pollution control measures

Question 1

why can no answer be given to the target level of pollution?

Answer 1

no answer can be given due to different modelling frameworks, goals and interpretations of the question

Question 2

how might the modelling framwork affect the target level of pollution?

Answer 2

the modelling framework might have different scope for example a geographical or political scope. (one might look at what is best for the country alone or one might look at what is best for the world as a whole and then infer a target for country)
they might have a different analysis ie partial equillbirium or general equilibrium analysis
they might have different specifications of the system in which pollution generating activities are embedded - incorporating natural resources into economic growth models

Question 3

how might the goals affect the target level of pollution?

Answer 3

one country might have the goal o sustainability, another might have a goal of human health protection ( standards for background radiation around nuclear facilities or concentration of particular matter in urban areas), another economic optimality ie optimal level of emissions that maximise social welfare or even just economic efficiency

Question 4

what is the marginal cost of pollution reduction?

Answer 4

the additional cost of reducing polution by one unit.

Question 5

how does the marginal cost of pollution reduction respond when pollution moves from max to a lower level?

Answer 5

the marginal cost increases. this is because a profit maximising firm will institute the lowest cost pollution reduction options first then proceed to the more expensive options

Question 6

what is the marginal damage from polliution?

Answer 6

the addition damage from producing an extra unit of pollution

Question 7

how does the marginal damage from pollution respond when the pollution moves from 0 to a max quantity of pollution?

Answer 7

the marginal damage from pollution increases as the level of pollution increases. this is because the absorption capacity of an ecosystem moves towards its limit as the amount of pollution increases

Question 8

what can the marginal damage from pollution also be interpreted as?

Answer 8

the marginal benefits of pollution reduction

Question 9

what is the optimal level of pollution?

Answer 9

the marginal benefits of pollution reduction is equal to the marginal costs of pollution reduction

Question 10

how is the total cost to firm in a welfare economic analysis of a reduction in the pollution level?

Answer 10

the area under the marginal cost curve

Question 11

how is the total social benefits of a reduction in the pollution level shown in the welfare economic analysis?

Answer 11

the area under the marginal benefit curve

Question 12

can you identify the optimal quantity of pollution in real life?

Answer 12

it is very difficult in real life as we are unlikely to know the shape and location of these curves (MCR and MD) with any precision

Question 13

what instruments can we implement to achieve the desireable level of pollution?

Answer 13

• No intervention is required because unexpectedly, the prevailing level of pollution is not different from the target.
• No intervention is required because of the existence of voluntary bargaining.
• Polices for pollution control.

Question 14

what does it mean to be cost effective?

Answer 14

if one particular instrument can attain that target at lower real cost than any other can then that instrument is cost effective

Question 15

why is it desireable to be cost effective?

Answer 15

Cost-effectiveness is desirable because it implies that we allocate the smallest amount of resources to pollution control, conditional on a given target being achieved. It has the minimum opportunity cost. it is a prerequisite for achieving economically efficient allocation of resources

Question 16

what is the least cost theorem of pollution control?

Answer 16

a neccessary condition for abatement at least cost is that the marginal cost of abatement be equalised over all abaters.
the overall abatement needs to be equal to the abatement target aswell

Question 17

what are institutional approaches which facilitate internalisation of externalities?

Answer 17

Any measure that facilitates voluntary bargaining solutions between generators and victims.

Question 18

what is the facilitation of bargaining?

Answer 18

it is an institutional approach to facilitate the internalisation of externalities. it reduces the cost or impediments to bargaining. an example being the polluter information placed in the public domain.

Question 19

what is the specification of liability?

Answer 19

it is an institutional approach to facilitate the internalisation of externalities. it is a codification of liability for environmental damage and an example being respiratory damage in japan

Question 20

what is the instrument of development of social responsibility?

Answer 20

it is an institutional approach to facilitate the internalisation of externalities. it is education and sociliastion programmes promoting citizenship. an example being energy conservation media campaigns or environmental labelling

Question 21

what are command and control instruments?

