Environment and how its issues should be tackled through public policy

Excerpts of a lecture delivered at Sri Jayewardenepura University – Part II

- By W.A. Wijewardena

IN the previous part¹, we discussed how environment is used by everybody to dump the waste-matter that is essentially produced as a byproduct of all the economic activities, namely, production, distribution, and consumption. This waste-matter is an undesired product called 'bads' compared to the desired products called 'goods'. In this sense, environment is the fifth factor of production because without environment, no economic activity could be undertaken. However, unlike other factors of production, environment is freely available for dumping since there is no one holding property rights over it and impose a price for its use.

The tendency is to use environment to the maximum point until it becomes a nuisance. Given this situation, public action in the form of the production of a public good is needed to regulate environment so that society at global, regional, and local levels could reach the optimal level of using environment. To address the issue of the absence of property rights, sovereign governments have chosen to 'nationalise environment' and regulate it through their public policy arms.

We continue from this point.

Society's objective