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Microeconomics

Microeconomics Free Essay

Abstract

Environmental degradation continues to be observed around the world through melting of ice caps, loss of wildlife and vegetation, climate change and increase in desertification. The United States decided to take reactive measures after the industrial revolution in an attempt to minimize the environmental destruction that had aggravated with the development of industries. The Congress, therefore, has put into action different regulations like Clean Air Act and Clean Water Act, which are aimed at controlling industrial pollution including both air and water contamination. Increase in the amount of carbon monoxide, sulfur dioxide and nitrogen (IV) oxide has led to global warming prompting the need for the nations around the world to take corrective measures. Efforts are being made to ensure that industries reduce the number of emissions by adopting environmentally friendly technologies such as electric automobiles that have been created to reduce the amount of exhaust fumes in the transport sector. The current paper seeks to examine the history of environmental regulations, the Clean Air Act and its economic effects such as environmental conservation, environmental taxes, and reduced environmental cost per factor, as well as reduced air pollution, creativity/innovativeness, jobs creation and health benefits.

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Keywords: industrial revolution, air pollution, Clean Air Act

Microeconomics

Introduction

Environmental issues became evident after the industrial revolution due to the use of machinery and modern technologies. Modern technologies are associated with positive developments for the nations since they contribute to the increase of population, and production of food and equipment. Population increase and production growth led to the change in living standards of people. However, the negative side of the economic progress was the environmental deterioration. Pollution from factories resulted in air, land and water pollution (Eco-issues, 2012). This was attributed to the use of fossil fuel, coal and wood as sources of energy in factories and transport networks. Environmental problems are usually interlinked; therefore pollution in one environmental sector leads to deterioration in the other sectors of the environment. As an example, factories used to cut trees to use them as wood fuel; which has resulted in deforestation and loss of habitats for the wildlife; destruction of these resources led to the endangerment of wildlife species.  Environmental pollution should be given first priority around the world since this problem can cause a devastating effect on the environment we live in. The ever-increasing deforestation, climate change, and environmental degradation endanger human life.

Recently, United Nations (UN) has prioritized reduction of global warming as a key objective since its effects are causing destruction of the environment. Nations around the world are trying to reduce the amount of air emissions released from their industries in order to minimize the amount of greenhouse gases released into the atmosphere. However, the key source of air pollutants today is the automobiles due to the economic growth of both developed and developing countries. Human beings depend on the environment as a source of their resources so that if it is destroyed beyond recovery they will face extinction.

History and the Emergence of Environmental Regulations

Post World War II Era

The problem of environmental pollution received more attention from the public after the World War II due to the fears of radioactive emissions into the atmosphere. In addition, health problems and the number of deaths resulting from pollution increased in the urban centers. Urban centers saw an increase in the amount of carbon and waste gases due steel and iron works which also contributed to acid rain. The mass production of cars led to the discovery of oil as the main source of fuel and later resulted in overdependence on fossil fuel to run machinery. Emissions from exhausts led to an increase of greenhouse gases in the atmosphere, which in great amounts have devastating effects on humans, animals, and plants (Kasa, n.d.). This leads to the emergence of environmental movements and environmentalists continue to complain about environmental problems, which are; climate change, air pollution, deforestation, poor solid waste management, water pollution and endangerment of species being experienced around the world due to in the increasing pollution as a result of the industrial revolution (History.com, n.d.). This, therefore, has led to the emergence of events like Environmental day and reinforcement of legislations.

The Period of 1970’s

In 1970’s, the Congress established environmental legislations to address water and air pollution in the United States (History.com, n.d.). There was an increase in the amount of sulfur dioxide, carbon monoxide, ozone, nitrogen (IV) oxide and Total Suspended Particles in the atmosphere thus prompting a need for actions to be taken. Therefore, in an effort to reduce air pollution, the Congress passed the Clean Air Act with an aim of ensuring that air pollution is controlled at both local and state levels. The effects of these greenhouse gases, emitted more than half a century ago, are still being experienced even today as climate change becomes a major environmental problem.

The Clean Air Act

The Clean Air Act deals with ambient air pollution and the sources of air pollution in the United States. The act has gone through a number of changes over the years in order to ensure greater efficiency after its implementation; this was done with an aim of reducing loopholes that could be exploited by companies. The standard ensures that at both local and state levels, air pollution is controlled and the health of its citizens is protected. Its implementation has been assigned to Environmental Protection Agency, which monitors the amount of air emission released from various sources around the country (National Wildlife Federation, n.d.). The act states that all new sources of air emissions in factories should be given permits before they begin their operations. It also sets targets for vehicles and assembly plants to reduce emissions of hydrocarbons that are monitored regularly. This is done with an aim of controlling and monitoring pollution from motor vehicles and major sources of pollutants to ensure that they do not exceed certain pollution levels (Katz, 2011). Today, many companies have opted to switch to environmentally friendly technologies and sources of energy in order to reduce their costs. Additionally, industries may be forced to control air pollution through an end-of- pipe method which captures air emissions before they are released into the atmosphere.

The implementation of the act has however not been a smooth process since the time when it was signed; this is despite the current progress by Environmental Protection Agency in archiving national air quality standards (Katz, 2011). A number of companies have been sued by the state for not complying with the regulation. An example is the case between Environmental Defense versus Duke Energy; the energy company did not apply for permits when they were implementing new technologies. Loopholes in the standard have forced Environmental Protection Agency to revise the standard with an aim of making the regulation more protective for both public health and the environment. Additionally, indoor air pollution, which is a major concern, is not regulated under the Clean Air Act; yet it has devastating effects on human health. Air pollution regardless of its source is one of the nation’s key environmental and health concerns; therefore, there should be put into action some regulations to address indoor air pollution.

