Slide Presentation by Lesley Allen Kabigting For The Role of Economics in Environmental Management

Environment Management
Mr. Getor Isip, MBA

Chapter1: The Role of Economics
in Environmental Management
Lesley Allen D. Kabigting

MBA – 2nd Trimester
Contents
Introduction
• Economics and the Environment
• Economic Theory:
 Circular Flow Model
 Materials Balance Model

• Flow of Resources: Natural Resource Economics
• Flow of Residuals: Environmental Economics
• Companies with Great Environmental Initiatives

• Fundamental Concepts in Environmental Economics
• What Causes Environmental Damage?
• Sources of Pollution
• Scope of Environmental Damage
• What do we want the environment to look like?
• Environmental justice
• Risk Analysis: Two decision-making procedures
• Environmental Policy and Laws in the Philippines
Introduction:
Economic and environmental performance must go hand in hand. The

natural environment is central to economic activity and growth, provi
ding the resources we need to produce goods and services, and absor
bing and processing unwanted by-products in the form of pollution an
d waste.
Environmental assets contribute to managing risks to economic and s

ocial activity, helping to regulate flood risks, regulating the local clima
te (both air quality and temperature), and maintaining the supply of c
lean water and other resources.
Environment and Economics
The environment provides resources to the economy, and acts as a sink

for emissions and waste. Poor environmental quality in turn affects
economic growth and wellbeing by lowering the quantity and quality of
resources or due to health impacts, etc.
Economic Theory
explains what we observed in reality, including environmental problems, and tries
to predict what will happen
Terminology:
Output Market consists of output that is disposed of on the market or intended t
o be disposed of on the market (PRODUCT)

Factor market is a market where businesses purchase the items needed to produc
e goods or services.

Thermodynamics - is the branch of physics that deals with heat and
temperature, and their relation to energy, work, radiation, and properties of matt
er.
The Two Basic Models of Economic
Activity
Circular Flow Model
• Shows the real and monetary flows of economic activi

ty through the output and factor markets
• Monetary flow of economic activity.
• Does not show the linkage between economic activity

and the environment
Materials Balance Model
• Expand on circular flow model.
• Shows links between economic activity and the natural environmen
t via flow of residuals from the economy to the environment.
• This is Environmental Economics
• Residuals are pollution remaining in the environment after some pr
ocess has occurred
• Residuals can be delayed, but not prevented, through recovery, rec
ycling, and reuse.
• Law of Thermodynamics for economists: planet’s resources won’t l
ast forever.
Flow of Resources: Natural Resource Economics
Natural Resource Economics deals with the supply, demand and allocation of the earth natural resource.
Main objective of natural resource economics is to better understand the role of natural resources in the
economy in order to develop more sustainable methods of managing those resources to ensure their availa
bility to future generations
Natural resource economics focuses on the supply, demand, and allocation of the Earth’s natural resources.
Every man-made product in an economy is composed of natural resources to some degree.
Natural resources can be classified as potential, actual, reserve, or stock resources based on their stage of d
evelopment.
Natural resources are either renewable or non-renewable depending on whether or not they replenish
naturally.
Natural resource utilization is regulated through the use of taxes and permits. The government and
individual states determine how resources must be used and they monitor the availability and status of the
resources.
Flow of Residuals: Environmental Economics
• Consumption residuals are what is left over after consumers have

finished using the products that contained or otherwise used these
materials.
• Emissions: The portion of production or consumption residuals that are placed in

the environment, sometimes directly sometimes after treatment.
• Recovery, Recycle, Recovery

