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By the end of this section, you will be able to:

  • Evaluate the benefits and costs of environmental protection
  • Explain the effects of ecotourism
  • Apply marginal analysis to illustrate the marginal costs and marginal benefits of reducing pollution

Government economists have estimated that U.S. firms may pay more than $200 billion per year to comply with federal environmental laws. That is big bucks. Is the money well spent?

Benefits and costs of clean air and clean water

The benefits of a cleaner environment can be divided into four areas: (1) people may stay healthier and live longer; (2) certain industries that rely on clean air and water, such as farming, fishing, and tourism, may benefit; (3) property values may be higher; and (4) people may simply enjoy a cleaner environment in a way that does not need to involve a market transaction. Some of these benefits, such as gains to tourism or farming, are relatively easy to value in economic terms. It is harder to assign a monetary value to others, such as the value of clean air for someone with asthma. It seems impossible to put a clear-cut monetary value on still others, such as the satisfaction you might feel from knowing that the air is clear over the Grand Canyon, even if you have never visited the Grand Canyon.

Although estimates of environmental benefits are not precise, they can still be revealing. For example, a study by the Environmental Protection Agency looked at the costs and benefits of the Clean Air Act from 1970 to 1990. It found that total costs over that time period were roughly $500 billion—a huge amount. However, it also found that a middle-range estimate of the health and other benefits from cleaner air was $22 trillion—about 44 times higher than the costs. A more recent study by the EPA estimated that the environmental benefits to Americans from the Clean Air Act will exceed their costs by a margin of four to one. The EPA estimated that “in 2010 the benefits of Clean Air Act programs will total about $110 billion. This estimate represents the value of avoiding increases in illness and premature death which would have prevailed.” Saying that overall benefits of environmental regulation have exceeded costs in the past, however, is very different from saying that every environmental regulation makes sense. For example, studies suggest that when breaking down emission reductions by type of contaminants, the benefits of air pollution control outweigh the costs primarily for particulates and lead, but when looking at other air pollutants, the costs of reducing them may be comparable to or greater than the benefits. Just because some environmental regulations have had benefits much higher than costs does not prove that every individual regulation is a sensible idea.

Ecotourism: making environmentalism pay

The definition of ecotourism is a little vague. Does it mean sleeping on the ground, eating roots, and getting close to wild animals? Does it mean flying in a helicopter to shoot anesthetic darts at African wildlife? Or a little of both? The definition may be fuzzy, but tourists who hope to appreciate the ecology of their destination—“eco tourists”—are the impetus to a big and growing business. The International Ecotourism Society estimates that international tourists interested in seeing nature or wildlife will take 1.56 billion trips by 2020.

Questions & Answers

what is unemployment
Munanag Reply
not working
Bethel
What is stock market?
JOHN Reply
explain the various types of cost curve
Ruth Reply
Short-run average fixed cost (SRAFC) Short-run average total cost (SRAC or SRATC) Short-run average variable cost (AVC or SRAVC) Short-run fixed cost (FC or SRFC) Short-run marginal cost (SRMC) Short-run total cost (SRTC)
Romy
supply function Qs=0+20P price of bread 30
Maricar Reply
what's economic development and growth
Popoola Reply
gamitin Ang supply function na Qs=0+20P Presyo ng tinapay 30.Dami ng ibebenta
Maricar
what do you understand by Ceteris Paribus?
Gabriel Reply
the external factor will remained constant, except the price
Hasib
explain the uses of microeconomics
Nikita Reply
uses of microeconomics
Nikita
Adam Smith's definition of economics
Sylvia Reply
what is economic deficit
Amjad
this is a situation whereby a nation's outcome or available resources are not enough to the people thereby causing scarcity
Ariel
prices of Quality demanded is equal to Quality supplied
NABUBOLO Reply
it's quantity demand and quantity supplied that's called equilibrium
Romy
no
NABUBOLO
they deal With prices
NABUBOLO
define the elasticity
NABUBOLO
explain different types of elasticity
NABUBOLO
oops 😬 you are right you talk about quality I tell about quantity
Romy
elasticity is the measurement of the percentage change of one economic variable in response to a change in another
Romy
Cross Elasticity of Demand (XED) Income Elasticity of Demand (YED) Price Elasticity of Supply (PES)
Romy
anything else?
Romy
I need to know everything about theory of consumer behavior
Grace
How does one analyze a market where both demand and supply shift?
Gabriel Reply
That's equilibrium market
Ramon
but an equlibrum can appear twice on the same market... both in Movement along the Demand/supply curve of shift in the Curve
Gabriel
I Mean on the same curve..
Gabriel
how can consumer surplus be calculated
Franklyn
How can we analyze the effect on demand or supply if multiple factors are changing at the same time—say price rises and income falls? 
Gabriel Reply
because of fall of income, less will be demanded and much will be supply as a result of price rises. Rise in price always motivate new supplier to enter into the system. But it only possible in the short run
Kweku
yeah.. I think Ceteris Paribus is applied in this case
Gabriel
that is the law of Demand is Inversely related to the law of Supply... so that mean a positive change in demand may produce a negative return to supply I think.
Gabriel
what are the difference between Wants and Needs
Gabriel Reply
When the price is above the equilibrium, explain how market forces move the market price to equilibrium. Do the same when the price is below the equilibrium.
Gabriel
economic problems
Manishankar
yeah please Explain
Gabriel
I don't know this is my question
Manishankar
no it was a mistake...😂😂 can you explain how Wants and needs differs 😌
Gabriel
wants is what human desire but might not need them, human want are mostly articles of ostentatious while need is what human must get to live e.g inferior goods
Ramon
what's equilibrium price
james
equilibrium prices is a situation whereby the price of goods supplied equates to the demand
Ariel
this whereby the prices of quality demanded is equivalent to quality demanded
NABUBOLO
wants are numerous desire man that man can do without if not purchased e.g. cosmetic while need are desires that you cannot do without e.g. food
Franklyn
equilibrium price is that level of output were quantity demanded is equal to quantity supplied
Arthur
what are the importance of studying economics
Bherla Reply
To know if the country is growing or not through the country's GDP
Ariel
to manage our resources
TOBI
compare base years GDP and the current years GDP
james
To tell whether a country is growing there are many factors to be considered not necessarily only the GDP due to weaknesses of GDP approach
james
What is the law of demand
Yaw Reply
price increase demand decrease...price decrease demand increase
Mujahid
ıf the price increase the demand decrease and if the demand increase the price decrease
MUBARAK
all other things being equal, an increase in demand causes a decrease in supply and vice versa
SETHUAH
yah
Johnson
how is the economy of usa now
Johnson
What is demand
jude Reply
Demand is the quantity of goods and services a consumer is willing and able to purchase at various prices over a given period of time.
Yaw
yea
SETHUAH
Okay congratulations I'll join you guys later .
Aj
yes
MUBARAK
demand is the quantity and quality of goods and services a consumer is willingly and able to purchase at a particular price over a given period of time.
TOBI

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Source:  OpenStax, Principles of economics. OpenStax CNX. Sep 19, 2014 Download for free at http://legacy.cnx.org/content/col11613/1.11
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