Essay Example: A Critical Assessment of the Internalization of Environmental

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Carnegie Mellon University
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The connection between the natural environment and development is apparent. To begin with, the natural environment is the major source of raw materials that drive economic development. For example, mechanization in the first industrial revolution was powered by steam. Essentially, steam is water in the form of vapor. The second industrial revolution was driven by electricity generated from hydroelectric and geothermal projects. Other than powering mechanization, the raw materials used in industries to create goods are often obtained from the natural environment (Robertson, 2014). For example, the manufacture of glass uses silica sand, limestone, and soda ash. On the other hand, cement is made from clay, limestone, and shale. In addition, the various forms of bricks, including concrete, sand, lime, and clay bricks are extracted from the natural environment. Currently, glass, cement, and bricks are the primary construction materials, and they are obtained after processing the various natural resources.

On the other hand, development is said to occur when productivity increases. According to Schmidheiny (1992), productivity is a measure of the rate at which raw materials (inputs) are converted to final products (output). Economic development implies increased productivity across the different sectors of an economy, including construction, manufacturing, energy and trade. Arguably, every sector of the economy thrives on natural resources. For example, the construction industry is an integral sector of an economy. Population growth increases demand for housing and other facilities. Construction of more buildings requires more materials including glass, cement, and bricks. These materials are obtained from the natural environment. In addition, most modern economies aspire to be energy independent. Previously the world economy was fueled by energy from fossils. However, fossil deposits are on the verge of depletion. The world is now exploring alternative sources of clean energy, particularly the renewables. Renewable sources of energy include solar and wind energy. Renewables are seen to be more convenient and reliable because they are readily available in nature. Essentially, the natural environment is a principal source of energy for development.

According to Robertson (2014), the natural environment is mans lifeline as it provides him with basic supplies including food, water, and air. However, man must invest some effort to extract these supplies from nature. For example, the history of agriculture began with the early man tilling land to supplement the food he obtained from hunting and gathering activities. Since land was readily available and the climate was favorable, cultivation became a viable activity. The invention of the wheel was a major boost for cultivation and is touted to be a sweeping contributor of the Agrarian Revolution.

Admittedly, the Agrarian Revolution set the stage for the Industrial Revolution. The former led to increased farm yields. The people used certain farm produce to make clothes. They would also use simple hand tools to make furniture. However, the invention of the steam engine was a phenomenal turnaround in early industrialization. The availability of raw materials and a ready market for finished goods fueled the revolution (Barbier, 1987). Most, if not all, of the modern industries originated from the ancient Industrial Revolution, including the textile industry, iron industry, transportation, and trade. Subsequent innovations and developments have built on these early breakthroughs. This goes to reinforce the position that since the ancient periods, man has benefited a lot from the natural environment through the extraction of raw materials.

The natural environment consists of systems that work together to form the ecosystem. The ecosystem is, therefore, an interaction between the living and the nonliving components of the environment. The interaction can be identified into energy cycles and nutrient cycles. For example, the water cycle is an energy cycle while the food chain is a nutrient cycle. More importantly, the interactions in the ecosystem create a natural balance. Ideally, the interaction between man and the environment should not interfere with the balance as instability on one element of the system can ruin the ecosystem. Even amid economic development, extraction of raw materials and other inputs from the natural environment should keep the balance in check. According to Barbier (1987), this is the premise of the concept of sustainable economic development.

The world economy has grown significantly over the years. Productivity in the various sectors has improved as the world continues to incorporate modern technology in production. The relationship between economic development and human activity is plain. As the world economy grows, human activity intensifies. This includes the extraction of raw materials and other industrial inputs from the environment. The unprecedented increase in human activity has created pressure on the ecosystem. Human activities have modified the natural environment, thereby disrupting the balance of the ecosystem. One such modification is the depletion of the ozone. The ozone is a thick blanket of gases that shield the earth from the harmful ultraviolet rays from the sun. The ozone layer filters these rays, allowing only those rays that are useful for the greenhouse effect. The greenhouse effect, on the other hand, is the warming effect of these rays on the earths surface. The greenhouse effect is important as it supports photosynthesis in plants. Photosynthesis is important in maintaining the balance in the ecosystem. However, according to DeSombre (2004), human activities such as the burning of fossil fuels intensify the greenhouse effect causing global warming. This is because the emission of greenhouse gases such as carbon dioxide from burning fossil fuels depletes the ozone layer, thereby allowing harmful sun rays into the earths atmosphere, which causes an unprecedented rise in global temperature.

