Commercial activities vs. environment

A viewer asked this question on 8/20/2000:

Hi, I badly need answers to these questions pls help me out
1:How does environment influence the commercial activities practised by man?
2:What is the nature of relationship between various components of environment?
3:What is the dynamics of interdependence between environment & commercial activities?
Even if you know the answer to one of them or any of them pls do not hesitate to reply

JesseGordon gave this response on 8/21/2000:

Many commercial activities use environmental resources directly (such as logging, mining, farming, fishing, ranching, etc.) All commercial activities ultimately use environmental resources at least in an indirect way, because people need breathable air, drinkable water, a healthy work environment, etc.

Traditionally, commercial activity has been able to use environmental resources "for free," i.e., without counting the cost of depletion of that resource. For example, factories were allowed to dump their wastes into rivers, which saved the company the cost of disposal, at the expense of river cleanliness (an environmental resource). When things are available for free, people use them more than if they have a cost; hence river cleanliness was degraded heavily ion that example.

The initial reaction once people started realizing the costs involved with the loss of environmental resources (in the 1970s) was to regulate the activities that used environmental resources. For example, dumping wastes into rivers was limited, or banned. That made for numerous legal battles and animosity between the factories (who argued that their livelihood and the jobs of their workers depended on it), and the "users of the environmental resource," such as fishermen or swimmers downstream, who were damaged by the dumped waste.

The newer solution is to charge fees which estimate the cost of the loss of the environmental resources. For example, the factory might be charged $100 per ton of waste disposed of into the river. The $100 would represent the cost of the loss of environmental resources to the users downstream. In some cases, the government agency that collected the fee might compensate the downstream users directly (for example, by cleaning up the waste, or paying them to move).

But the theory is that the factory will dispose of less waste. If the factory can spend, say, $25 per ton to dispose of a few tons of waste in a different way (like by drying it out first, or treating it with chemicals), then they save $75 per ton compared to dumping it in the river. Some tons might be more difficult to treat, say costing $200 per ton -- those they continue to dump in the river because the $100 per ton fee is cheaper. The result is that there is an economic incentive to reduce the number of tons of waste dumped in the river. And the most "economically efficient" method of waste treatment is found for each ton of waste. Most importantly, no jobs are lost, but the downstream water becomes cleaner. The key to a plan like this is to charge an appropriate amount for the use of the environmental resource, i.e., charge a fee for polluting the river.

That should get you started -- write a follow-up with details.

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