Chapter 10 - Decentralized Policies Flashcards
Defined Decentralized policies:
Policies that essentially allow the individuals involved in a case of environmental pollution to work it out themselves.
What are two key advantages of using Decentralized approaches?
- They have strong incentives tossed solutions to the environmental problems.
- They may be the best able to find the right balance among them to find efficient solutions.
Why are liability laws effective?
Because polluters know they will be held liable for environmental damages in effect internalizing effects that would otherwise be ignored.
What do common law systems rely on?
Court proceedings in which plaintiffs and defendants meet to make claims and counterclaims.
What two roles are often involved in common law?
- Private Party
- Polluter
Define Strict Liability:
Holds polluters responsible for damages regardless of circumstances.
Define Negligence under the Doctrine of liability:
Holds polluters responsible only if they do not take appropriate steps to avoid the damage.
Define Joint and Several Liability:
One party can be held liable for all the damages stemming from a collective act of pollution.
Define Nonjoint Liability:
A party will be held liable only for its portion of the total.
What are the two steps involved in the Burden of Proof?
- Showing that the polluting material at issue was in fact the cause of damage.
- Showing that the polluting material did in fact come from that specific defendant who appears in court.
What is the Probabilistic Basis?
Exposure to the substance involves an increased probability of disease, not certainty.
Define Transaction Costs:
The costs of reaching and enforcing agreements.
In what three scenarios are Liability Laws and the incentive they create helping to generate efficient pollution levels?
- When relatively few people are involved
- causal linkages are clear
- Damages are easy to measure
What is the CERCLA?
Comprehensive Environmental Response, Compensation and Liability Act
What two things does the CERCLA do?
- Cleanup costs at legacy dump sites
- Compensation for damages
Property Rights are the most _______________ in most developed economies.
dominant institutional arrangement
What three main conditions must occur to ensure the Property Rights Approach is effective?
- Property rights must be well defined, enforceable and transferable.
- Reasonably efficient and competitive system
- Complete set of markets
What is the Payment for Environmental Services program?
When governments or other organizations identify critical ecosystem assets and pay landowners to ensure their preservation.
What is a factor that exacerbates the problems of transaction costs?
Public Goods
When ______________ are involved, decentralized approaches will not bring about efficient outcomes.
public goods
What is Voluntary Action?
Cases where individuals engage in pollution-control behaviour in the absence of any formal, legal obligation to do so.
What are the two social forces that presumably must be in operation for voluntary programs to be effective?
- Moral Suasion
- Information Community Pressure
What are the two main Decentralized approaches to environmental quality improvement?
- Liability Rules
- Property Rights
What is Coase Theorem?
Stigler’s interpretation; in a competitive economy, direct bargaining will result in the elimination of all externalities.
What is an advantage of the Coase Theorem?
Regulator needs no information about damages, abatement costs
What is the Negligence Standard under Liability Laws?
If damages occur, but tortfeasor can show they have exercised due are, they will be excused.
What is Strict Liability?
If damages occur, tortfeasor is liable, regardless of the care taken.
What are three remedies to Liability Laws?
- Injunction: Damaging activity is forbidden
- Damages: Tortfeasor must pay victim compensation
- Implementing tort law is equivalent to assigning property rights ex-post.
When is Liability Law limited?
- Problems meeting burden of proof
- Difficulty obtaining standing
- Legal value do not reflect WTP
- Transaction costs are high
What dies free-riding occur with Property Rights?
Efficient system for interested parties to come together and negotiate over rights.
What is an advantage of Moral Suasion?
Widespread spillover effects unlike, for example a tax on one type of pollutant which has no impact on emissions of another pollutant.
What is a disadvantage of the Moral Suasion?
Unethical individuals free-ride on the ethical (may erode long-run level of moral responsibility)
Why are Green Goods important?
Entry of green goods reduces demand for polluting good
The greater the proportion of ____________, the lower the MAC curve.
green goods
