Energy represents about ten percent of the cost of production, and so they achieve with their efficiency about a five percent competitive advantage in world markets relative to US goods. This advantage is certainly significant, but to it must be added the price edge of using other natural resources more efficiently. These efficiencies benefit countries, companies, and local communities. Using our natural resource base in a more efficient way, and maintaining a larger supply of both non-renewable and renewable resources relative to demand, makes the products of a nation, a company, or a community more competitive in the marketplace.
At the same time, we must begin to calculate into our economic reasoning the costs imposed by wastes. When wastes reduce the productivity of natural systems -- forests, fisheries, agricultural and range lands -- they reduce our supply of economic inputs. When wastes damage our existing investments -- acid rain eating our bridges, etc. And when wastes damage our health, they impose costs even as they add to GNP by generating demand for health services.
We can see that even given the prices of things today, environmental protection offers many substantial economic advantages. But a big piece of the puzzle has still been left out. Today's prices in many cases make no economic sense.
Price signals don't reflect the reality of the cost to provide goods and services. When thinking about the operation of the market in metering the use of natural resources, we must realize the extent to which we subsidize resource use and thereby distort price signals. Perhaps the most obvious and dramatic example of this is in transportation.
When we make transportation decisions, or when we make decisions about the location of our housing and employment sites, we consider the cost of getting from here to there. As the cost goes up, we are likely to decide to forgo trips or situate our home and job closer together.
Or we might decide to use transit, or bike or walk, rather than drive. The cost of automobile transportation is today subsidized enormously. If the true cost is every expenditure that is generated by auto use, a brief listing of some of these expenditures that are not actually paid by drivers in proportion to their driving will illustrate the subsidy. We build roads in many cases with general taxes. We also build roads by putting the cost on new development, and the bill is ultimately paid in mortgage and lease payments.
We maintain, repair and rebuild roads for the most part with general taxes. And we service them -- traffic patrol, accident response, and so on -- also mostly with general taxes. Parking including the garages in our homes is for the most part provided by mortgage and lease payments -- and for commercial structures, is passed along in the prices of products and services.
If all of these costs were paid by auto registration fees and gas taxes, or through other "use related" charges, the cost of auto use per mile would go up dramatically. Certainly it would at least double, and by many calculations might increase as much as three or even four times. Economics teaches simply that anytime any good or service is subsidized, the market undervalues it and its use goes up. If we paid all of the true costs of auto use in per mile and per vehicle charges, powerful price signals would be created to avoid unnecessary trips, shorten trip lengths, and shift to transit.
If these shifts were made in a revenue neutral way -- that is, if general taxes, development fees, product prices and so on were reduced to an extent equal to the increase in registration fees and gas taxes -- we would not pay more for auto use. We would just pay in a way that would send much more accurate price signals. The environmental impact of this would be dramatic. In California, auto use is the single largest source of air pollution, greenhouse gases, acid rain, imported oil demand, and urban land use.
Better price signals for auto use would have major environmental benefits, and at the same time, again per Economics , produce a more economically rational and efficient allocation of all the resources required for auto use.
So lets look at water. Most of us realize that water consumption, not just for agriculture but for all uses, is enormously subsidized by general taxes. The subsidy may exceed 90 percent for agriculture, but is substantial for all uses. What if we paid lower taxes but paid the true cost of water? We would become more efficient in our use of water. How about solid waste? Although this is finally beginning to change, most residents of California still pay flat garbage fees, and in many areas of the country, garbage disposal costs are borne by the general taxpayer.
Would we work to throw away less if we paid for disposal by the pound? More than half of the resource use and environmental impact of food production is related to meat.
The cost of producing meat is greatly reduced by water subsidies, but is likewise reduced by artificially lower prices for energy, fertilizer, transport and refrigeration. Would more accurate price signals mean change? What if we eliminated price supports and direct agricultural subsidies? You can begin to see the pattern.
Subsidies to cotton and wool production could be ended. Subsidies to the feedstocks of synthetic fabrics could be ended. Subsidies to the transport of raw and finished clothing products could be ended. The tax burden would go down. The cost of clothing would go up.
