Inequality and Environmental Protection James K Boyce Department

Inequality and Environmental Protection James K. Boyce Department of Economics & Political Economy Research Institute University of Massachusetts, Amherst New Economics Summer Institute, Boston College, June 2012

Democracy State Market Oligarchy

What’s the “right” level of environmental protection?

BCA prescription: the “efficient” level of pollution $ MC MB Neoclassical “optimal” level Level of Environmental Degradation

BCA normative rule: maximize Net Present Value $ MC NPV MB Neoclassical “optimal” level Level of Environmental Degradation

Interpersonal aggregation in BCA NPV = net benefit = benefits minus costs summed over all individuals NPV = bi i where bi = net benefit to individual i

Let them eat pollution? The measurement of the costs of health-impairing pollution depends on the forgone earnings from increased morbidity and mortality. From this point of view a given amount of health-impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic of dumping a load of toxic waste in the lowest-wage country is impeccable and we should face up to that. - Lawrence Summers, “Let them eat pollution, ” The Economist, February 8, 1992.

Valuing human health risks The role of purchasing power Marginal benefits of reduction in poor countries “Efficient” level in poor countries

Beyond purchasing power: From normative prescription to positive description Decision power. Agenda power. Value power. Event power.

Event power

Event power: another example Siting of hazardous facilities in Louisiana’s “Cancer Alley” began before the Voting Rights Act of 1965.

Changing power balances: the environmental justice movement

Recall: BCA rule max bi i where bi = net benefit to the ith individual. If bi > 0, individual i is a winner; if bi < 0, individual i is a loser.

PWSDR max πi bi i where πi = power of the ith individual

BCA $ MC to losers = |Σbi| where bi < 0 i MB to winners = Σbj where bj > 0 j Neoclassical “optimal” level Level of Environmental Degradation

PWSDR: (i) winners more powerful than losers $ MC to losers = |Σbi| where bi < 0 i Power weighted MC to losers = |Σπibi| i Power weighted MB to winners = Σπjbj j MB to winners = Σbj where bj > 0 j Neoclassical Actual level optimum Level of Environmental Degradation

PWSDR: (ii) losers more powerful than winners $ Power weighted MC to losers = |Σπibi| i MC to losers = |Σbi| where bi < 0 i Power weighted MB to winners = Σπjbj j MB to winners = Σbj where bj > 0 j Actual level Neoclassical optimum Level of Environmental Degradation

Which is more widespread? (i) “too much” environmental degradation or (ii) “too little”? Benefits (in the forms of consumer surplus and producer surplus) are correlated with wealth: the rich consume more and own more stock. Even if costs were evenly distributed, net benefits (bi) are correlated with wealth. Power (πi) is correlated with wealth, too. Net benefits and power tend to be positively correlated. Cases where the winners are more powerful than the losers are more widespread.

PWSDR two hypotheses 1. Direction: Environmental costs will be imposed disproportionately on people with less power. 2. Magnitude: Greater power inequalities will lead to higher levels of environmental degradation.

Valuing human health risks The role of political power (πi) Power-weighted marginal benefits of reduction (poor countries) Actual level in poor countries

Valuing human health risks Purchasing power + political power combined Marginal benefits of reduction in poor countries Power-weighted MB of reduction (poor countries) Actual level in poor countries

PWSDR two hypotheses 1. Direction: Environmental costs will be imposed disproportionately on people with less power. 2. Magnitude: Greater power inequalities will lead to higher levels of environmental degradation.

Measuring interstate variations in power distribution Educational Attainment POWER DISTRIBUTION Voter Participation Medicaid Access Tax Fairness

Interstate variations in the distribution of power Rank Environmental policy rank State Score 1 Minnesota 2. 32 7 2 Maine 1. 65 5 49 Alabama -1. 61 49 50 Mississippi -1. 74 46 Source: Boyce, Klemer, Templet & Willis, “Power Distribution, the Environment, and Public Health, ” Ecological Economics, 1998.

The new environmentalism: Beyond sacred groves and sacrifice zones For more, see The New Environmental Activists. Online at: http: //www. peri. umass. edu/fileadmin/pdf/New_Environmental_activists. pdf.