Companies with Great Environmental
Initiatives
Ford Motor Company
The company uses sustainable fabrics in its vehicles while 80% of both its Focus and Escape ve
hicles are recyclable. The company also focuses on fuel efficiency, particularly on the six-speed
transmission, offering a clean diesel heavy duty pickup truck. Furthermore, the paint fumes
in the company’s plant in Michigan are recycled as fuel.
Disney
• Is determined to please companies that have made it a giant by using zero net direct
greenhouse gas emission policies within all its facilities.
• In addition, it is working at reducing the indirect greenhouse gas emissions through the
reduction of electrical consumption
• Also has a zero waste policy meaning that there is nothing that would end up in landfills.
• Also uses technology that saves water and is working on lowering the footprint of its
product manufacturing and distribution.
• This is tied up to the company’s policy of having a net positive environmental impact that
has made Disney a leader in environmental responsibility
Hewlett-Packard

one of the first companies to have reported its greenhouse gas emissions,
after which they have initiated plans that are aimed at reducing emissions and
cutting back on
toxic substances used in manufacturing its products like cartridges

It has an aggressive recycling program that ensures most of the manufacturing
waste does not end up in landfills.
Fundamental Concepts in Environmental
Economics
Environmental economics is a sub-field of economics

concerned with environmental issues. It has become
a widely studied topic due to growing environmental
concerns in the twenty-first century.
What Causes Environmental Damage?
 Natural Pollutants arise from non-artificial processes in nature

 Ocean salt spray
Sea spray contains both organic matter and inorganic
salts that form sea salt aerosol

 Pollen
is found naturally in the air, human activities and choices can
increase the amount of pollen in our air, and in turn, can cause people to
have more severe allergic reactions. Because human activities can increase the amount
of pollen in our air and cause adverse health effects, some people view pollen as an air
pollutant.

 Anthropogenic Pollutants
(human-made) pollution is caused due to human activities. Burning of fossil fuels,
deforestation, mining, sewage, industrial effluent, pesticides, fertilizers, etc. can cause
anthropogenic pollution. - The primary air pollutants are sulfur oxides, oxides of nitrogen,
carbon monoxide. Chemical wastes, gases from combustion.

Sources of Environmental Damage
• Sources grouped by mobility (shifting source)
Stationary sources fixed site producer of pollution
e.g. combustion (burning) of fuel and industrial processes.

• Mobile source: any non-stationary source (fixed source)
e.g. such as power plants, chemical plants, oil refineries,
manufacturing plants, and other industrial facilities.

• Sources grouped by identifiability (pre-established)
Point source: single identifiable source
Nonpoint source: a source that cannot be accurately identi fie
d, degrading in a diffuse way.
Scope of Environmental Damage
Local Pollution
Damage not far from the source
e.g. Urban smog
Regional Pollution
Damage extends well beyond the source
e.g. Acidic deposition (acid rain)
Global Pollution
Involving widespread environmental effects with global impl
ications
e.g. Global warming, ozone depletion
Local Pollution
Damage not far from the source
e.g. Urban smog
Regional Pollution
Damage extends well beyond the source
e.g. Acidic deposition (acid rain)
Global Pollution
Involving widespread environmental effects with global implications
e.g. Global warming, ozone depletion
What do we want the environment to look like?
Environmental Quality – reduction in anthropogenic contamination to socially acceptable
levels.
Environmental quality includes the natural environment as well as the built environment, suc
h as air, water purity or pollution, noise and the potential effects which such characteristics m
ay have on physical and mental health.

Sustainable Development – management of resources to ensure long-term quality and abun
dance.
The goal of sustainable development is to meet the needs of today, without compromising th
e needs of tomorrow. This means we cannot continue using current levels of resources as thi
s will not leave enough for future generations. Stabilizing and reducing carbon emissions is ke
y to living within environmental limits.

Biodiversity – assuring the variety of distinct species, genetic variability, and variety of inhabi
table ecosystems.

