ENVIRONMENTAL ISSUES AND REGULATIONS 



Dr. Thomas A. Lynch 



Chief Economist 



Office of Economic Analysis 



Florida Department of Environmental Regulations 



2600 Blairstone Rd. 



Tallahassee, FL 32301 



INTRODUCTION 



The economic and environmental impacts of man's alteration of natural 

 resources are the focus of this paper. All natural resources are finite and 

 competition for their use is universal. The tenet of economics therefore, is 

 the study of the distribution of resources among competing users. This tenet 

 includes the air and the seemingly boundless waters into which wastes are 

 discharged. 



Some resources such as labor, raw material, and managerial expertise have 

 a market price associated with their use that is incorporated into the price 

 of the product. Resources such as air and water are used in the production 

 process and are assumed to be free. They are not, however. When wastes are 

 released into the air or water, they frequently result in secondary, often 

 unintended impacts or costs. Human health may be affected by sulfur oxide 

 discharged from coal -fired boilers, or by lead poisons from industrial waste 

 discharge. Some indirect costs (side effects) are the destruction of valuable 

 saltwater fisheries and contamination of oysters, and intrusion of saltwater 

 into groundwater aquifers. 



Air and water pollution often causes excessive direct and indirect costs 

 to local economies. Proper knowledge about market demand and resource values 

 would avoid many of these external costs. In economic terms, indirect costs 

 are not usually counted in the pricing system. Pollution is an example. In- 

 direct costs that escape the pricing mechanism may include impaired health, 

 lower property value, altered ecological resources, and lost recreational 

 opportunities. 



Many of the underlying economic problems related to environmental protec- 

 tion manifest costly side effects. For example, the "cost" of pollution to 

 society rarely carries a price tag and is not usually considered in cost/ 

 benefit analysis. 



Many indirect costs are caused by imperfections in the market system. 

 This imperfection arises, in part, because many natural resources, such as 

 air and water, are owned by the public rather than by private individuals. 



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