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Article

The production of food, fiber, and fuel often results in negative externalities due to impacts on soil, water, air, or habitat. There are two broad ways to incentivize farmers to alter their land use or management practices on that land to benefit the environment: (1) provide payments to farmers who adopt environmentally beneficial actions and (2) introduce direct controls or regulations that require farmers to undertake certain actions, backed up with penalties for noncompliance. Both the provision of payments for environmentally beneficial management practices (BMPs) and a regulatory requirement for use of a BMP alter the incentives faced by farmers, but they do so in different ways, with different implications and consequences for farmers, for the policy, for politics, and consequently for the environment. These two incentive-based mechanisms are recommended where the private incentives conflict with the public interest, and only where the private incentives are not so strong as to outweigh the public benefits. The biggest differences between them probably relate to equity/distributional outcomes and politics rather than efficiency. Governments often seem to prefer to employ beneficiary-pays mechanisms in cases where they seek to alter farmers’ existing practices, and polluter-pays mechanisms when they seek to prevent farmers from changing from their current practices to something worse for the environment. The digital revolution has the potential to help farmers produce more food on less land and with fewer inputs. In addition to reducing input levels and identifying unprofitable management zones to set aside, the technology could also alter the transaction costs of the policy options.

Article

María E. Ibarrarán and Jerónimo Chavarría

In Mexico, the laws and norms that regulate the environment emerged at the end of the 19th century to standardize infrastructure construction and preserve nature. However, it was not until the early 1970s that the first formal government entity dedicated to promote environmental protection, the Vice-Ministry for Environmental Improvement, under the Ministry of Health, was founded, mostly responding to a government initiative rather than social pressure. Other laws were then issued and applied by the Secretariat of Urban Development and Ecology. However, in the 1980s, civil society pressed for more regulations aimed at protecting the environment. In the 1990s, the Ministry of the Environment, Natural Resources and Fisheries (SEMARNAP) was created, focusing on natural resources, biodiversity, hazardous waste, and urban-industrial environmental problems. Its objective was to reduce the trends of environmental deterioration and to promote economic and social development under criteria of sustainability. This and other institutions have evolved since then, covering a larger set of topics and media. Nevertheless, degradation has not been stopped and is far from being reverted, because even though there is a toolbox of policies and instruments, many of them economic, they have not been fully implemented in some cases or enforced in others because of economic and political factors. With the changes in institutions, legislation was also modified. Mexico became part of international environmental agreements and included the rights to a safe environment in the constitution. However, this legislation has not been enough to modify behavior because often the incentives either for regulators or for polluters themselves are not enough. Environmental degradation is a market failure. It can be shaped as an externality that markets alone cannot solve either because of overproduction, abuse of open access resources, or underprovision of public goods. In any of these cases, resolution comes only through government intervention. Regulations must include consideration of the benefits and costs they impose to change behavior. However, regardless of formal regulation, there are still a host of environmental problems that affect both urban and rural communities and Indigenous and non-Indigenous populations, and there is a regulatory vacuum integrating environmental aspects with economic and social development issues. Examples of this are the Energy Reform of 2013 and the Law of Waters, as well as the Law of Biodiversity, where impacts on communities are often left aside, because of a de facto prevalence of economic activity over human rights. On the other hand, legal loopholes prevent adequate management of wildlife resources and sufficient treatment of hazardous waste discarded by industries, even if they are regulated. Furthermore, environmental regulations are based on corrective regulations, such as obligations, restrictions, and sanctions, but these have not strengthened their preventive character. It is still less expensive to pollute or degrade the environment than take measures not to. A shift in the paradigm toward policies that create incentives to protect the environment, both for polluters and regulators, may foster much better environmental quality.

