THE COST OF POLLUTION:

ACCOUNTING EXTERNALITIES TO
GROWTH
PART II:

PUBLIC SOLUTIONS
Game!
P O L L U T I O N
P E R M I T
C A P
L E G I S L A T I O N
RECAP!
EXTERNALITIES
A side effect or consequence of an industrial
or commercial activity that affects other
parties without this being reflected in the
cost of the goods or services involved, such
as the pollination of surrounding crops by
bees kept for honey.
Externalities Can Be Either Positive or Negative!
Positive: Net benefit produced for third parties

I.e When corporations set shop in developing countries,

they create jobs

Better economy, more spending power, more taxes,

etc.

Negative: Harms towards third parties

I.e Pollution, child labor, death of local industries,

etc.
 POLLUTION
● By-product of human existence
● Caused by both producing and consuming goods
● Highest source: CO2 emissions
 Hypothetical Solution:

1. Identify biggest pollutant.

2. Decrease its
demand or supply.

Substitute goods
Consumers heavily
would still be too
depend on it.
expensive.
Bakit ang hirap?
Bakit ang hirap?
PEOPLE LACK
INITIATIVE
Tragedy of the ● Originated from
Commons William Forster
Lloyd’s 1833 essay
● Popularized by Garrett
resource shared Hardin’s 1968 essay
by many people
(e.g. natural resources)
 ● No one owns exclusive
rights on a portion of the
Tragedy of the commons

Commons ● People are free to use as much

for their own benefit

resource shared ● People have the tendency to

by many people exploit sources for
(e.g. natural resources) themselves
● Commons is depleted/ruined
 ● Negative externalities
Tragedy of the ●
is a well-known feature
Imbalanced

Commons benefit-to-cost ratio

Benefits that go to one individual,

resource shared others pay for the cost of losing the
by many people resource
(e.g. natural resources)
Environment and
Externalities
Examples
Ganges River in India
- Regarded as sacred by Hindus, the
river is personified as the goddess
Ganga in ancient texts and art. Ritual
bathing in the Ganges was and is an
important part of Hindu pilgrimage
- Experts estimate that more than 3000
million litres of untreated sewage from
these towns along the Ganges are
pumped into the river every day. By
the time it reaches Varanasi, whose
untreated sewage (or most of it) is also
pumped into the waters, it becomes a
sewer and the sixth most polluted
river in the world.
Bhopal Disaster
- The Bhopal disaster, also referred to as
the Bhopal gas tragedy, was a gas leak
incident on the night of 2–3 December
1984 at the Union Carbide India Limited
(UCIL) pesticide plant in Bhopal,
Madhya Pradesh, India.
- Over 500,000 people were exposed to
methyl isocyanate (MIC) gas. The highly
toxic substance made its way into and
around the shanty towns located near
the plant.
- Estimated death toll: 3000
- Settled through fines and litigation. The
company is still operating right now
Monsanto GMOs and Biotechnology
- In the 1980s, scientists began
using biotechnology, a
method of transferring genes
directly into a plant without
the long process of trial and
error. These products are
called genetically modified
organisms, or GMOs.
- Beneficial for farmers
- Weather resistant
- Food shortage
Zero Waste to Landfill Operations
Increasingly, companies are aiming to be

more environmentally friendly, and one

of the measurable means toward that

end is establishing facilities and

operations that send zero waste to

landfills.

Less waste! Less harm to the

environment.
 I. Laws and International Treatises
II. Research on energy-saving technology
III. Price Incentives
A. Taxes
B. Subsidies
IV. Systems and Regulations
A. Cap & Trade
B. Command and Control
V. Precautionary Principle
VI. Consumer Advocacies

Public Solutions on Pollution Externalities

 INTERNATIONAL
AGREEMENTS/ TREATIES
Ramsar Convention on Wetlands (1971)

● Held in Iran
● protect and conserve wetland resources
*all water habitats and biomes except oceans
 - There are six wetland
Importance of habitats in the
Philippines designated as
Wetlands Ramsar wetlands of
international
Conservation importance
in the - To sustain the utilization
of wetlands and to
Philippines recognize the important
ecological roles
Convention on International Trade In
Endangered Species (CITIES) (1960s)
● one of the largest international agreements concerning the
environment
● makes sure that endangered animals and plants are not
harmed by international trade that further diminishes their
populations
● one of their most difficult, ongoing struggles is keeping
poachers from illegally harvesting animal products, such as
elephant ivory and rhinoceros horns
 - At the request of the
Philippine
PH has Stricter government, CITES
Domestic has released a note to
prohibit trade of
Measures in the CITES specimens
Trade of - Notification concerns
Specimens terrestrial fauna and
aquatic species
- Released in 2010
Basel Convention (1992)