Presently, global warming is perhaps the most daunting environmental scourge that the world is grappling with. Global warming has changed the weather patterns causing acute drought and famine in some areas. The other problems relating to global warming include thawing, which destroys infrastructure as well as excessive evaporation, which causes immoderate precipitation and floods. Apart from the depletion of the ozone layer, other modifications to the natural environment include deforestation and emission of greenhouse gases, both of which contribute to global warming by trapping the warm air from the earth (Gardiner, 2006). Pollution of water, land degradation and extinction of certain species of plants and animals are common modifications of the natural environment. The result of these modifications is that the present and future well-being of human being tends to be bleak as time goes by. Indeed, certain human activities amount to the destruction of natural resources which arguably weakens human civilization because the prosperity of humans is contingent on the integrity of the natural environment. For example, not only do natural resources have economic uses, but also medical, scientific and aesthetic uses. The pace at which the modifications are taking place is alarming thereby drawing global concern. Indeed, the incident has sparked political debates from all corners.

Motivated by a concern for posterity, the conservationists are leading in calling for the formulation of policies that can possibly decelerate the speed at which the modifications are taking place. Interestingly, the call is not to root out the modifications, but to slow them down. Perhaps this is an honest admission of the unique relationship between economic development and the environment where the former is inescapably dependent on the latter (Barbier, 1987). As economies across the world strive to attain higher levels of development, the environment is being modified significantly. The challenge is one of striking a balance between the two. Advocating for an absolute halt on modifications is unserviceable because it would obstruct development. Compromise is the ideal position, whereby the policies would alleviate the modifications and at the same time maintain the growth rate of world economies.

The cap-and-trade scheme is a popular policy that has been employed in the EU and Australia to manage emission of greenhouse gases. Under this scheme, governments and environmental agencies put a ceiling on the amount of emissions that can be released to the atmosphere. The ceiling is flexible such that as time goes by, the cap keeps falling, consequently restricting the amount of emissions that can be released into the atmosphere. Upon establishing the cap, companies are then invited to obtain allowances. The allowances are either dished out freely or auctioned. At the end of the financial year, the companies are asked to surrender an amount of allowances that covers all the emissions released by it during the year (Murray, Newell and Pizer, 2009). If the company fails to comply, a hefty fine is imposed on it. However, if the company reduced the emissions, it is left with surplus allowances. It can trade them with other companies or businesses in the future at a profit. Sometimes, when the company realizes that it falls short of allowances in a particular year, it can buy from other companies and reduce emissions in the subsequent periods. Proponents of this policy maintain that trading the allowances provides an opportunity for companies and businesses to reduce emissions where the costs attributed to the cut in emissions are low. Besides, price stability in this market motivates investors to explore low-carbon fuels. For example, a power generation company that is using coal will require more allowances or permits than one that uses gas. This is because coal releases higher amounts of emissions to the atmosphere than gas. Suppose the company is planning an expansion project, all factors remaining constant, then the company will choose gas over coal in the new venture. This is a strategy of cutting down operational costs. Cap-and-trade emissions trading scheme, ETS has been lauded as an effective method that has reduced greenhouse emissions in the EU and Australia. In addition, more companies have invested in renewables. More importantly, productivity in both the EU and Australia has increased since the adoption of the scheme. As a result, the particular economies have registered growth and job creation has been enhanced. Some people have opposed the cap-and-trade ETS. They contend that giving companies a right to pollute is against the principle of environmental justice (Murray, Newell and Pizer, 2009). They argue that while the world is joining forces to eradicate every form of pollution; cap-and-trade scheme encourages companies to pollute when they acquire the rights to pollute. The emissions trade system allows companies to trade the rights with one another, particularly when one company has a shortfall of allowances due to excess emissions. The opponents argue that this move wittingly or unwittingly encourages pollution.

Certainly, the cap-and-trade ETS is one way of taking the companies to account by making them pay for non-compliance while giving them a leeway to invest in clean and safe energy. Essentially, the companies are internalizing the costs of the damage they inflict on the society by paying for any excess pollution in the form of fines or purchases of additional permits from other companies to cover the shortfall. The scheme is a classic illustration of how a balance between economic dev...

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