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Economic Impacts of the Regulation

Economic development and environmental protection go hand in hand. During the industrial revolution, countries around the world tried to attain economic development despite the effects this development had on the environment. After nations like the United Kingdom and the United States archived economic stability, they turned their attention to environmental degradation, which had already occurred, and tried to improve the areas of the environment that had already been destroyed.

Health Gains

The Clean Air Act has impacted the economy of the United States in a positive way contributing to both health and environmental gains. Environmental Protection Agency is the institution in charge of monitoring and enforcing of all environmental acts in the states; this has led to the reduction in the number of health cases among families affected by respiratory diseases like bronchitis and asthma thus leading to a healthier community (Environmental Protection Agency, 2016). A productive and healthy workforce has given a chance to the citizens to invest their wages in income generating activities instead of paying for hospital bills. Secondly, a country with healthy citizens signifies the improvement in work productivity, since workdays wasted for visiting the hospitals by the employees are minimized (Johnson, 2011).

Creation of Jobs

The law is an economic blessing as it has also contributed to the growth of job opportunities and job creation. Environmental regulations that protect the resources are usually labor intensive thus generating a net increase in jobs (Johnson, 2011). The departments responsible for implementing the law provide employment opportunities to the people. Jobs are usually created in various sectors of the economy such as construction and engineering.

Creativity

The environmental regulation has created market opportunities that contribute to innovation and invention in the environmental technology sector. For companies to reduce their environmental costs, they have designed, built, installed and maintained equipment that is intended for reducing environmental pollution. Many companies have therefore switched to environmentally friendly technologies which reduce the amount of air pollution. Clean Air Act has also led to the improvement of technology markets in the United States making it a global market leader. The sales of this equipment to other countries have increased the economic revenues of the United States.

Reduced Air Pollution

Clean Air Act has led to the reduction in air pollution, decreasing the chances of acid rain, as the amount of emissions have been reduced (National Wildlife Federation, n.d.). This has led to improved crop health and yield, therefore, increasing the amount of agricultural production. The increase in the food supply has led to a healthy population who are able to work efficiently for the benefit of the economy. Surplus crops are exported, earning the country more revenue. To boost agricultural sector, the government has encouraged environmental technologies that are environmentally friendly and increase the number of yields. This has enabled an increase in exports while decreasing the number of imports thus encouraging the economic development.

Reduced Environmental Costs per Factor

Clean Air Act has led to direct benefits to the economy by reducing the amount of environmental costs per factor. This has increased the revenue as the country participates in environmental programs. The benefits that arise from environmental regulation can be enjoyed by producers only if the environmental costs are not high. High environmental costs make the goods exported less favorable in comparison to those of the competitors. This increases the number of imports, leading to a deficient balance of trade and worsening the trade performance of the United States. However, some businesses have greatly opposed environmental regulation due to the costs that they have to bear to comply with the regulations (Benjamin, 2003). They complain that these costs have put them in a disadvantaged position as compared to their competitors forcing them to reduce the number of employees working for them. The labor cuts are done with an aim of reducing labor and regulatory costs that arise due to policies implemented to increase the unemployment rate in the country. This, however, can be amended if industries develop and adopt cutting edge solutions that reduce their pollution rate and in the process create new jobs. This will strengthen the economy while improving the environmental conditions in the country.

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Environmental Taxes

Environmental regulations have led to the promotion of environmental taxes, eco taxes, which aim at ensuring that environmental conservation activities are being practiced in every state. These taxes are aimed at ensuring that free markets are regulated while their environmental impacts are controlled (National Wildlife Federation, n.d.). The government has also gone ahead to control pollution by giving companies economic incentives in case they reduce their emissions. Eco-taxes paid are included in the states budgets and deployed in areas of the environment that need to be improved, thus improving the economy. However, the taxes add an economic burden to firms and thus lower their productivity.

Environmental Conservation

Environmental issues continue to be of major concern with issues like climate change, wildlife extinction and desertification receiving highest recognition. Climate change has lead to an increase in temperatures on the earth. The high-temperature level has led to melting of ice caps, increasing the sea water level and leading to the loss of habitats and extinction of wildlife. The increase in deforestation has contributed to the increase of desert covered lands. Environmental legislations have been put in place with an aim of ensuring that the environment is preserved. Nations around the world have gone ahead to control air pollution at a national level by ensuring that their industries reduce the number of emissions. Constant monitoring of the activities, carried out by environmental agencies, ensures that these industries still adhere to the set regulations. Internationally, the signing of treaties like Kyoto protocol is done with an aim of reducing the number of air emissions, especially from the industries in the developed countries, so that global warming is reduced.  Despite all these efforts, the effects of environmental degradation will be felt for a long time to come. In addition, the increase in the number of automobiles around the world continues to increase the amount of air emissions thus derailing the efforts made to ensure a clean environment.

Conclusion

The industrial revolution was an era that was marked by technological advances which are today seen as the main background of modern technological development. Despite the economic development enjoyed during this period, the environmental degradation that occurred is still being felt even today. In an effort to prevent further environmental destruction, countries implemented environmental regulations that are to be followed by industries tracing back to the Post-World War II era. An example of the measures taken is the establishment of the Clean Air Act that is associated with economic benefits such as environmental conservation, environmental taxes, and reduced environmental cost per factor, reduced air pollution, creativity/innovativeness, jobs creation and health benefits. Lastly, environmental stability is the backbone of sustainable development around the world but this will only be attained if the industries comply with the regulation, because the effect of pollution on the society is quite significant.

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