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Chapter 12: Problem 35

From an economic perspective, is it sound policy to pursue a goal of zero pollution? Why or why not?

Short Answer

Expert verified
From an economic perspective, pursuing a goal of zero pollution is not a sound policy because the high marginal costs of eliminating all pollution outweigh the marginal benefits. Instead, a more efficient approach is to focus on policies that achieve a balance between reducing pollution and maximizing social wellbeing by considering both the costs and benefits of such policies, such as emission taxes, pollution permits, and subsidies for environmentally-friendly practices.

Step by step solution

01

1. Define the Concept of Zero Pollution

Zero pollution refers to a situation in which no harmful pollutants or emissions are released into the environment. This can be considered an ideal goal for environmental protection, but we need to evaluate its feasibility from an economic perspective.
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2. Consider Marginal Costs and Benefits

When discussing economic policies, it is essential to consider the concepts of marginal costs and benefits. Marginal cost refers to the additional cost of producing one more unit of goods or service, while marginal benefit refers to the additional benefit that is gained from producing or consuming one more unit. In the context of pollution, marginal cost refers to the cost of reducing pollution by one additional unit, while marginal benefit refers to the benefit gained from reducing pollution by an additional unit.
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3. Introduce the Idea of Efficiency

In economics, efficiency is the optimal allocation of resources to achieve the maximum possible satisfaction or wellbeing for individuals or society as a whole. In terms of pollution reduction, efficiency means finding the level of pollution reduction where the marginal cost of reducing pollution is equal to the marginal benefit of reduced pollution. This point is called the 'efficient level' of pollution.
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4. Understand the Limitations of Zero Pollution

The goal of zero pollution can be considered infeasible because achieving complete elimination of pollution would require extremely high economic costs. Reducing pollution to zero would likely involve shutting down or modifying many industries and could result in significant job loss and economic setbacks. Moreover, the marginal benefits of reducing pollution might not always outweigh the marginal costs when approaching zero pollution.
05

5. Discuss Alternative Pollution Reduction Policies

Rather than pursuing a zero-pollution goal, it might be more economically efficient to focus on policies that reduce pollution to an acceptable level while maximizing social benefits and minimizing the costs. Possible policies could include the implementation of emission taxes, pollution permits, or subsidies for environmentally-friendly practices.
06

6. Conclusion

From an economic perspective, pursuing a goal of zero pollution is not a sound policy due to the potentially high marginal costs of eliminating all pollution, which would likely outweigh the marginal benefits. A more efficient approach would involve focusing on policies that achieve a balance between reducing pollution and maximizing social wellbeing, by considering both the costs and benefits of such policies.

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Most popular questions from this chapter

Table 12.5 provides the supply and demand conditions for a manufacturing firm. The third column represents a supply curve without accounting for the social cost of pollution. The fourth column represents the supply curve when the firm is required to account for the social cost of pollution. Identify the equilibrium before the social cost of production is included and after the social cost of production is included. $$\begin{array}{l|l|ll}\hline \text { Price } & \begin{array}{l}\text { Quantity } \\\\\text { Demanded }\end{array} &\begin{array}{l}\text { Quantity Supplied without paying } \\\\\text { the cost of the pollution }\end{array} &\begin{array}{c}\text { Quantity Supplied after paying } \\\\\text { the cost of the pollution }\end{array} \\\\\hline \$ 10 &450 & 400 & 250 \\\\\hline \$ 15 & 440 & 440 & 290 \\\\\hline \$ 20 & 430 & 480 & 330 \\\\\hline \$ 25 & 420 & 520 &370 \\\\\hline \$ 30 & 410 & 560 & 410 \\\\\hline\end{array}$$

Identify whether the market supply curve will shift right or left or will stay the same for the following: a. Firms in an industry are required to pay a fine for their carbon dioxide emissions. b. Companies are sued for polluting the water in a river. c. Power plants in a specific city are not required to address the impact of their air quality emissions. d. Companies that use fracking to remove oil and gas from rock are required to clean up the damage.

Consider two ways of protecting elephants from poachers in African countries. In one approach, the government sets up enormous national parks that have sufficient habitat for elephants to thrive and forbids all local people to enter the parks or to injure either the elephants or their habitat in any way. In a second approach, the government sets up national parks and designates 10 villages around the edges of the park as official tourist centers that become places where tourists can stay and bases for guided tours inside the national park. Consider the different incentives of local villagers - who often are very poor- -in each of these plans. Which plan seems more likely to help the elephant population?

A city currently emits 16 million gallons (MG) of raw sewage into a lake that is beside the city. Table 12.13 shows the total costs (TC) in thousands of dollars of cleaning up the sewage to different levels, together with the total benefits (TB) of doing so. Benefits include environmental, recreational, health, and industrial benefits. a. Using the information in Table 12.13 calculate the marginal costs and marginal benefits of reducing sewage emissions for this city. b. What is the optimal level of sewage for this city? How can you tell?

What does a point inside the production possibility frontier represent?
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