Essay/Term paper: The economics of the clean air act

Essay, term paper, research paper:  Economics

The Economics of The Clean Air Act


Air is a part of all of our lives. Without clean air, nothing we know of can
exist. The debate over clean air, it's regulations, their teammates and
opposition, and the economic factors coming into play into this ever-more
recognizable problem is a widespread and ever more controversial one. Like a
long countdown to eventual disaster, the pollution effecting our world has no
doubt made increasingly more impact on our daily lives, and has increased the
intensity on Washington and other countries to solve the problem. The Clean Air
act is a step in the right direction, but with every answer their comes two
questions and likewise more and more people taking sides. There have been long
debates not over the effectiveness of such regulations, but the lack of
opportunity such regulations and deregulations provide for other companies.
Global warming has increased the tension over the economics of cleaner air, but
with little the government can do to limit the use of cars, the production of
necessary coal-fired power plants and other such human resources, the topic just
turns into another fog for debate and argument over stricter regulations and the
impeached right these sources have to operate. The continual power struggle of
such economic and social issues and the debate over the effectiveness of
stricter, present or more lenient regulations has turned into a smorgasboard of
prectical solutions, with opponents quickly changing minds and becoming
supporters and vice-versa.

The expenditure of about 20 billion on the part of companies since 1990 to
clean up such hazardous pollutants as cars, factories, and thousands of other
measures have reaped about 400 billion in saved hospital costs, lost workdays,
reduced productivity, and other conditions while at the same time theoretically
helping to reduce smog and pollution. The findings of a report on experiments
done for the Clean Air act was passed into law in 1970. The Enviornmental
Protection Agency has recently come under attack by critics however, and
Washington has threatened to cut the agencies' budget citing high costs of
enviornmental legislation, even while their is solid proof that the agencies'
measures are paying off. Congress is skeptical of reports that the whole system
is reaping more benefits on the enviorment than the whole operation actually
costs.

Economically, the Clean Air Act is definitly sound and good for the economy.
For example, American fishermen average $24 billion a year in expenditures and
ultimately generate $69 billion yearly for the economy. Moreover, the average
American worker recieves $20 in value in reduced risks of death, illness, and
other adverse effects for every dollar spent to control air pollution. All in
all, the country spent roughly $436 billion enforcing clean air regulations, and
gained about $6.8 trillion in benefits in 1990. The amounts of harmful
chemicals and pollutants in the air has also found to be dramatically reduced
since 1970. 40 percent of sulfer dioxide in the air has been reduced, as well
as 30 percent of nitrous oxide, and 50 percent of carbon monoxide.

As well as air, the EPA has produced results in protecting our nation's
waterways. For example, the Clean Water Act, which passed in 1972, has since
given states grants of $66 million to help install water sewage treatment plants.
They also found that the act has required the industry to install tens of
billions of dollars of anti-polltion technology. The effect on the liquid
industry has been enormous. Boating sales generate $14 billion alone while
fishermen produce $3 million, and the nation spends an estimated $35 million
anually for fish.

The economics of the Clean Air Act and the regulations pioneered by the EPA
have set new standards for the production of companies. Under the current
regulations, there is a set amount of pollution that can be produced in the U.S.
each year. The units of pollution, or credits, are distributed evenly among
production companies, mining factories, and other producers of such
externalities based on size, output and strength in the industry. Companies are
allowed to sell their credits if they want, which enables companies whose
pollution rates exceeds their limit in a particular area to still operate in a
particular area to still operate efficiently while not exceeding their maximum
level of pollution output.

There are many arguments for and against this method of regulation. The
bigger and richer companies get to produce the most pollution in the end while
the current system alienates newer, more finantially strapped firms. What makes
the current system more unfair is that the emission allotments of certain states
are more lenient than others. For example, in Western Pennsylvania, there are
strict regulations on emission output levels, while 35 miles west in Ohio, there
are more lenient levels of precautions. The results of this is that many
companies don't look to move or produce in PA and would rather just do so in
Ohio. The results have been disastrous for the Western Penn. economy. This
system with seemingly limitless updates and new precautions are cutting back on
jobs and increasing overall unemployment.

Theorists contend that in a market driven economy, competition alone serves as
an adequate regulatory device. Make a poor product or price it too high and
your competitors will make more money. Better yet, with less regulations,
businesses have more money to grow faster, hire more employees and offer greater
returns to shareholders. Money that can be spent on cleaning pollution up is
often just spend on litigation. The lawyers get paid protecting the precautions,
while the dump just stays put. That money in turn would have been channeled
more effectively if there were less precautions. Many people contend however,
that precautions are supposed to be a burden and that keeps businesses from
doing what they want to do, which is the primary nature of any law.

As with any environmental protection regulation nowadays, the regulations
imposed on cars, coal-fired power plants and other human resources in an attempt
to thwart or at least slow down the effects of global warming, has met with
angry responses from the domestic oil, coal, and utilities industry. The United
Mine Workers, a key member of the labor coalition that supported President
Clinton's reelection has also registered it's concerns.

The supporters of these measures have valid arguments for the precautions they
expect to be signed into law sometime this year. The burning of fossil fuels
such as coal, oil, and their products such as gasoline, produces carbon monoxide,
a greenhouse gas which can build up in the atmosphere. Scientists believe that
the continual buildup of these compounds could lead to devastating climate
changes in the next century unless their buildup is slowed. Opponents of the
new precautions believe that the new precautions could lead to the
deindustrialization of the U.S. and unless stopped, the entire world.

Shifting the world away from fossil fuels also provides enormous economic,
political, and diplomatic challenges. Many developing nations such as China are
dependent on coal-generated power to drive their economic growth over the next
several decades. U.S. utilities uses coal to produce more than half of the
nation's electricity. Plentiful U.S. coal supplies have also meant power for
many U.S. companies where coal is plentiful.

Air and water are concrete parts of all of our lives. With the destruction
and continual pollution being pumped into our ecosystem, who knows how long it
will be before the whole world is contaminated to the point where we can no
longer live in it. The beuracrats in Washington don't have all the answers,
neither do the unions, or the big corporations. The idea and impact of
pollution is like a time-bomb waiting to explode, and the end draws nearer and
nearer. We cannot look back on our world after we have destroyed it and comment
on things we should have done differently.