Environmental justice – concerned with the fairness of the

environmental risk burden across segments of society or
geographic region.
Risk Analysis:
Two decision making procedures
Risk Management
the decision-making process of evaluating and

choosing from alternative responses to enviro
nmental risk
• Policy Evaluation Criteria – these strategies use criteria to evaluate policy
options based on measure of risk, cost, or benefits.
 Allocative efficiency – requires resources to be appropriated such that benefits

equal costs
 Cost-effectiveness – requires the least amount of resources be used to achieve
an objective
• Government Policy Approach

 Command and control approach - tell the people what to do
 Market Approach – create initiatives (prices) for people to do the “right thing”.
 Setting the Time Horizon

 Management Strategies – methods that addresses existing
 environmental problems and attempt to reduce the damage from the resi
dual flows
 Pollution Prevention – A long Term strategy aimed at reducing the amou
nt or toxicity of residuals released to nature
Environmental Policy and Laws in the Philippines
One of the earliest notable recognition by the Philippine government of the import
ance of sustainable development taking into consideration the environment was set
out in the 1987 Constitution which stipulates that “The State shall protect and adva
nce the right of the people to a balanced and healthful ecology in accord with the
rhythm and harmony of nature.”
Presidential Decree No. 1586 establishing an environmental impact statement system includi
ng other environmental management related measures and for other purposes.

PRESIDENTIAL DECREE No. 1308 March 2, 1978
REGULATING THE PRACTICE OF THE PROFESSION OF ENVIRONMENTAL PLANNING IN THE PHI
LIPPINES

DENR-DILG JOINT MEMORANDUM CIRCULAR NO. 98-01
MANUAL OF PROCEDURES FOR DENR-DILG-LGU PARTNERSHIP ON DEVOLVED AND OTHER FO
REST MANAGEMENT FUNCTIONS

REPUBLIC ACT 9275 PHILIPPINE CLEAN WATER ACT OF 2004
aims to protect the country's water bodies from pollution from land-based sources (industrie
s and commercial establishments, agriculture and community/household activities)

REPUBLIC ACT 9003 ECOLOGICAL SOLID WASTE MANAGEMENT ACT OF 2000
An act providing for an ecological solid waste management program, creating the necessary i
nstitutional mechanisms and incentives, declaring certain acts prohibited and providing penal
ties, appropriating funds therefore, and for other purposes
REPUBLIC ACT 8749 PHILIPPINE CLEAN AIR ACT OF 1999

Is a comprehensive air quality management policy and program which aims to achieve and m
aintain healthy air for all Filipinos.

REPUBLIC ACT 6969 TOXIC SUBSTANCES, HAZARDOUS AND NUCLEAR WASTE CONTROL ACT
OF 1990
To control, supervise and regulate activities on toxic chemicals and hazardous waste

PRESIDENTIAL DECREE 1586 ENVIRONMENTAL IMPACT STATEMENT (EIS) STATEMENT OF
1978
The main objective of this law is to maintain the balance between the environment and the s
ocio-economic development of the country.
Quote:
“The real problem in this world is not climate change; the real problem is us because o
f our ignorance and apathy. What we have to do is to start changing our ways, to
start recalibrating our minds, and redirecting our steps, because together, as a global
community, our micro efforts will have a macro effect to help save our home,
our planet.”
Karen Ibasco
Miss Earth 2017

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Environment Management

Mr. Getor Isip, MBA

Lesley Allen D. Kabigting

Economic and environmental performance must go hand in hand. The

Environmental assets contribute to managing risks to economic and s

The environment provides resources to the economy, and acts as a sink

• Shows the real and monetary flows of economic activi

• Monetary flow of economic activity.

• Does not show the linkage between economic activity

• Consumption residuals are what is left over after consumers have

• Emissions: The portion of production or consumption residuals that are placed in

• Recovery, Recycle, Recovery

Environmental economics is a sub-field of economics

carbon monoxide. Chemical wastes, gases from combustion.

Environmental justice – concerned with the fairness of the

the decision-making process of evaluating and

 Allocative efficiency – requires resources to be appropriated such that benefits

• Government Policy Approach

 Setting the Time Horizon

REPUBLIC ACT 8749 PHILIPPINE CLEAN AIR ACT OF 1999

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