Interweaving core concepts facilitates a comprehensive understanding of environmental
economics. Investigating relevant scholarly articles generates discussion surrounding the field’s
fundamental principles. The paper illustrates the degree to which three articles on Analytical
Tools: 1) Benefits and Costs, 2) Markets and Social Efficiency, and 3) The Economics of
Environmental Quality support fundamental concepts examined in “Environmental Economics:
An Introduction” (Field and Field 2015, chap. 3, 4, and 5). Through applying benefit-cost and
marginal analysis frameworks, students formulate effective policy recommendations.
Benefits and Costs
In the first study, “Supply Response, Marginal Cost, and Soil Erosion Implications of
Stover- based Biofuels,” the authors examined the benefits and costs of land changes impacting
stover supply density and price. Cellulosic biofuel has potential to be the next advancement in
biofuel production. However, the biofuel is made from corn stover which causes serious soil
erosion without using cover crops. The pricing strategy for selling the cellulosic biofuel is based
on the supply curves predicted by data collected over several years. A market for stover may
result in lower soil erosion insofar as the agricultural producers and manufacturers relocate
land for continuous corn residue removal (Sesmero et al. 2015). The farmland would be
relocated to acreage that would later be surrounded by a manufacturing plant for biofuel.
Doing so would significantly reduce transportation costs which would then increase the price
and supply of the product. The plants producing stover need to determine the marginal cost to
continuously procure stover as the price determines cellulosic biofuel’s viability in the current
The authors concluded implementing cover crops nourishes the soil. Stover with 75%
cover crops has lower soil erosion within a given acre (Sesmero et al. 2015). However, the
supply curve changed significantly with cover crops involved because it costs more to produce
stover with cover crops. That being said, the question brings willingness to pay for soil health
into consideration. The values of both healthy soil and clear air are difficult to quantify. The
decision to prolong soil erosion by refusing technological change is similar to saying “I [don’t]
like clean air more than you do” (Field and Field 2015). A firm’s value of healthy soil is
contingent upon how much it is able to increase the cost of its methods. The reduction of
erosion to an area does develop a better crop yield over time, thus benefiting the quantity of
output (Sesmero et al. 2015). Further, consumers may be willing to pay more for the product as
long as they are aware of the effect corn stover production has on soil health. However, current
wealth is a valuable contributor to a firm’s willingness to pay for technological change (Field
and Field 2015). In the case of cellulosic biofuel, a new technology may not have hefty initial
capital to support it launching off the ground.
In addition, cover crops only reduce soil erosion insofar as they are accompanied by a
lower stover removal rate (Sesmero et al. 2015). Specifically, lower stover removal rates would
drive up the cost per ton while higher removal rates would drive down price per ton. A price of
$35 per ton or higher can lead to the manufacturing plants increasing their price (Sesmero et al.
2015). As the supply curve increases, the price of each unit increases insofar as the
manufacturing plants continuously produce cover crops. However, the inclusion of cover crops
would also increase the acceptable rate of stover removal due to the added protection of the
soil (Sesmero et al. 2015). Further, a company’s reduced soil erosion provides savings on costs
of care during the corn growing. The authors successfully support the fundamental concepts as
the article reveals benefits and costs of using cover crops during cellulosic biofuel production.
Markets and Social Efficiency
In the second study, “Pesticides, External Costs and Policy Options for Thai Agriculture,”
the authors investigate the relationship between the market system, its externalities, and social
efficiency related to pesticide use in growing food. Specifically, Thailand experienced a
significant increase in pesticide use from 1987-2010 (Praneetvatakul et al. 2013). The authors
introduced Pesticide Environmental Accounting (PEA) as a comprehensive tool to understand
pesticide use and its wide range of negative effects on bee colonies, biodiversity loss, human
health, and pollution (Praneetvatakul et al. 2013). While the authors depicted the detrimental
health impacts of pesticide use, they also recognized other forces propelling its market.
Organic farmers who are willing to pay for alternatives to pesticides have trouble
engaging in competition. Currently, the organic farmers who are willing to pay for a healthy,
valuable product are supplying less compared to large agricultural ﬁrms who use pesticides.
Since the consumer’s price for the organic good is relatively high, the consumer demand is low.
The article generated curiosity regarding how wealth distribution amongst the citizens of
Thailand contributes to their ability to purchase from organic farmers within their country. It
supported a stellar discussion about how public vs. private goods are defined on a spectrum of
relativity to each other. While essentials such as water and air are public goods, clearly organic
food is a private good because it is not “a good that, if made available to one person,
automatically becomes available to others” but non-organic food is not a public good because it
is not free (Field and Field 2015). However, non-organic food is more of a public good compared
to organic produce. Moreover, the article showed overexploitation or underuse of public goods
are correlated to natural resource management problems (Libecap 2019). Equity for a single
group is not a sufficient indicator of social efficiency because there are externalities, or
downstream costs, that people outside a selected group have to deal with. In the article, the
authors explored socially efficient strategies to decrease pesticide use.
