Economic Costs of a Changing Environment

One explanation for inaction in the face of future environmentally related calamities is the concept of interest. A catastrophic event 100 years in the future when discounted at 5% is only worth 1.5 cents on the dollar. In other words our economic system discounts the vote of future generations to almost nothing.

Another explanation derives from the idea that the aspects that are most important to sustaining quality of life are are free. Since they are free they are ignored by the economic system and become marginalized. Quiet time with the family, fresh air and a clear sky on a sunny day are just a few examples that come to mind.

While these may be significant factors, there are current costs to environmental degradation that when totaled up are significant enough to warrant an immediate change in attitude and policy.

1. Weather: Weather related costs such as damage from floods, severe storms, and draughts. The mechanics of climate change are looked at in the section on weather, but the costs of the changes can be summarized here.
a. Cost to farmers for crop losses from drought and storm activity.
b. Cost of increased hurricane damage (because of increased intensity, and rising sea level increasing flood damage).
c. Cost of floods (both from more severe storms, and shifting of weather patterns overloading existing flood control systems).
d. Loss of forest to climate changes (the Intergovernmental Panel on Climate Change (IGPCC) estimates that 1/3 of the worlds forests will undergo a major shift in vegetation type with a doubling of CO2 ).
e. Costs in human health from increase in tropical disease and exposure to heat waves in the summer.
The IGPCC estimates the cost of a doubling of CO2 to be between 1-1.5% of GDP for developed countries, and 2-9% of GDP for developing countries. Clearly the countries with the highest population densities, and the greatest dependence on agriculture will be hurt the worst. With the Gross World Product in excess of $20 trillion the cost of global warming is estimated conservatively to be in excess of $400 billion annually.

2. Raw Materials and Energy: A second category of expense is the increasing cost to consumers of raw materials. This aspect has not manifested yet because up to this point the development of technology has enabled us to extract resources from the earth more rapidly than the demands of the increasing population have grown. There are examples of the rapid price rise possible if there is a threat of scarcity. The increase in gasoline prices is well known and was triggered by a modest reduction in output of crude oil. The expected peak in oil production early this century will trigger a continual increase in price unless demand is reduced. The cost of water for irrigation will continue to rise as existing stores of groundwater are depleted, and other sources of water are split between increasing demand by cities, and the need to preserve river ecosystems by leaving more water in rivers.

3. Health and the Environment

The challenges of health in the 21st. Century are increasingly complex. Pollution, poor nutrition, and stress contribute to an increased vulnerability to disease. The speed and freedom to travel permits new disease outbreaks to spread quickly to the rest of the planet. Changes in temperature will allow diseases migrate to new territory. The inappropriate use of Antibiotics has led to the evolution of resistant strains of almost every disease organism formerly treated with antibiotics.

Health and Global Warming

As the climate warms up and extreme weather phenomenon become more common, there are two effects on people. First, tropical diseases are able to migrate farther north. This has led to outbreaks of dengue ("breakbone") fever, malaria, hantavirus and other tropical diseases not previously encountered in the U.S.

Antimicrobial Resistance

Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, National Institutes of Health in a hearing before the Senate, February 25, 1999:
 
"As you are aware. many diseases are increasingly difficult to treat because of the emergence of drug-resistant organisms, including HIV and other viruses: Bacteria such as staphylococci, enterococci, and E. coli which causes serious infections in hospitalized patients: bacteria that cause respiratory diseases such as pneumonia and tuberculosis: food-borne pathogens such as Salmonella and Campylobacter: sexually transmitted organisms such as Neisseria gonorrhea: Candida and other fungi: and parasites such as Plasomidium falciparum, the cause of malaria. according to the Institute of Medicine, the total cost of treating antimicrobial resistant infections may be as high as $5 billion annually in the United States."

Some diseases have become untreatable, while others are still treatable, but he cost of treatment may be prohibitive in resource poor countries. For instance, chloroquine, the standard treatment for malaria world wide is no longer effective in many cases. In Nigeria it costs 75 cents to treat a case with chloroquine, but $25 to treat a resistant case of malaria.

It appears that many of the resistant trains of bacteria originate in less developed countries as a result of improper use of antibiotics, either from a lack of knowledge, lack of access to the appropriate antibiotic, or a lack of funds or understanding on the part of the patient who does not compete the full cycle of treatment. Antibiotics are still being overperscribed in the U.S. and Europe, however, the level of awareness is increasing.

Antimicrobial agents, particularly the tetracycline family, are becoming ubiquitous in the environment. More than 55 million pounds of Sulfonamides are produced each year. Of the 15-17 million pounds that are used in the livestock industry, 80% of that is used as growth stimulants. It is now clear that even at the low doses used as growth stimulants, resistant bacteria do develop. The question then becomes, can that resistance be transmitted to humans. In one trial, for instance, 300 chickens were raised without antibiotics. When the antibiotic was added to the experimental group, resistant E. coli began to appear in 24-36 hours in the feces of the chickens. In 5 to 6 months, resistant E.coli appeared in the farm family. It seems that E. coli can live in a variety of animals as shown by experiments tracing marked bacteria as it migrates from one host to another, from a calf to mice to chickens to wild turkeys for instance. Once it is established in a host, the resistant genes, which are usually located in the plasmids can be readily exchanged with other bacteria in the host, thus transferring the resistance to other potentially harmful bacteria.

The use of antibiotics in livestock has become common knowledge, but the use in fish farming is less well known and has equally significant ramifications. It is estimated that salmon farming uses 147 lb. of Sulfonamides per acre of fish. Consequently the fish develop resistant strains of bacteria, and the residue from each treatment is dispersed in the river or estuary and is ingested by animals in the wild food chain, creating antimicrobial resistance in a diversity of species of which we are unaware.

Health problems related to pollution.

Health problems related to nutrition: the overfed and the underfed.

The U.N.Food and Agriculture Organization estimates that more than 50% of children in several countries including India, Bangladesh, and Ethiopia are underweight, and roughly 50% of the children in western countries such as the U.S. England, and including Russia are overweight.

The World Bank estimates in a report on the 1990's that poor diet is responsible for 1/2 of the burden of disease worldwide. In India the cost of malnutrition due to lost productivity, illness, and death is estimated to be $10-$28 billion, or 3-9 percent of GDP.

 

Resources:

Levy, Stuart M.D., The Antibiotic Paradox, 1992, Plenum Press, New York.
Hearing before the subcommittee on Health, Education, Labor, and Pensions in the U.S. Senate, Feb 25, 1999, S.HRG. 106-7
Boston Globe, Associated Press, Steve LeBlanc, 05.05.00
 

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