Article

Ann E. Ferris, Richard Garbaccio, Alex Marten, and Ann Wolverton

Concern regarding the economic impacts of environmental regulations has been part of the public dialogue since the beginning of the U.S. EPA. Even as large improvements in environmental quality occurred, government and academia began to examine the potential consequences of regulation for economic growth and productivity. In general, early studies found measurable but not severe effects on the overall national economy. Although price increases due to regulatory requirements outweighed the stimulative effect of investments in pollution abatement, they nearly offset one another. However, these studies also highlighted potentially substantial effects on local labor markets due to the regional and industry concentration of plant closures. More recently, a substantial body of work examined industry-specific effects of environmental regulation on the productivity of pollution-intensive firms most likely to face pollution control costs, as well as on plant location and employment decisions within firms. Most econometric-based studies found relatively small or no effect on sector-specific productivity and employment, though firms were less likely to open plants in locations subject to more stringent regulation compared to other U.S. locations. In contrast, studies that used economy-wide models to explicitly account for sectoral linkages and intertemporal effects found substantial sector-specific effects due to environmental regulation, including in sectors that were not directly regulated. It is also possible to think about the overall impacts of environmental regulation on the economy through the lens of benefit-cost analysis. While this type of approach does not speak to how the costs of regulation are distributed across sectors, it has the advantage of explicitly weighing the benefits of environmental improvements against their costs. If benefits are greater than costs, then overall social welfare is improved. When conducting such exercises, it is important to anticipate the ways in which improvements in environmental quality may either directly improve the productivity of economic factors—such as through the increased productivity of outdoor workers—or change the composition of the economy as firms and households change their behavior. If individuals are healthier, for example, they may choose to reallocate their time between work and leisure. Although introducing a role for pollution in production and household behavior can be challenging, studies that have partially accounted for this interconnection have found substantial impacts of improvements in environmental quality on the overall economy.

Article

Industrialized livestock production can be characterized by five key attributes: confinement feeding of animals, separation of feed and livestock production, specialization, large size, and close vertical linkages with buyers. Industrialized livestock operations—popularly known as CAFOs, for Concentrated Animal Feeding Operations—have spread rapidly in developed and developing countries; by the early 21st century, they accounted for three quarters of poultry production and over half of global pork production, and held a growing foothold in dairy production. Industrialized systems have created significant improvements in agricultural productivity, leading to greater output of meat and dairy products for given commitments of land, feed, labor, housing, and equipment. They have also been effective at developing, applying, and disseminating research leading to persistent improvements in animal genetics, breeding, feed formulations, and biosecurity. The reduced prices associated with productivity improvements support increased meat and dairy product consumption in low and middle income countries, while reducing the resources used for such consumption in higher income countries. The high-stocking densities associated with confined feeding also exacerbate several social costs associated with livestock production. Animals in high-density environments may be exposed to diseases, subject to attacks from other animals, and unable to engage in natural behaviors, raising concerns about higher levels of fear, pain, stress, and boredom. Such animal welfare concerns have realized greater salience in recent years. By consolidating large numbers of animals in a location, industrial systems also concentrate animal wastes, often in levels that exceed the capacity of local cropland to absorb the nutrients in manure. While the productivity improvements associated with industrial systems reduce the resource demands of agriculture, excessive localized concentrations of manure can lean to environmental damage through contamination of ground and surface water and through volatilization of nitrogen nutrients into airborne pollutants. Finally, animals in industrialized systems are often provided with antibiotics in their feed or water, in order to treat and prevent disease, but also to realize improved feed absorption (“a production purpose”). Bacteria are developing resistance to many important antibiotic drugs; the extensive use of such drugs in human and animal medicine has contributed to the spread of antibiotic resistance, with consequent health risks to humans. The social costs associated with industrialized production have led to a range of regulatory interventions, primarily in North America and Europe, as well as private sector attempts to alter the incentives that producers face through the development of labels and through associated adjustments within supply chains.

Article

Deep-sea mining pertains to underwater minerals such as polymetallic nodules, ferromanganese crusts, and hydrothermal sulfides that are considered as alternative sources for metals such as Cu, Ni, Co, Pb, Zn, Cd, Mn, Fe, and rare earths that could be exploited in the future by developing suitable technologies. Many of these deposits occur in international waters in which several “contractors” have staked claims over large tracts of the seafloor under the United Nations Law of the Sea, whereas attempts are also being made to develop the deposits within the Exclusive Economic Zone of some countries. However, several concerns have emerged over potential impacts of mining these deposits, leading to regulations being framed as well as measures being devised for conserving the marine ecosystems. The likely sources of environmental impact of deep-sea mining include those from the mining ship where handling of ore, machinery, oil will take place; the lift mechanism that would transfer the minerals from the sea bottom to the surface through the entire water column; as well as the mining machine that would actually scrape the seafloor for minerals. This article describes the likely impacts that could be caused due to mining of three different types of deep-sea minerals, viz. polymetallic nodules, hydrothermal sulfides and ferromanganese crusts. It further shows the estimation of impacts in terms of mining area, volume and weight of associated substrates; and goes on to suggest mitigation measures to minimize the potential impacts of deep-sea mining. Finally, the national and international environmental regulations for deep-sea mining have been discussed.

