Environmental Pollution and Energy: An Economic Evaluation

Environmental resources -- the atmosphere, land. oceans, rivers and lakes -- provide us with many services, one of which is to serve as a sink for the disposal of wastes. Several disciplines have provided frameworks for examining the change in the environment due to energy extraction, generation, transmission and use. For example, ecologists have attempted to trace through the effects of each plant and animal species of adding given amounts of effluents. Our viewpoint is economic. and we attempt to investigate why quantities of effluents are discharged and what leads to the medium and place of discharge. Furthermore, we discuss procedures to quantify the economic cost of discharging effluents and trace out methods by which society could achieve a desirable balance between environmental quality and other social and economic objectives.

The next sections briefly review the economic theory of environmental resources and the use of benefit-cost analysis in environmental decision-making. Section IV reviews methods for determining the social cost of air and water pollutants stemming from energy extraction, generation, and use and provides some estimates of these costs. A final section presents a brief summary.