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Chapter 12: Problem 37

Can extreme levels of pollution hurt the economic development of a high-income country? Why or why not?

Short Answer

Expert verified
In conclusion, extreme levels of pollution can adversely impact the economic development of a high-income country due to its detrimental effects on public health, productivity, and investment. Although high-income countries possess certain resilience and resources to tackle pollution, they may still be susceptible to its long-term consequences.

Step by step solution

01

Introduction

In this exercise, we will analyze if extreme levels of pollution can hurt the economic development of a high-income country. To do this, we will consider the effect of pollution on public health, productivity, and investment and how these factors can influence economic development.
02

Impact on Public Health

Extreme levels of pollution can have an adverse effect on public health. Pollution affects air quality, which can lead to respiratory illnesses, heart disease, and even premature death. In a high-income country, this may put a strain on the healthcare system and reduce the overall wellbeing of citizens. A poor public health can lead to lower productivity and less labor force participation, ultimately impacting the economic development.
03

Impact on Productivity

Productivity, or output per hour worked, is crucial for economic development. Extreme pollution can have negative effects on the productivity of a high-income country in two main ways: directly, by causing illness and missed work hours, and indirectly, by affecting cognitive function and decision-making abilities. In the long run, this can slow down the growth trajectory of an economy, potentially impacting its development.
04

Impact on Investment

Extreme pollution may affect investment and business opportunities in a high-income country. This is because, in order to tackle the problem of pollution, the government may have to introduce stricter regulations on businesses. This can lead to higher operation costs and a potential loss of foreign direct investment from firms looking to avoid the increased regulatory burden. Additionally, pollution may create a negative image of the country, discouraging businesses and tourists, which could also hurt economic development.
05

High-Income Country Resilience

High-income countries tend to have better infrastructure and resources to address pollution problems. They have the ability to invest in cleaner energy technologies and fund research to mitigate pollution's effects. However, even with these advantages, the long-term consequences of extreme pollution may still take a toll on a high-income country's economy.
06

Conclusion

In conclusion, extreme levels of pollution can hurt the economic development of a high-income country due to its negative effects on public health, productivity, and investment. While high-income countries have some resilience and resources to address these challenges, they may still be vulnerable to the long-term consequences of extreme pollution.

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Most popular questions from this chapter

An emissions tax on a quantity of emissions from a firm is not a command-and- control approach to reducing pollution. Why?

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?

The rows in Table 12.7 show three market-oriented tools for reducing pollution. The columns of the table show three complaints about command-and- control regulation. Fill in the table by stating briefly how each market- oriented tool addresses each of the three concerns. $$\begin{array}{l|lcc}\hline & \begin{array}{l}\text { Incentives to } \\\\\text { Go Beyond }\end{array} & \begin{array}{c} \text { Flexibility about Where and How } \\\\\text { Pollution Will Be Reduced }\end{array} & \begin{array}{c}\text {Political Process Creates } \\\\\text { Loopholes and Exceptions }\end{array} \\\\\hline \begin{array}{l}\text { Pollution } \\\\\text { Charges }\end{array} & & \\\\\hline \begin{array}{l}\text { Marketable } \\\\\text { Permits }\end{array} & & \\\\\hline\begin{array}{l}\text { Property } \\\\\text { Rights }\end{array} & & \\\\\hline\end{array}$$

What are the three problems that economists have noted with regard to command- and-control regulation?

Classify the following pollution-control policies as command-and-control or market incentive based. a. A state emissions tax on the quantity of carbon emitted by each firm. b. The federal government requires domestic auto companies to improve car emissions by 2020 . c. The EPA sets national standards for water quality. d. A city sells permits to firms that allow them to emit a specified quantity of pollution. e. The federal government pays fishermen to preserve salmon.
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