Compose a 1500 words assignment on economic effect of environmental degradation. Needs to be plagiarism free!

Compose a 1500 words assignment on economic effect of environmental degradation. Needs to be plagiarism free! Environmental regulation is the immediate outcome of environmental degradation. And, today, environmental regulation has played a major role in protecting the environment. However, some are claiming that environmental regulation weakens economic development, according to the findings of studies indicating that environment protection programs slow down GDP growth rates. A thorough examination of the Clean Air Act, for instance, showed that the GNP of the United States in 1990 lowered to 1% because of the environmental policy (Hussen, 2012, 111). Similarly, studies on the economic effect of key environmental regulations in Europe show a combined GDP drop of roughly 0.2 percent. The aggregate macroeconomic effects of environmental policies are calculated by means of computable general equilibrium (CGE) approaches (Hussen, 2012, 111-2). This case study discusses the economic impact of environmental regulations in relation to the Californian case.

Environmental Regulations: Boon or Bane to Economic Performance?

Approaches like CGE enable economists to identify how effects in a particular economic sector extend to income and employment in other sectors. The approaches comprise feedback loops to structure longer-range effects, especially the way capital investments behave in response to changes in supply and demand in various sectors. Yet, the outcomes of CGE approaches should be analyzed with care (Hussen, 2012, 110):

CGE models have to predict reduced economic growth because of environmental compliance. After all, pollution control costs in these models are treated as extra expenditures necessary to produce the same level of valued output… The outcome is implicit in how the model is constructed. So this finding isn’t necessarily a complete picture for what people and policymakers want to know about real-world regulation, where a pollution control sector emerges as part of the economy and helps to produce environmental protection, which is also an ‘output’ with value.

CGE approaches do not calculate the gains from regulation, especially those that do not surface in markets. CGE approaches are also unable to represent positive feedback loops like the rise in the rate of productivity as detrimental health effects decrease with higher water and air quality (Yan & Carr, 2013).