Maybe more of us would return to mending our socks. It goes on and on. Natural resource use and environmental impacts are increased by our pervasive addiction to subsidies for consumption. Economics says this decreases efficiency. And by ending subsidies to consumption, more would be saved and invested in increasing the then much more cost-effective investments in increased efficiency. But all of this represents but a fraction of our subsidies for consumption and environmental destruction.
A big part is our habit of treating consumption of our stocks of non-renewable resources as pure income -- and likewise treating our unsustainable draw of renewable resources as pure income. A friend of mine has a good way of describing the economic irrationality of this. Valuing forest products as equal to the cost of extracting them, he says, is like valuing our life savings by the cost of driving to the bank to withdraw them. Our forests, fisheries, agricultural and range lands, mineral resources, fossil fuel resources, slow to recharge aquifers, and other natural resources are being consumed.
Yet in the national accounting system driven by GNP, we fail to calculate net income. Our forests shrink, but we do not subtract the shrinking asset value from gross income to see if we are realizing net income. Our topsoil is lost, but we do not subtract its value from the value of agricultural products.
And so on, and so on, as we gradually impoverish ourselves without even counting the costs. In fact, tax policies push in exactly the opposite direction.
We subsidize extraction with tax credits and other favorable tax treatments. And the federal government builds roads and other infrastructure needed for extraction at a loss in order to improve the economics of withdrawing our natural resources from the bank. Come to think of it, even if we did value our bank accounts at the cost of driving to the bank to withdraw them, we would still be undervaluing them because we would pay only a fraction of the true cost of that trip.
But even this doesn't end the account of our subsidies of waste and environmental destruction. Most of us understand externalities -- costs created by an activity that are not internalized in the cost of that activity. Our national accounting system just doesn't figure things right. When we produce and discharge to the environment pollutants that degrade the value and productivity of our natural and manmade systems, we count that discharge as "free.
We will not secure the efficiency and economic rationality of markets until we also end these subsidies. And we will continue to harm or environment and deplete our natural resources until we internalize these costs. Finally, still one more major factor must be considered if we are to truly appreciate how we undermine market signals. Inflation and high interest rates devalue future savings.
When we invest today to save a forest for the next generation, we generally consider the economic rationality of that investment by figuring the so-called "net present worth" of that forest that will exist a generation hence. The higher the interest rate, the lower will be the net present value. Another friend has a way of illustrating this problem. A single mature redwood tree can be worth tens of thousands of dollars.
The net present worth of a mature redwood tree planted as a seedling today would be less that one cent. At this worth, none will ever be planted. So, recapping the comments to this point, we can see that even at today's prices and under today's accounting systems and economic yardsticks, much that is needed in the way of conservation of natural resources and protection of the environment will enhance the efficiency, productivity and competitiveness of our economy.
At the same time, we can see that today's prices, accounting systems and economic yardsticks are badly flawed, and that removing subsidies and developing better accounting systems and yardsticks would contribute enormously to both economic prosperity and environmental protection. So what does this mean for economic growth. Business leaders generally assume that economic growth is essential to future prosperity. Environmental leaders sometimes assume that economic growth is the enemy.
But economic growth is measured in dollars, and a growth in transactions does not necessarily mean a growth in environmental impact. Dollars saved by natural resource efficiency will be spent on something. To the extent that that something is less resource intensive and pollutant generating that the expenditures replaced, the environmental impacts of the economy will decline. Removal of massive subsidies to material consumption will not end economic growth but redirect it.
As we meet our basic material needs -- for food, shelter, transport, clothing, etc. We don't generally want more and more, but we generally want better -- better tasting food, more attractive, safer and more durable structures and goods, more access to entertainment, culture and information, more leisure to enjoy our lives, and so on.
To the extent that material consumption is priced at its true cost, we will make more efficient use of it and shift our economic demands to less resource intensive and polluting products and services.
Per capita income has doubled. The share of income spent on material goods has halved. The resource inputs and pollutant outputs of producing materials goods has halved. In this future, our prosperity has doubled but our environmental burden on the Earth has fallen dramatically.
