Environmental Policy Notes

Goals:

• Security, prevention of future needs

• significant debate over efficiency of free market principles

  • free market vs planned economy

free market: let consumers decide what to do with the environment

planned economy (government regulations): it is the governments job to regulate environmental policy

types of market failures:

• Negative Externality: actions taken by one which negatively impacts another and the costs are paid by the one impacted, not by the one who caused the impact

• Free riders: costs are expended by one which benefits others who pay no cost

• Limited Resources (NOT TRAGEDY OF THE COMMONS): most resources are finite. What is the incentive to limit the capture and use of limited resources?

Policy Issues

    Risk: the threat to health and life as a result of some activity or exposure to some substance

Risk Control

• Risk assessment: determination of risk

• Risk management: actions taken based on the assessment

Risk Adverse vs Risk Tolerant

    Adverse: trying to avoid risk, taking action to avoid risk

    Tolerant: not avoiding risk, not taking action to avoid risk

Policy Tools

Performance Standards vs Design Standards

    Performance Standard: set a requirement and allow people to meet it in any way they want

    Design Standard: set performance standard and tell them how to do it

Policy tool: Inducements

• charge systems, tradable permit systems, subsidies