Environmental Economics and Human Health

Environmental economics has made numerous contributions to both the theory and the applied problems surrounding pollution control. Given that the primary benefits of controlling most pollutants are health benefits, there is a close link between human health and environmental economics. One of the most important contributions that economics has made to the problem of pollution control is to clarify the objective of social policy. The objective of controlling pollution is to minimize the total costs to society, where these costs include the damages from remaining pollution and the abatement cost required to eliminate pollution. The optimal policy keeps the total cost to society from pollution as small as possible. Additional pollution should be removed as long as the damages removed are less than the cost of additional abatement. Although this is a straightforward application of common sense, this optimal policy is nonetheless controversial, as many environmental advocates would prefer simply to minimize pollution itself. Even within the health community, there are many who would advocate minimizing health effects regardless of cost. However, going beyond the optimal strategy and minimizing health effects would eliminate only a small amount of health loss while costing a great deal of abatement resources. Rather than spending huge resources chasing the last elements of pollution, environmental economics suggests diverting those resources to save more lives in other more promising activities such as reducing driving fatalities or fighting curable diseases. Another major contribution of environmental economics is proof that government intervention is necessary to control pollution. A few observers, such as Ronald Coase (1), dissented and argued that victims would willingly bribe polluters for clean air. But the profession recognizes that, in general, victims do not and cannot organize themselves to make offers to polluters. There are simply too many people damaged by most emissions of pollution for them to act as a single coordinated agent. With victims having different tastes and incomes, they cannot agree how much to pay and how much to control the pollution. In the absence of government intervention, the market simply does not get organized and so fails to abate. At first, government intervention meant regulations or standards. The Clean Air Act in 1970 began federal control of the primary air pollutants (sulfur dioxide, particulates, carbon monoxide, ozone, nitrogen dioxide, and lead). The Clean Water Act followed suit and provided federal regulations to protect water resources. Further laws have been passed to …