chapter 4 - pollution

why does pollution exist?

Recycling processes fail to prevent wastes from accumulating in the environment

• air, land, & water are the major types impacted

what is pollution?

is the introduction of harmful substances or energy into the natural environment at a rate faster than it can be safely broken down or stored.

why does pollution exist?

is mainly caused by human activities like burning fossil fuels, industrial manufacturing, and poor waste management.

why does pollution matter?

important because it affects tourisms

how is pollution an economic problem?

it causes…

1. scarcity

2. external cost-market failure

3. externalities

what are the pros of regulating pollution?

• New technology industry

• Health and safety

• Economic value to protecting environment

what are the cons of regulating pollution?

• The rebound effect

• Regulation hurts business

• Technology already progressing

what is are externalities?

WHEN ONE PERSON’S ACTIONS IMPOSES A COST OR BENEFIT ON THE WELL-BEING OF A BYSTANDER.

what should the goal of externalities be?

GOAL: Marginal Social Benefit = Marginal Social Cost

what are positive externalities?

an external benefit is imposed on someone. (gardens, vaccines)

what is an example of positive externalities?

getting a vaccination, which protects the individual who gets the shot while also lowering the risk of disease for everyone else in the community through herd immunity

what is negative externalities?

(spillover costs): an external cost is imposed on someone. (exhaust, barking dog, smoking)

what is an example of negative externalities?

Secondhand Smoke: Smoking cigarettes forces harmful passive smoke into the air, affecting the health of people nearby.

what is a Externality in Consumption?

a change in satisfaction, + or –(demand curve), for someone other than the direct consumer of the item.                

• Marginal Social Benefit = Marginal Propensity Benefit + (-) externality.

what is Marginal Propensity benefit?

is not a standard economic term, but it likely refers to the marginal propensity to consume (MPC) or the marginal propensity to save (MPS), which measure how people react to changes in their income

what is an Externality in Production?

• occurs when markets operating on their own, don’t lead to a socially optimal allocation of resources, + or – (supply curve).   

  • Marginal Social Costs = Marginal Propensity t(o) Consume + (-) externality

what is an marginal propensity consume?

is the fraction of any new or extra income that a person chooses to spend on goods and services instead of saving

what are Examples in Production (negatives)?

- noise pollution,

- antibiotic resistant,

what are Examples in Production (positives)?

+ bees for honey also pollinates other crops

+ research & development

+ learning by doing

+ reducing the cost of producing another good

WHY DO POLLUTERS POLLUTE?

Property rights in the environment either nonexistent or not enforced. Much of environment’s services shared by entire population. If not regulated, firms can over utilize resources  & charge low prices if there are no consequences

can we eliminate pollution?

no we need pollution to survive, so we need to find the perfect balance where it won’t kill us

based on this graph what is the optimal level of pollution?

7th 10% which is 258

does more control over pollution mean more benefit?

NO, more control doesn’t mean more benefit

what are the current solutions?

1. pollution permits

2. incentives

3. taxes

what are types of pollution permits?

• Give firms the legal right to produce a certain amount of pollution (Cap & Trade)

• Permits can be sold & bought

• Encourage reduction of pollution: Costs the firm to go over the set amount of pollution

• Provides the government with revenue & reduce sulfur dioxide emissions in pollution rights markets

what is an example of incentives?

licenses

• Costs to purchase these licenses means that the social costs are reflected in the firm’s costs, giving the firm an incentive to reduce pollution when economically beneficial

what are examples of pollution incentives?

Cap-and-Trade (Tradable Permits)

what are types of taxes?

• Green taxes: Raise government revenue & provide a market incentive to limit waste

• Carbon Tax

• Fuel Tax

• Direct (Ex. cars pass emission tests before on the road) & Indirect controls

SHOULD POLLUTION EVER BE ELIMINATED?

1. Yes, only when the MSB is greater than or equal to the MSC of control for all units of pollution and

2.  When the marginal social cost of control is zero

can pollution ever be at a 0%?

no it can’t

what is the appropriate level of control?

• Optimal level of pollution will never be zero.

• We have to pollute to live.

• Pollution control is not costless.

what are marginal social benefits to pollution?

The marginal social benefit (MSB) of pollution is the additional gain or value that society receives from one more unit of pollution

what are examples of marital social benefits to pollution?

is the extra financial or economic gain society gets from allowing one more unit of pollution, usually measured by the cost savings a company achieves when it does not spend money on pollution control

what are economic efficient levels?

Economic efficient levels refer to the optimal points where resources are allocated to maximize total societal welfare with zero wasted inputs

what are economic efficient levels according to pollution?

the economically efficient level of pollution occurs where the marginal benefit of an additional unit of pollution equals the marginal damage (or marginal cost) it causes to society

• In environmental economics, this balance means the goal is rarely a zero-pollution target, because economic activities like manufacturing and energy production provide valuable goods and services to society. 

what are ways to minimize pollution?

You can reduce pollution in your daily life by changing how you travel, saving energy, and managing waste responsibly

• drive less

• save electricity

• recycle

• compost food