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.