heat within Earth’s atmosphere, leading to increasing global temperatures.  Five Major Environmental Problems Pollution The addition of any substance (solid, liquid, or gas) or any form of energy (such as heat, sound, or radioactivity) to the environment at a rate faster than it can be dispersed, diluted, decomposed, recycled, or stored in some harmless form. The major kinds of pollution, usually classified by environment, are air pollution, water pollution, and land pollution. Modern society is also concerned about specific types of pollutants, such as noise pollution, light pollution, and plastic pollution. Pollution of all kinds can have negative effects on the environment and wildlife and often impacts human health and well-being.  Five Major Environmental Problems Habitat Destruction Habitat destruction refers to the process by which a natural habitat becomes incapable of supporting its native species. This occurs when the conditions necessary for the survival of plants and animals are eliminated or significantly altered. As a result, the organisms that once thrived in that environment may either migrate to other areas or perish, leading to a decline in biodiversity and species populations. Habitat destruction is a critical environmental issue that threatens the survival of countless species and the overall health of ecosystems. Addressing this problem is essential for conservation efforts and maintaining biodiversity on our planet.  Five Major Environmental Problems Deforestation the process of clearing or removing forests or stands of trees from land, transforming these areas into non-forest uses such as agricultural land, urban development, or other types of land use. This intentional clearing can lead to significant environmental consequences, including habitat loss, decreased biodiversity, and contributions to climate change due to the release of stored carbon dioxide from trees. The impact of deforestation is profound, affecting not only the local environment but also global ecological systems. It disrupts habitats, threatens wildlife, and contributes to climate change by reducing the number of trees that can absorb carbon dioxide from the atmosphere. Overall, deforestation poses a significant threat to the health of our planet and requires urgent attention and action to mitigate its effects.  Five Major Environmental Problems Loss Of Biodiversity Refers to the decline or disappearance of biological diversity within a specific area or globally. This encompasses several dimensions, including the reduction in the number of species, the extinction of species, and the decrease in genetic diversity within populations. Biodiversity is crucial for maintaining healthy ecosystems, which provide essential services such as clean air, water, and food production. The implications of biodiversity loss are profound, affecting not only the environment but also human well-being. Healthy ecosystems contribute to food security, clean water, and climate regulation, and their degradation can lead to significant challenges for humanity, including increased vulnerability to natural disasters and loss of resources essential for survival. Understand The Result Of An Inefficient Market Condition To Environmental Economics Inefficient market conditions in environmental economics occur when the allocation of resources does not lead to optimal outcomes, meaning that the benefits do not match the costs An inefficient market is a market where the price of an asset does not accurately reflect its true value. Frequently occur because of externalities, which are expenses or advantages that have an impact on persons not directly involved in a transaction. This has several important effects on the environment and the economy.  Comprehensive Analysis of Inefficient Market Conditions in Environmental Economics Externalities Externalities are a primary cause of market inefficiency, occurring when the production or consumption of goods and services imposes costs or benefits on third parties not reflected in market prices  Comprehensive Analysis of Inefficient Market Conditions in Environmental Economics Externalities Negative externalities occur when the product and/or consumption of a good or service exerts a negative effect on a third party independent of the transaction. An ordinary transaction involves two parties, i.e., a consumer and the producer, who are referred to as the first and second parties in the transaction. Any other party that is not related to the transaction is referred to as a third party. Negative externalities, such as environmental pollution, can be difficult to hold accountable, as producers or consumers can create them without fear of lawsuits or fines. For example, oceans are a public utility, and nobody holds private rights over them. Without regulations, ships and boats can pollute the sea which affects other ocean users, such as fishermen who depend on clean and productive ocean water for their livelihood.  