RECENT developments involving pollution and natural resources - including the early retirement of an Oregon nuclear power plant, the oil spill in the Shetland Islands, the federal report on "secondhand" tobacco smoke - illustrate one of the most fundamental issues in determining the worthiness of government policy protecting the environment.
Experts call this "externality," the environmental impact of production and consumption essentially ignored in the process of making economic decisions.
* Because of safety problems, the Trojan plant along the Columbia River in Oregon is being shut down less than halfway through its 40-year design life. Decommissioning will cost at least $500 million, which is more than 10 times what the company had set aside for that purpose. The same thing has happened at other nuclear power plants. Cheap electricity is not as cheap as originally believed.
* The Shetland Islands spill could be twice as bad as that of the Exxon Valdez in Alaska. Would the clean-up cost or the loss to commercial fisheries and wildlife been so high if the tanker owner had built a double-hulled ship - as is now required of United States tankers or foreign tankers operating in US waters - and passed along the real oil cost to customers?
* "Secondhand" smoke, the Environmental Protection Agency reported last week, kills some 3,000 US nonsmokers each year and affects thousands more. Would this be true, and the resulting health-care costs be so high, if the government stopped subsidizing the tobacco industry?
Prices and costs are fundamental determinants in consumption and production decisions. It is acknowledged that this affects the environment. "But the information traditionally used to make and describe such choices has seldom captured environmental impacts," a White House Council on Environmental Quality report states.
"In unrestricted markets, environmental problems arise when individuals and businesses fail to take fully into account the environmental consequences of their decisions," the report continues. "These omitted elements are called externalities."
For example, "Superfund" hazardous wastes at thousands of sites include 1.5 billion tons from oil and gas operations, 3.6 billion tons from mining, and 85 million tons from electric utilities. One big polluter is Uncle Sam. Cleaning up the nuclear-weapons fuel production site at Hanford, Wash., alone will cost at least $57 billion and take 30 years.
If the price tag for disposing of such wastes had been figured into original cost/benefit ratios, such activities might have been modified to be more environmentally protective.
The full cost of including environmental impact would have been "internalized," rather than left for other politicians and taxpayers to deal with.
For several years, World Bank economist Herman Daly has been urging a shift from Gross National Product (GNP) as a gauge of economic well-being to what he calls the "Index of Sustainable Economic Welfare." This includes an upfront factoring of pollution abatement and resource depletion into production and consumption decisions.
The Dutch government and some governments in Scandinavian countries already have made this shift in national economic accounting.
In some areas, the impact of economic decisions on the environment is becoming an important consideration in determining US government policy.
In the mid-1980s, the US was losing more than 1.5 million tons of topsoil each year due to erosion tied to farming practices. Since then, the federal government - through taxpayer money - has been paying farmers to plant trees and grasses on highly erodible land, instead of cash crops under 10-year contracts. As a result, loss of topsoil has been reduced by one-third and is expected to decrease another third by 1995.
The Bush administration has pushed market-based mechanisms to protect the environment. Such efforts are expected to accelerate under the Clinton administration.