The authors emphasized educators need to draw intersection between the social value
of food safety and a ﬁrm’s willingness to pay by merging social efficiency with equity. Part of
the reason Thailand’s farmers increased its use of pesticides is because policy decisions
promoted the chemical concoction as a public health and safety beneﬁt (Praneetvatakul et al.
2013). From there, the authors recommended teaching farmers about the negative health
consequence of using pesticides. Further, the authors acknowledged incentives structures are
needed to supplement education initiatives (Praneetvatakul et al. 2013). Moreover, they
informed strengths and short-comings of various government intervention methods for
decreasing pesticide use. The class discussed potential solutions such as command and control,
incentives-based techniques as well as reinforcement of ideas through education.
The article revealed successfully lowering pesticide use involves multiple strategies
collaborating to change the market-based system. Each method contains strengths and
limitations. For example, without command and control and incentives complimenting
education, businesses ignore information and follow improper and unhealthy management
techniques. For example, coal production causes black lung, and while there are federal
guidelines created to protect workers, the cases of black lung are still on the rise (Blackley et al.
2018). Moreover, despite education, ties to certain crops impact Thailand’s consumer habits
(Kazuo 2017). Due to other Thailand conditions, such as finances and culture, government-
funded incentives may be difficult to implement (Kazuo 2017). Further, the current command
and control policy in Thailand is the Hazardous Substance Act which aims to reduce chemical
exposure but has holes in monitoring after point of sale (Panuwet et al. 2012). Therefore, as we
examine market systems, it is evident all three mechanisms need to function well together to
achieve maximum social efficiency. The article supports students understanding the difference
between equity and efficiency as well as how externalities impact a market-based system.
The Economics of Environmental Quality
In the third study, “Marginal Damage Cost of Nutrient Enrichment: The Case of the Baltic
Sea,” the authors determine marginal damage costs and marginal abatement costs of pollution
in the Baltic Sea as it pertains to the Eastern Baltic cod fisheries. The spawning season for the
Eastern Baltic cod extends from March to October with the peak spawn in early summer.
Nitrogen concentrations during these peak months are key indicators of eutrophication
effecting fish stocks (Nguyen et al. 2015). The report details calculations that contribute to the
actual marginal damage costs of cod stocks. The total variable cost of the cod is a function of
harvest rates and spawning fish stocks. The aggregate abatement cost is between $210 million
Denmark Krones and $1.6 billion Denmark Krones. Comparing the aggregate abatement cost to
the marginal pollution damage function determines the loss to fisheries compared to the
marginal abatement cost associated with agriculture. The results show, even though pollution
has caused a decline in the health of the marine ecosystem, the benefits-to-damages trade-off
needs to be analyzed to make an informed decision. The agricultural improvements gained
through increased nitrogen pollution were found to be much higher than the economic loss
from the fisheries.
The information provided in this study provides an excellent real-world model of
marginal pollution damage functions and marginal abatement cost functions. The validity was
established by providing examples of information that was excluded that could further weigh
on the marginal damage costs. It was established early in the study that the cod fisheries were
solely being analyzed as an example for what effect nutrient enrichment through nitrogen
loading has on the Baltic Sea fisheries. The authors established, although the nitrogen levels
need to be reduced to reach the socially equivalent levels, the benefits of nitrogen pollution
through agriculture are high compared to the relatively low damages to the fisheries. The
authors close their study by providing suggestions for further research to more accurately
predict the relationships between pollution and total damages.
We assessed all three articles as valid applications of the concepts with limitations. The
first article review illustrates how the equimarginal principle brings technological change
supporting efficiency in biofuel production due to a supply response and decrease in marginal
cost. However, the article does not consider an environmental impact report would also need
to be updated to include potential effects of machinery pollution and fertilizer runoff. The
second article review shows the difference between equity and social efficiency as we explore
external costs arising from unwillingness to pay for farming methods alternative to pesticide
use. However, the article did not depict how Thai citizens’ value of organic farming versus
conventional farming could be assessed using aggregate marginal willingness to pay curves and
firm-based demand curves. The third article review uses the marginal damage function to
understand pollution in the Baltic Sea as it pertains to the cod fisheries. However, it is difficult
to put a value on loss of marine life other than monetary value on annual fish harvests. The
study does not go in to detail regarding how many sources of pollution there are and to what
scale each source is contributing. Moreover, the study does not account for additional issues
such as salmon or herring fisheries, tourism, and water quality. The Baltic Sea is a large
ecological and economic system that needs to be reviewed through the analysis of many
studies to find the connections. That beings said, all three articles sparked interest to dive
deeper into referenced topics and consider potential policy change resulting from the research.
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Field, Barry C., and Martha K. Field. 2015. Environmental Economics: An Introduction. Seventh
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Kazuo, Watanabe. 2017. “Improvement in Rainfed Rice Production during an Era of Rapid
National Economic Growth: A Case Study of a Village in Northeast Thailand”. Southeast
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Libecap, Gary. 2009. “The Tragedy of The Commons: Property Rights and Markets As Solutions
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Nguyen, Thanh Viet, et al. 2016. “Marginal Damage Cost of Nutrient Enrichment: The Case of
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Panuwet, Parinya, et al. 2012. “Agricultural Pesticide Management in Thailand: Situation and
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