Consumption The Key To Prosperity. There is much confusion these days about what will produce prosperity. A few weeks ago a group of leading economists advised the President not to introduce a middle-class tax cut to stimulate our way out of recession, but rather to craft a program based on increasing investment. They proposed, among other things, a fifty billion dollar transfer to the states and local governments to support investment in infrastructure and education.
The key to our future is investment, and this investment must mean reduced consumption. Reducing and eventually ending subsidies to consumption will help generate the investment capital, and if we invest properly, the process will build on itself.
An investment program can be crafted which would at one and the same time yield growing prosperity and shrinking environmental destruction. They are categorized by their content, recognizing that a number of the studies do not fit perfectly into one category or another.
The heading of each section is the title of a study and is hyperlinked to the ConservationTools. For the few items that require purchase, a link to the web page where the item can be ordered is provided. The organization responsible for the study is given, followed by a summary of the key economic findings of the study.
Outdoor recreation, including hunting, fishing, hiking, wildlife watching and boating is big business. It brings day and overnight visitors to an area and communities reap the economic benefits when visitors buy meals and snacks, stay overnight in hotels, buy specialized equipment, lease land, and pay for travel costs.
When a community protects its natural resources, it protects the reason outdoor tourists come to the community. It also provides some information on participation in wildlife recreation by those 6 to 15 years of age. Prepared by the American Sportfishing Association for the U. When productive farms and forests are haphazardly consumed by development, the agricultural and forest product industries that depend on these lands are hurt.
The workers in these industries are hurt and the people who provide goods and services to these workers are hurt. If enough farmland in an area is converted to non-farm use, the farming communities lose the critical mass necessary to keep local farm-related businesses and hence the whole farm economy alive. Between and , America lost 23,, acres of farmland to development. Working forests are essential to a healthy environment, sustaining wildlife, cleaning our water and air, and mitigating climate change through carbon sequestration.
They are also an economic resource, providing renewable natural materials. Pennsylvania is the top producer in the country of export grade hardwood. This paper explores how well farmland preservation programs provide the benefits their proponents state they do: Trees and green spaces in urban areas provide more than aesthetic benefits. Where there are trees, there are reduced energy costs, decreased stormwater treatment costs, increased property values, increased spending at stores, increased employee satisfaction, and lower health care costs through cleaner air and increased recreational opportunities.
A healthy urban forest can produce long-term benefits that all residents can share. Preservation of parks, forests, farms, stream valleys and trees increases the value of nearby houses, increases tax revenues, supports local businesses, decreases government spending through the natural provision of ecosystem services, decreases the cost of recreation, and creates jobs. More than just pretty places, the preserved open spaces of southeastern Pennsylvania, Bucks, Chester, Delaware, Montgomery, and Philadelphia counties , account for millions of dollars each year in savings, earnings, and avoided costs.
Preserved open spaces contribute to local economies and property values, create savings on health care and recreation, and perform valuable ecosystem services that naturally improve the air we breathe and the water we drink. In Southeastern Pennsylvania, these economic benefits include:. This research project estimated the impact of different land uses on residential property values of 8, single family houses in Berks County, Pennsylvania.
It was based on sale prices between and This report brings together scientists, economists, and researchers from academia, government, nonprofits, and industry to summarize the best current studies, present new research, and to suggest areas for further inquiry into the economic benefits of land conservation. To show how a strategy of land conservation is integral to economic health, the report:.
This report is a review of the literature dealing with the economic benefits of creating parks, conserving working land, conserving land prone to flooding, and preserving the value of ecosystem benefits. It also discusses the costs of sprawl development.
The following show the main benefits described in this paper, and some of the examples used:. Investing in parks and natural areas yields fiscal relief, improved public health, strengthened neighborhoods, environmental protection, and preservation of natural beauty, all of which makes communities more livable.
Wilderness areas, large tracts left relatively untouched by humans, touch the human economy in significant ways. Communities near wilderness areas are attractive places to live and visit, and businesses look to relocate to them because of the amenities they offer to employees and for the opportunity to work in the tourism industry.