● protect human health and the

environment against the adverse effects
of hazardous wastes
 - In the meetings of the
Basel, Rotterdam, and
PH Stockholm (BRS)
Recognized as conventions, PH was
recognized
“BRS - Participating in
Practitioner” workshops, etc. and
applied the technical
knowledge in their jobs
Convention on Biological Diversity
● 3 main goals: conservation of biological diversity,
sustainable use of plant and animal species, and
equitable sharing of benefits from the use of genetic
resources
● Cartagena Protocol on Biosafety is an agreement created
by members of the CBD to safely control the
transportation of genetically modified organisms
 CBD Not - The CBD does not integrate
the rights of the indigenous
people
Giving Full - The CBD approaches problems
in a sectoral manner rather
Recognition to than an integrated manner
- Must also aim to preserve
Indigenous indigenous and local
communities that live
People traditional lifestyles
United Nations Framework Convention
on Climate Change (1992)
● agreement that came out of a large meeting (called
Earth Summit) in Rio de Janeiro
● Nations that were interested in understanding global
climate change and reducing the impact of human
activities on the world global climate system signed
this agreement
● laid the groundwork for later agreements like the Kyoto
Protocol
 - Commits to reduce carbon
PH Commits to emissions but also
maintaining the “business as
Reduce Carbon usual scenario” from 2000 to
Emissions by 2030
- A conditional commitment
70% by the year only if the financial resources
and facilitation of technology
2030 are given
 UNITED NATIONS AGREEMENTS
A. Stockholm B. Montreal Protocol
Declaration (1972) (1987)
● doesn’t bind any nation to
● successful in phasing out
specific action but outlines that
the use of dangerous CFC
nations will work together in
(Chlorofluorocarbon)
international cooperation to
aerosol chemicals and
maintain a healthy, pollution-free
preventing further damage
global environment for the good
to the ozone layer
of all humankind
Stockholm Declaration
- President Marcos addresses
concern on the decay of the
environment brought upon by
the Stockholm Declaration
World during the World Environment
Day (1977)
Environment - “our objective will be to reach
the point where we don’t need
Day to cut our trees in order to
develop economically”
 Montreal Protocol
- PH is successful in phasing out
ozone-depleting substances
(ODS)
PH Complies - This excludes
hydrofluorocarbons (HFCs)
to Montreal - Reduced the production of
HFCs by 10% in 2015
Protocol - All ODS in the country to be
banned by 2040

2016
 UNITED NATIONS AGREEMENTS
C. Kyoto Protocol (1997) D. Paris Agreement on
● Kyoto, Japan Climate Change (2016)
● most well-known protocol of the
UNFCCC. ● World leaders from across the globe united
for the first time in history to legally ratify
● many nations agreed to set limits on
action against pollution through the United
carbon dioxide and other greenhouse Nations Framework Convention
gas emissions ● agreed upon and required that they would
● A few nations have succeeded in all work towards making sure the Earth’s
reducing their greenhouse gas emissions temperature doesn’t rise above 2 degrees
in line with Kyoto guidelines, but Celsius and limit temperature increases
worldwide, greenhouse gas emissions to 1.5 degrees Celsius
● Paris Agreement will replace the Kyoto
haven’t decreased significantly
Protocol in 2020.
 Kyoto Protocol
- Department of Foreign Affairs
(DFA) delivered a statement
during the global climate
PH Gets Support treaty talks in Doha, receiving
support from other countries
from Other - Obligated to reduce an
average of 5.2% below 1990
Countries to levels
- First commitment period runs
Preserve Kyoto from January 1, 2008 to
December 31, 2012
Protocol
Paris Agreement on - Paris Agreement on Climate
Climate Change Change to take effect on Earth
Day 2017
- Sen. Loren Legarda appeals to
the public to transition to
renewable energy, if possible
Earth Day - Although the emissions are
minimal, PH experiences the
adverse effects of it
2017 - Demanding assistance and
compensation as a part of
climate justice
PHILIPPINE LAWS
Presidential Decree (P.D.) 984:
Pollution Control Law of 1976
Revision of Republic Act No. 3931, commonly
known as the Pollution Control Law
● a national policy to prevent, abate and
control pollution of water, air and land for
the more effective utilization of the
resources of this country
Presidential Decree (P.D.) 1181:
Providing for the Abatement, Control and Prevention of
Vehicular Pollution & Establishing the Maximum
Allowance Emissions of Specific air Pollutants from all
Types of Vehicle of 1997
● prevent, control, and abate the emission of air
pollution from motor vehicles in order to protect the
health and welfare of the people and to prevent or
minimize damage to property and hazards to land
transportation
 2018 - 1000 PUVs stopped by
the Metro Manila
PUVs flagged Development
down for smoke Authority (MMDA)
since the start of the
belching
“Tanggal Bulok,
Tanggal Usok”
campaign
Republic Act (RA) 8749:
Clean Air Act of 1999
● provides for a comprehensive air quality management
policy and program which aims to achieve and maintain
healthy air for all Filipinos
● covers all potential sources of air pollution: (1) Mobile
Sources (eg. motor vehicles); (2) Point or Stationary
Sources (eg. industrial plants); and (3) Area Sources (eg.
wood or coal burning)
2013 - Department of Environment
and Natural Resources (DENR)
Philippines: 9 postpones the issuance of a
department order to switch
Years Behind in motor vehicles from Euro 2 to
Euro 4 emission standard
Standards - Euro 2 emits 500ppm of toxic
sulfur while Euro 4 emits
50ppm of toxic sulfur
- Initially to be established in
2010, moved to 2012, but only
established in 2016
Republic Act (RA) 9275:
Clean Water Act of 2004
● aims to protect the country’s water
bodies from land-based pollution
sources (industries and commercial
establishments, agriculture and
community/household activities)
2011
- 250 out of 1,600 communities
have no access to clean water
250 communities (mostly 5th class municipalities)

