Case Studies
Reserve Mining Company
 Shortly after WWI, some entrepreneurs decide that there was money to be made in a rcok called taconite, found in abundance near the Mesabi Iron Range. They called their venture the Reserve Mining Company. Basically the company built the tiny town of Silver Bay on the shores of Lake Superior in Minnesota.
The refining process of the stone produces a vast amount of sandy residue called tailings. Reserve Mining found the cheapest place to dump these tailings was Lake Superior. In 1973, it was discovered that tailings might contain asbestos, a known carcinogen. Within a few weeks, much of the population of Duluth, 60 miles to the West had stopped drinking water. The case wound up in Federal Court. Environmentalists produced expert witnesses who said the tailings were dangerous. Reserve produced experts who said they were not… and hinted that they might be forced to shutdown the plant if denied access to the lake, which would result in economic hardship for the residents of Silver Bay.
In 1977 the courts handed down its decision. Reserve agreed to keep the Silver Bay plant open and to build a tailings disposal sight seven miles inland from the lake at a cost of $400 Million.
Smog
 1970 marked a turning point in this country’s battle again pollution. People were upset about America’s deteriorating environment. Congress passed a series of amendment to the Clean Air Act, which established higher air quality standards and faster timetables to reach them. They also created an agency to enforce the new law. The Environmental Protection Agency, or EPA.
The Clean Air’s intent was to eliminate smog. In Los Angeles most of the smog was caused by automobiles. The smog had been so bad at times that children couldn’t play outdoors and so citizens of Los Angeles sued the Federal Government. The courts ordered the EPA to impose the Clean Air Act standards. This would have meant that 80% of LA cars would need to be removed from the roads creating an economic disaster. But the EPA was not allowed to take that into account. In order to avoid an economic catastrophe, the law was amended to give Los Angles a waiver which allowed the city more time to clean up the air and lowered the standards it was expected to meet. The air isn’t as clean as it would have been with 80% of the cars off the road, but neither is Los Angeles an economic basket case.
Global Warming
 By the 1990’s most climatologists agreed that the rising temperatures of the past several decades known as global warming were due to human activity. However, there are social and economic ramifications of trying to do something about the problem. To solve global warming or to slow it is likely to be very costly, in the billions of dollars a year.
In December 1997 at the environmental summit in Kyoto, Japan, the World’s developed countries pledged to cut their greenhouse gas emissions. The major agreements that we reached were for the developed countries to take specific targets on average a reduction of about 5% from 1990 levels to be reached in the year 2001. Although the US is responsible for 25 percent of the World’s emissions of greenhouse gases, the newly elected President, George W. Bush decided not sign the accord, basing his decision on reports from economists that it would cause significant economic injury to US industries for marginal benefits. The decision by the United States not to participate in the Kyoto accords touched off an uproar in European capitols.
| Comment & Analysis by Nariman Behravesh Environmental groups minimize the cost of implementing the Kyoto Accords. Many business groups are concerned that such measures would hurt growth and raise the unemployment. Society needs to figure out cost effective ways of dealing with global warming as well as other problems like poverty, disease in our global society. One challenge that both the supporter and opponents of the Kyoto Accords face is to come up with better and less exaggerated estimates of the costs and benefits. |
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