The protection of rivers, streams, lakes, bays, and adjacent lands can create jobs, protect fisheries relied upon by the fishing industry, protect food and drinking water sources, protect and create tourism opportunities, enhance property values, decrease local government expenditures and provide recreational opportunities, including those associated with the multi-billion dollar fishing industry. Because so many rely on the services provided by waterways, when they are not protected, governments have to undertake costly projects to restore them or to replace the services they provide.
This allows for the evaluation of the fiscal impacts of the various land uses and the impacts of changing from one land use to another. Well planned and maintained preservation of land protects these ecosystem services and prevents governments from having to artificially replace them at high costs. The following provides a breakdown of these benefits:. The authors estimated the economic value of 17 ecosystem services for 16 biomes, based on published studies and a few original calculations.
Because of the nature of the uncertainties, this must be considered a minimum estimate. The 17 ecosystem services considered were: This guide was researched and written by Elana Richman and edited by Andrew Loza. Nothing contained in this or any other document available at ConservationTools.
The authors disclaim any attorney-client relationship with anyone to whom this document is furnished. Text may be excerpted and reproduced with acknowledgement of ConservationTools.
An Investment that Pays Livable Places: Summary Conserving natural lands, working farms and forests, and the creation of trails and parks are often viewed in terms of their costs. Introduction The conservation of natural lands and of working farms and forests can generate financial returns, both to governments and individuals, and create significant cost savings as well. Related guides at ConservationTools. Economic Benefits of Biodiversity Economic Benefits of Parks Economic Benefits of Trails Economic Benefits of Smart Growth and Costs of Sprawl This guide presents an inventory of studies that quantify the economic benefits of land conservation and analytical tools for accomplishing the same.
Outdoor Recreation and Tourism Outdoor recreation, including hunting, fishing, hiking, wildlife watching and boating is big business. Poorly planned development and unchecked sprawl threaten the land that support wildlife related recreation.
Sprawl consumes acres per day and that pace may be accelerating. The sights, sounds, smells and experiences that distinguish rural Pennsylvania and bring Pennsylvanians outside to hunt, fish, and wildlife watch are being lost forever. They contain a multitude of historic, recreational, natural and scenic resources of state and national significance that collectively exemplify the heritage of Pennsylvania. Through regional partnerships and public grassroots planning strategies, these resources are identified, protected, enhanced and promoted to strengthen regional economies through increased tourism, job creation and stimulation of public and private partnerships for new investment opportunities.
Of the 6-toyear-olds U. Department of Agriculture Between and , hunters, fishers and wildlife watchers traveling to U. These expenditures included travel items such as food, fuel, and lodging , and non-travel items including souvenirs, ammunition and other hunting supplies, and entertainment. As these expenditures were spent and re-spent by businesses, additional economic impacts were created for state and national economies.
Abundant, sustainable fish and wildlife populations yield abundant and diverse hunting and fishing opportunities. Hunters and anglers respond to those opportunities by purchasing more hunting, fishing, and target shooting equipment. This tax shows how investing in conservation and rehabilitation projects that benefit game species, as well as nongame species, brings significant economic returns. Working Lands When productive farms and forests are haphazardly consumed by development, the agricultural and forest product industries that depend on these lands are hurt.
Economic Benefits of Farmland Preservation: Evidence from the United States Agricultural and Resource Economics, University of Maryland This paper explores how well farmland preservation programs provide the benefits their proponents state they do: Food security and local food supply: Consumers value the ability to purchase local agricultural products. Evidence shows that the sale of local farm goods is important to local economies and some type of public intervention is needed to ensure they are supplied.
A viable local agricultural economy: A study found that communities that manage land for conservation purposes do not have lower employment growth rates, wage rates, and may have a slightly higher residential growth rate because of the draw of the amenities provided by the lands. Farmland and open space is a basis for tourism in many states. Farmland preservation can signal a commitment to the farming industry that stimulates farm investment rather than waiting to sell out.
Farmers are using preservation as a way to maintain a sustainable agricultural economy. A survey of farmers in four Maryland counties found that, over a five-year period: Forty two percent of farmers said they wanted to use the money they received from preserving their farm for their farm operations. For example, New Jersey does not offer the same level of extension services to dairy farmers that other states do because it does not have a critical mass of dairy farmers, and this lack of services can impact input costs and management quality.