Answer 21

they are instruments that directly control the polluters. they operate by imposing mandatory obligations/ restrictions on the behaviour of firms and individuals. the regulation may apply to the emissions themself (license), quantity of final product (quota), production techniques used(filters), level and/or mix of production inputs

Question 22

what is the policy of an input controls over quantity and/or mix of inputs?

Answer 22

they are requirements to use particular inputs, or prohibitions/restrictions on use of others. an example being a ban on the use of toxic cleansing agents

Question 23

what is the policy of technology controls?

Answer 23

they are the requirements to use particular methods or standards. an example being requirement to install catalytic converters in exhausts

Question 24

what is the policy of output controls such as quots or prohibitions?

Answer 24

they are non transferable ceilings on product outputs. an example being a ban on the use of DDT, Singapore vehicle quotas , effluent discharge licenses

Question 25

what is the policy of emissions licenses?

Answer 25

they are non transferable ceilings on emission quantities

Question 26

what is the policy of location controls ( zoning, planning controls and relocation)

Answer 26

they are regulation relating to admissable location of activities. an example being heavy industry zoning regulation

Question 27

what are economic incentive (market based ) instruments?

Answer 27

they are instruments that work by creating incentives for individuals or firms to voluntarily change their behaviour. These instruments alter the structure of pay-offs that agents face.

Question 28

what is the instrument of emissions charges/ taxes?

Answer 28

they are direct charges based on quantity and/or quality of a pollutant. an example being air pollution charges (NOx charges in France, water efflent charges, noise pollutant in Germany)

Question 29

what are the instrument of user charges/fees/natural resources taxes?

Answer 29

they are paymnts for cost of collective services (charges) or for use of a natural resource ( fees or resource taxes). an example is user charges on municipal waste collection/treatment/disposal, hazardous waste charges.

Question 30

what is the instrument of product charges/taxes?

Answer 30

they are taxes applied to polluting products. an example being Hungarys taxes on vehicle tyres, or finlands on nuclear waste

Question 31

what is the instrument of emissions abatement and resource management subsidies?

Answer 31

they are financial payments designed to reduce damaging emissions or conserve scarce resource. an example is the subsidy for energy generated waste in Quebec.

Question 32

what are the instrument of marketable (transferable, marketable) emissions permits?

Answer 32

they include two systems; those based on emissions reduction credits or cap and trade. an example is denmarks CO2 emissions from power plants

Question 33

what is the instrument of a deposit refund scheme?

Answer 33

a fully or partially reimbursable payment incurred at purchase of a product. an example being austrias refillable plastic bottles or quebecs one way beer and soft drink bottles

Question 34

what are the instrument of non compliance fees?

Answer 34

they are payments made by polluters or resource users for non compliance, usually proportional to damage or to profit gains . an example being in greece with car emissions or sweden of sea dumping of oil from ships

Question 35

what are the instrument of performance bonds?

Answer 35

they are a deposit paid, repayable on achieving compliance. one example being australias mine sites or US open pits

Question 36

what are the instruments of liability payments?

Answer 36

they are payments in compensation for damage. an example being japans waste where they restore sites polluted by illegal dumping

Question 37

why will the specificaiton of liability encourage efficiency??

Answer 37

the judicial system can help bring about efficiency. a general legal principle could be established such that any person/ organisation is liable for the adverse external effects of their actions. then any polluter knows that with some probability they can be identified, successfully prosectued, and so made to pau for that pollution.

Question 38

how is the liability principle related to property rights?

Answer 38

pollution can be viewed as a private good or as a public good.
Pollution as private good, the liability is equivalent to a statement of enforceable property rights vested in the victims, and enforcement would be done through civil law.
Pollution as public good, an environmental agency (EPA, EEA, UK EA) acts as an agent of the public interest, enforcing the liability principle on behalf of affected parties.

Question 39

what is the issue with the liability principle?

Answer 39

the problem is tracking down who is liable when the damage only becomes apparent a long time after the relevant pollutants were discharged. therefore the individuals or firms may no longer exist.

Question 40

what is cradle to grave methodology?

