Environmental Policy

environmental policy, any measure by a government or corporation or other public or private organization regarding the effects of human activities on the environment, particularly those measures that are designed to prevent or reduce harmful effects of human activities on ecosystems.

Environmental policies are needed because environmental values are usually not considered in organizational decision making. There are two main reasons for that omission. First, environmental effects are economic externalities. Polluters do not usually bear the consequences of their actions; the negative effects most often occur elsewhere or in the future. Second, natural resources are almost always underpriced because they are often assumed to have infinite availability. Together, those factors result in what American ecologist Garrett Hardin in 1968 called “the tragedy of the commons.” The pool of natural resources can be considered as a commons that everyone can use to their own benefit. For an individual, it is rational to use a common resource without considering its limitations, but that self-interested behaviour will lead to the depletion of the shared limited resource—and that is not in anyone’s interest. Individuals do so nevertheless because they reap the benefits in the short term, but the community pays the costs of depletion in the long term. Since incentives for individuals to use the commons sustainably are weak, government has a role in the protection of the commons.