Environmental and rural amenities: Research suggests that people clearly desire farmland preservation programs and express a willingness to pay for the environmental and rural amenities they provide. The preservation of farms may sufficiently raise the property taxes of nearby homes to pay for the preservation of additional farms. This could, at least in the short-term, allow farmland preservation programs to be self-sustaining, though this may not be the case for rural or predominantly agricultural counties.
Sound fiscal policy and orderly development; The impact of preservation programs on development patterns is unclear. Some evidence shows that farmland preservation alone has limited impacts on concentrating growth, but combined with other policies may be able to direct development away from agricultural areas.
The positive amenities generated by preservation may increase the demand for housing near the preserved farms, and create even more development pressure on other farms, especially in areas where there is a short commute to employment centers.
An area that should be researched is whether farmland preservation programs shift development to forests. Evaluation of Potential Gross Income from Non-Timber Products in a Model Riparian Forest for the Chesapeake Bay Watershed Agroforestry Systems The creation of riparian buffers in agricultural landscapes can improve water quality, but also take land out of productive agricultural use.
However, using planting and harvesting techniques, such as those employed in indigenous systems of tropical agrogorestry, can create economic, as well as environmental benefits. The largest economic benefits of the easements were the purchases of local goods and services, employment and product sales. In addition to the eased property, the farmer also leased Southern Forests for the Future Incentives Series The economic benefits of working farm preservation include revenues from timber, recreation service, the avoidance of having to artificially replace the ecosystem services naturally provided by the forest, and the avoidance of development costs.
The location of a preserved working forest can affect the amount of avoided costs of new development and the gain in property taxes from nearby lands that benefit from a protected area established in close proximity.
Managing for timber, carbon sequestration, recreation and other ecosystem service revenues can, at a minimum, help cover the costs of ongoing management and pay for restoration activities. It could also generate a positive return per dollar spent. This is even more feasible if the working forest is located in newly developing areas, where land values are not as high. Utilizing conservation easements rather than fee simple purchases greatly reduces debt service payments and retains at least a modest stream of property tax revenues for the county.
Why Save Farmland American Farmland Trust Preserving farmland and promoting farmland best management practices has benefits both on the world market scale and for local economies. Ensuring food supply and continuing the preeminence of American agricultural products in a rapidly changing world market requires a careful strategy of farmland preservation. Agriculture has direct, positive effects on local economies through product sales, job creation, the use of support services and businesses, and the supply of lucrative secondary markets such as food processing.
Conversion of farmland to residential lots puts a burden on local government budgets. Farmlands pay more in taxes then they require in services, while residential lands require more in services than they pay in taxes. Distinctive agricultural landscapes bring tourism dollars into communities.
Farmland preservation paired with sustainable management practices protects the provision of ecosystem services. Without this protection, governments would have to pay to artificially replace the services naturally provided by the farmland. Urban Greenspace Trees and green spaces in urban areas provide more than aesthetic benefits. The analysis provides a dollar value for the environmental work provided by each tree. This is composed of: The interception of The New Kensington Pilot Study Susan Wachter, The Wharton School, University of Pennsylvania Starting in , the New Kensington neighborhood of Philadelphia, PA was revitalized with street tree plantings, the planting of grass and trees on vacant lots, and the conversion to community gardens or side yards for adjacent homeowners.
Trees increase shade and lower summertime air temperatures. Mature trees reduce neighborhood wind speeds. In Chicago, this period ranges from 9 to 18 years. Employers find greater employee productivity, satisfaction and retention at businesses located on properties with trees and other vegetation. By luring people outside, trees encourage increased physical activity. Studies suggest that attractive streetscapes and parks that include trees, can lead to an increase in physical activity.
Urban trees can lower health care costs associated with asthma and other pollution-related health problems by providing cleaner, safer air. Cars are the main polluters; each day, Atlantans daily drive more than million miles a day, causing the release of tons of nitrogen oxides. Preserving and increasing tree cover can mitigate some of the impacts of driving related air pollution.