Answer 40

it is a methodology used to evaluate natural effects linked to all the phases in the life of the product from obtaining of raw materials, processing of these materials, manufacturing, dissemination, usage, maintenance, and repair, and selling or reusing. the process of establishing legal liability throughout the life cycle of a product.

Question 41

how do emmision standards increase efficiency?

Answer 41

a standard requires all firms/ individuals to pollute below a maximum allowable level or reduce pollution to a certain percentage below a baseline level. it has a focus on a particular industry or products.

Question 42

what is the advantage of emissions standands?

Answer 42

standards can specify a definite desired result by imposing a uniform rule on all producers/products. 0 emissions is a ban on a particular pollutant

Question 43

what are the disadvantages of emissions standards?

Answer 43

inflexibility - fixed standards work well when pollution generating firms or products are relatively similar which is not the case as industry is made up of many firms of different sizes and ages
not cost effective - for some firms it can be cheaper to reduce pollution then others. requiring firms to all reduce by the same amount is not the cheapest way to achieve given pollution reduction.
not incentivising - once firms meet the standard there is little incentive to reduce pollution further for example the motor vehicle fuel economy program in US known as CAFE.

Question 44

how do technology based regulations boost efficiency?

Answer 44

best practicable means (BPM); best available technology (BAT); best available technology not entailing excessive cost ( BATNEEC).
regulation that mandates; the required characteristics of the production process, the equipment to be installed, the production techniques to be implemented

Question 45

what are the advantages to technology based regulation?

Answer 45

low enforcement and monetary costs (occasional checks)
they are sometimes capable of achieving large reductions in emissions quickly, particularly when technological fixes are available but not widely adopted

Question 46

what are the disadvantages to technology based regulation?

Answer 46

not incentivise innovation - they have little incentive to research new technology especially those requiring higher costs
usually not cost efficient because the instrument does not intrinsically focus abatement effort on polluters that can abate at least cost- no distinction between firms and abatement costs

Question 47

what is a pigouvian tax?

Answer 47

a per unit tax is set equal to the external damage caused by an activity. tax price is set equal to the monetary damage at the socially efficient level of pollution. it sends information to polluters about the cost of pollution without mandating that firms take specific actions. the regulation creates a strong incentive for individuals or firms to voluntarily change their behaviour. the firms response to the tax is cost effective, as any other level of pollution different from tax will impose higher costs

Question 48

what are the advantages of a pigouvian tax?

Answer 48

generates the efficient outcome and this is done in a cost effective way
each firm operating in a cost minimising manner, for a given level of total pollution reduction will achieve the lowest overall cost
the producer pays a price for the pollution and has an incentive to produce at the optimum level of output
taxes allow firms the freedom to reduce the emissions as they see best - it is a decentralised solution

Question 49

what are the disadvantages of a pigouvian tax?

Answer 49

the polluter is penalised twice - once by paying the tax and once by losing profits by not operating at a higher level
political difficulties and opposition from industry (lobbying)
information requirements/difficulties eg shape of function known to producers, but not necessarily to regulators etc

Question 50

how do transferrable pollution permits encourage efficiency?

Answer 50

they defie a clear emmission reduction target/total emissions allowed. they issue a total number of permits equal to the desired target level of pollution. they allocate these permits by either free allocation to firms based on historical emissions or auction. firms will only emit the level of pollution for which the have permits. an open market to trade permits allows for a free market allocation based on supply and demand. permits may expire after a period of time to reduce total number of pollution

Question 51

what are the advantages of a transferrable pollution permit

Answer 51

it reaches the efficient solution
it combines the advantages of direct regulation and an emissions tax
auctioning to existing firms - permits are sold to highest bidder
tradeable permits sold at auction will theoretically raise the same amount of revenue as an equivalent pollution tax. under an auction, existing firms would not have an advantage over new firms

Question 52

what are the disadvantages of transferable pollution permits?

Answer 52

free allocation of emissions permits based on past emissions records results in: no revenue for the government, unfairly reward inefficient plants, new firms potentially with more efficient technologies will be at a disadvantage because they will need to purchase permits on the open market from existing firms