Comprehensive Analysis of Inefficient Market Conditions in Environmental Economics Externalities These arise when actions provide benefits to others without compensation, such as planting trees that improve air quality for an entire neighborhood There are also positive externalities, and here the issue is the difference between private and social gains. For example, research and development (R&D) activities are widely considered to have positive effects beyond those enjoyed by the producer that funded the R&D—normally, the company that pays for the research. This is because R&D adds to the general body of knowledge, which contributes to other discoveries and developments. However, the private returns of a firm selling products based on its own R&D typically do not include the returns of others who benefited indirectly. With positive externalities, private returns are smaller than social returns. Comprehensive Analysis of Inefficient Market Conditions in Environmental Economics Public goods Because public goods violate the principles of supply and demand that support free markets, they represent another example of market failure. Public goods can indeed lead to inefficient market conditions due to two key characteristics: a. Non-excludability: This means that it's difficult or impossible to prevent individuals from consuming a public good, even if they haven't paid for it. For example, once a lighthouse is built, ships can benefit from its light regardless of whether they contributed to its construction. b. Non-rivalry: This means that one person's consumption of a public good doesn't diminish the amount available for others. For instance, if one person enjoys the benefits of national defense, it doesn't reduce the benefits available to others. These characteristics create a free-rider problem. Individuals have little incentive to pay for a public good, knowing they can benefit from it without contributing. As a result, the market often underprovides public goods compared to the socially optimal level. Comprehensive Analysis of Inefficient Market Conditions in Environmental Economics Information Asymmetry Asymmetric information occurs when one party to an economic transaction possesses greater material knowledge than the other party. This typically manifests when the seller of a good or service possesses greater knowledge than the buyer. However, the reverse dynamic is also possible. Also known as "information failure," asymmetric information is involved in nearly all economic transactions.  Comprehensive Analysis of Inefficient Market Conditions in Environmental Economics Example of Information Asymmetry which leads to market failure Used Car Market In the used car market, sellers often have more information about the condition of the car than buyers. They are aware of the car's maintenance history, any hidden defects, and overall quality. This imbalance of information can lead to a situation known as the "Lemons Problem.“ The Lemons Problem is a concept in economic theory involving information asymmetry. It refers to the issue of quality uncertainty in the used car market. Here's how it works: 1. Sellers know the quality of their cars and price them accordingly. High- quality cars are priced higher than low-quality cars (lemons). 2. Buyers, however, can't accurately assess the quality of a car before purchase. They're aware that they face a risk of buying a lemon. 3. Because of this risk, buyers are only willing to pay a price that reflects the average quality of cars in the market. 4. This leads to a situation where sellers of high-quality cars aren't able to get a price that reflects the true quality of their cars. As a result, they may choose to withdraw from the market. 5. This leaves a higher proportion of low-quality cars (lemons) in the market, which further lowers the average price buyers are willing to pay. This cycle can continue until only lemons are left in the market, leading to market failure. This example demonstrates how information asymmetry can distort market dynamics and lead to inefficiencies or even market failure.  Comprehensive Analysis of Inefficient Market Conditions in Environmental Economics Market Power Monopolies or oligopolies can lead to inefficient outcomes by restricting output and raising prices above competitive levels, affecting environmental resources. A monopoly, a market structure where a single seller dominates an industry, can lead to several inefficiencies that disrupt the smooth functioning of a market economy. Monopoly power has the potential to seriously influence market outcomes, resulting in decreased output, higher prices, fewer options for consumers, and less innovation. An oligopoly, a market structure dominated by a few large firms, can lead to various inefficiencies. Essentially, oligopolies can result in less innovation, higher prices, fewer consumer choices, and a less effective use of resources. Governments frequently implement competition laws and regulations to foster competition and safeguard the interests of consumers to lessen these negative consequences.  Comprehensive Analysis of Inefficient Market Conditions in Environmental Economics Common-pool resource Also sometimes called an open-access resource suffers from big multilateral negative externality problems. This situation is sometimes called the “tragedy of the commons.” Like public goods, common-pool resources are non-excludable. However, they are highly rival in use. Many natural resources have common-pool features: Water in a river can be removed by anyone near it for irrigation, drinking, or industrial use; the more water one set of users removes, the less water there is available for others. Like public goods, common-pool resources are non-excludable. However, unlike public goods, common-pool resources are rivalrous in consumption, like private goods, or the normal goods that we buy and sell on markets. Examples of common-pool resources include forests, man- made irrigation systems, fishing grounds, and groundwater basins. For instance, fishermen have an incentive to harvest as many fish as possible because if they do not, someone else will—so without management and regulation, fish stocks soon become depleted. And while a river might supply many cities with drinking water, manufacturing plants might be tempted to pollute the river if they were not prohibited from doing so by law because someone else would bear the costs.