Open Space in General Preservation of parks, forests, farms, stream valleys and trees increases the value of nearby houses, increases tax revenues, supports local businesses, decreases government spending through the natural provision of ecosystem services, decreases the cost of recreation, and creates jobs. In Southeastern Pennsylvania, these economic benefits include: Within meters of a house, open space had the most positive impact on house price, followed by large-lot single family residential land.
Commercial, small-lot single family residential, and multi- unit residential were less desirable and the least desirable land use was industrial.
Between and meters away from a house, commercial land use had the most positive amenity impact, followed closely by large-lot single family residential housing. For open spaces, only government owned land and land protected by a conservation easement positively impacted residential property values. Within meters of the house, open space with conservation easements are viewed less positively than open space without easements.
This could be because this category includes agricultural conservation easements, and such land tends to be intensively managed, which may not be desirable to nearby homeowners. Easements are perceived as a positive amenity if the parcel is located between and meters from the house. It designates a portion of receipts from offshore oil and gas leases into a fund for land conservation and recreation. The Economic Benefits of Land Conservation The Trust for Public Land This report brings together scientists, economists, and researchers from academia, government, nonprofits, and industry to summarize the best current studies, present new research, and to suggest areas for further inquiry into the economic benefits of land conservation.
To show how a strategy of land conservation is integral to economic health, the report: Illustrates that parks and open space generate increased property tax revenue and yield a better return on investment than development: The proximate principle states that the market values of properties located near a park or open space are frequently higher than those of comparable properties located elsewhere.
Higher property values lead to higher property taxes. Those revenues can be used to pay debt used to acquire, develop, or renovate the park and once the debt is paid, can provide additional funds to the community. When open space is developed for homes, the taxes of existing residents increase because the cost of providing public services and infrastructure to the new development is usually higher than the tax revenue it generates. Reviews the economic benefits of farmland preservation, including maintaining viable local economies and protecting rural and environmental amenities: Land preservation policies do not cause jobs in a community to shift from high to low wage positions.
Wage rates are not affected by putting land into non-extractive uses versus multiple uses including timbering. Preserved farmland can increase the value of nearby houses enough to generate enough extra property tax revenues to enroll additional acres of agricultural land into the preservation programs.
However, farmland preservation helps to ensure sufficient farmland to supply communities with locally grown produce and helps farmers improve their economic well-being. Agricultural preservation preserves the open space attributes and rural amenities that attract tourists and new residents to an area Shows how forest cover decreases the cost of treating drinking water: Enumerates the economic value of urban trees, which improve air and water quality: Urban trees reduce temperatures and have other microclimate effects, reducing costs energy costs.
They reduce ozone levels. Although the economic benefit of this is unknown, a study found that the cost of reducing a single part per billion of ozone through electric utility nitrogen oxides limitations is estimated at one-half to three-quarters of a billion dollars annually. When a wooded area is developed, impervious surfaces block the absorption of rain water, and the tree canopy is no longer able to intercept rain before it hits the ground.
Trees can reduce and delay peak flows after a storm, reduce the need for stormwater treatment facilities, and improve water quality. Reducing runoff is likely to save city residents millions per year.
Most pollutants enter water bodies from nonpoint sources, including runoff from agricultural lands, urban areas, construction and industrial sites, and failed septic tanks. Examines the role of parks and open space in attracting businesses and affluent retirees: They are seen as attractive to communities because they bring money into a local economy, but not the pollution often associated with traditional manufacturing industries. These companies often choose to locate in communities that offer a high level of amenities to employees as a means of attracting and retaining top-level workers.
Parks, recreation, and open space are top-ranked amenities for a large majority of employees. In a 5-year study of small business owners who relocated to, expanded in, or launched in Colorado, quality of life was their main reason for choosing the area and small-business decision makers ranked the presence of park, recreation, and open space amenities as being most important factor in the measure of quality of life.
An Investment that Pays The Trust for Public Land This report is a review of the literature dealing with the economic benefits of creating parks, conserving working land, conserving land prone to flooding, and preserving the value of ecosystem benefits. The following show the main benefits described in this paper, and some of the examples used: Parks and preserved open space boost land values and property taxes: During the same period, in 3 residential neighborhoods near unpreserved forests, there was no increase in property value for those lots bordering the forests in two of the neighborhoods, and a much smaller increase in the third.
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