with no - blamed on poor management,

lack of infrastructure, and
clean water pollution

- government is doing
rehabilitation efforts
 2017
More Water Sources to be Tapped
- DENR wants to add more
bodies of water as sources for
potable water in the next 5
years (until 2022)
- 761 bodies of water have been
classified since the enactment
of the RA
- DENR aims to add an
additional 183 bodies of water
to this classification
 2018
BORACAY
- 6 month ban on construction on
the island because of violations
of environmental rules and
regulations
- 92 establishments were in
violation of the Clean Water Act
- 4 establishments were in
violation of both the Clean
Water Act and Clean Air Act

Algae bloom found in Boracay shores

Republic Act (RA) 9003:
Philippine Ecological Solid Waste Management Act
(PESWMA) of 2000

● provides the legal framework for the

country’s systematic, comprehensive, and
ecological solid waste management program
that shall ensure protection of public health
and the environment.
 2014
- Sen. Loren Legarda appealed
LGUs told to to LGUs to comply to the RA
- 576 open dumps still present
follow solid even though it was banned
since 2000
waste law - 414 out of 1,610 local gov’ts
followed the RA
- technical and financial
constraints show the law can’t
be implemented
Presidential Decree (P.D.) 856:
Sanitation Code of 1975
● places the responsibility in the local
government units for the solid waste
management in his area of production
 2016
- Wet markets were in violation
of the sanitation code
Quezon City - Market Development and
Administration Department of
shuts down QC issues a cease and desist
order after seeing that the wet
markets markets are not complying
with health codes
- Failed to create a sewage
treatment plant, segregate
waste, and enforce a cleaning
code for their tenants
Republic Act (RA) 9512:
Environmental Awareness and Education Act of
2008
● promote environmental awareness through
Environmental Education (EE) and covers the
integration of EE in the school curricula at all levels, be
it public or private, including day care, preschool,
non-formal, technical, vocational, indigenous learning,
and out-of-school youth courses or programs
 2015
- Project launched in
DENR searches for response to the RA
the most - Encouraging schools to
eco-friendly and be more involved and
more active in
sustainable schools environmental issues
 Research on
Energy-saving
technology
 Might lead to the
Rebound Effect
benefits of energy efficiency
might be reduced as
people change their behavior
 PRICE INCENTIVES:

TAXES & SUBSIDIES

● Used to curb products; ● Provide funding for
to decrease demand industries to make
● CARBON TAX people buy more

Example:
people pay a corresponding price
● For electric car users
for how much carbon they emit
 PRICE INCENTIVES:

TAXES & SUBSIDIES

● Used to curb products;
to decrease demand
● CARBON TAX
Made in China 2025
people pay a corresponding price ● China (Sept. 2017) → $15,000 per
for how much carbon they emit electric vehicle or hybrid
 SYSTEMS AND REGULATIONS:

COMMAND
COMMAND and CONTROLand
● ProvidesCONTROL
a fixed or specific amount for
pollution emission

PROBLEM:

● offer limited flexibility on

where and how to reduce pollution
 SYSTEMS AND REGULATIONS:

COMMAND COMMAND and

and CONTROL
CONTROL
UNITED STATES OF AMERICA
Environmental Protection Agency (est. 1970)
 SYSTEMS AND REGULATIONS:

CAP and TRADE

[also known as emissions
[ trading]
● limits emissions without hindering economic growth

limit set on use of pollution permits

how much emission that firms can buy and sell;
that a firm can produce permit markets
SYSTEMS AND REGULATIONS:

CAP and TRADE

“By letting the market set a price on carbon,

emissions can be reduced in the
most cost-effective way.”

- Center for Climate and Energy Solutions

 When the health of humans and
the environment is at stake, it may
not be necessary to wait for
scientific certainty to take
protective action.

PRECAUTIONARY
PRINCIPLE
 ● Can be applied in
managing global commons
● Manages environmental
externalities
● But it is not cost effective

PRECAUTIONARY
PRINCIPLE
 Consumer
Advocacies
(e.g. zero-waste lifestyle)