Article

Rama Mohana R Turaga and Anish Sugathan

Pollution is one of the greatest causes of premature deaths and morbidity in the world, and this burden of pollution is disproportionately borne by the lower and middle income countries such as India—home to more than one-sixth of humanity. In India, due to the compound effect of its large population and high levels of environmental pollution, the human cost of pollution is among the highest in the world. The environmental degradation is partly a consequence of the development model pursued after independence in 1947 based on large-scale industrialization and exploitative resource utilization, with scant consideration for sustainability. Moreover, it is also due to the failure of the environmental administration, governance, and regulatory infrastructure to keep pace with the magnitude and pace of economic growth in India since economic liberalization in 1991. Ironically, India was also one of the early pioneers of integrating environmental considerations into its legislative and policy-making process beginning in the early 1970s. The federal and state environmental regulation and policy framing institutions set up during this era, along with environmental legislation such as the Environment (Protection) Act 1986, are comparable in design, stringency, and comprehensiveness to other contemporary command-and-control environmental regulatory regimes in many industrially developed economies. However, the widening gap between de jure expectations of environmental compliance and the de facto state of affairs has been a great concern for environmental governance in the country. The ongoing debates discuss several mechanisms to address the regulatory failures. The first is a greater emphasis on strengthening institutions and mechanisms that foster transparency and public disclosure by pollution sources with the intent to increase access to and credibility of information on pollution. Proponents argue this will help mobilize groups such as non-governmental organizations (NGOs) and the general public to pressure the industry and government to improve regulatory enforcement. Second, there have been calls for wider adoption of market-based instruments that are more efficient than the traditional command-and-control approaches on which India relies. Again, information is a prerequisite for the functioning of such market-based regulatory mechanisms. Third, the legal infrastructure to facilitate expedited hearing of environmental litigation is being created. With the establishment of the National Green Tribunal in 2010, India is one of only three other countries in the world to have an exclusive judicial body to hear environmental cases. This is potentially a significant step in providing greater access to environmental justice. An emerging view, however, argues that the prevailing economic development model is incompatible with ensuring sustainable development and requires a radical rethink.

Article

Haitao Yin, Xuemei Zhang, and Feng Wang

China’s environmental challenges are unprecedented in terms of their size and severity. The country’s constantly evolving regulatory systems are a blend of lessons learned from Western market- and information-based regulations, China’s own unique political and administrative context as an authoritarian country, the complex relationship between its central and local governments, and the balance between the needs for environmental protection and economic growth. A close look at China’s environmental regulatory system may offer useful insights to those working toward a more sustainable future. In the 21st century, the environmental regulatory system in China is entering a new era. Over the last three decades, efforts have focused on developing regulatory standards for air, water, and solid waste, among many other pollutants. This regulatory system primarily follows a command-and-control approach and is often criticized for its failure to curb China’s increasingly severe environmental degradation. In the future, the Chinese government may pursue two routes. The first is to increase the use of market mechanisms and information tools to enable and incentivize more stakeholders, such as consumers, nongovernmental organizations, and communities, to engage in the development and enforcement of environmental regulations, for instance, through cap-and-trade systems, information-disclosure programs, and environmental insurance. However, existing evidence shows that the usefulness of these new instruments is limited. Another route is to develop new mechanisms to strengthen the enforcement of traditional command-and-control regulations. Examples include making environmental performance a key performance indicator (KPI) in the performance appraisals of government officials or leveraging the power of financial sectors. These approaches are a footnote to the new argument in favor of environmental authoritarianism, which suggests that authoritarian regimes, setting authoritarian rules, may be more capable of handling complex environmental pressures. More studies need to be conducted on the effectiveness of these new approaches and the mechanisms by which they may achieve success.