| Cost-Benefit Analysis
The procedure of cost-benefit analysis seeks to measure all of the costs and benefits of a particular environmental regulation.Deposit-Refund Systems
To encourage consumers to bring back recyclable bottles, some areas offer refunds where a consumer pays an added tax on a bottle then gets their money back by returning it.Direct Pollution Controls
The simplest way of reducing pollution is to simply set an absolute limit on how much pollution a
person or device can create.Ecosocialism
Ecosocialism has some roots in Marxism and says that the government should intervene to prevent environmental destruction by capitalism.Emission Taxes
Sometimes, governments will charge companies for the pollution they create in an attempt to recover some of the social costs
that are produced by pollution.Environmental Effects of the North American Free Trade Agreement
Some environmentalists have expressed concern that the free trade agreement between the U.S., Canada, and Mexico could endanger the environment.Environmental Economics
Dating back to the 1800s,
environmental economics has dealt with many features of capitalism that are largely unique to the environment and solutions to economic problems.Externalities of Transportation
Like factories, automobiles pollute and create negative externalities in the form of pollution and dangerous emissions. Governments have attempted various solutions.Externality
An externality is something that, while it does not monetarily affect the producer of a good, does influence the standard of living of society as a whole.Failure in Optimal Resource Extraction
While the market should cause the rate of extraction to be that level where the rise in price of a natural resource equals
the interest rate, several problems can get in the way.Free Riders
A free rider benefits from a public good without paying for it. The idea relates closely to the tragedy of the commons, and can be a major problem for the environment.Government Failure
Since some politicians have to be reelected, others may
lack adequate knowledge of the environment, and other problems may occur as well, causing governments to fail to provide the most economically efficient environmental policy.Impacts on Future Environmental Economics
When making economic decisions, policymakers and economists have to take future generations into account as well. To do this, they use the discount factor.
Internalizing Costs
In order to prevent market failure, the government has to step in to require companies that create negative externalities to internalize these costs.Landfill Tax
A landfill tax is a popular method of combating the negative externality created by throwing garbage into landfills.Marxism on the Environment
Marx thought that humanity would develop greater and greater control over nature and humanize it. Now, the Marxist view of the environment has split into two factions.Optimal Environment Regulations
Free-market economics seeks to equate marginal social cost and marginal social
benefit for the purpose of deriving the optimal level of environmental damage. However, other systems exist as well.Organization of Petroleum Exporting Countries
OPEC is a cartel that attempts to set the world oil price by having many leading oil producers collaborate to restrict production.
Pollution Problems in the Third World
Third World nations tend to be very poor and in great need of foreign capital. As a result, First World capitalists are often able to take advantage of weak pollution laws in Third World countries.Rate of Extraction of Natural Resources
Economic theory predicts that natural resources will be extracted from the ground at a
rate where the annual rise in price of the resources is equal to the interest rate.Recycling Domestic Waste
While the public is highly supportive of recycling, there are limitations coming from the costs of recycling and the market for recycled goods.Resource Exhaustion - A Limit to Growth
While some economists think that it will be possible for economic growth to continue indefinitely, others say that the limited resources on the planet will impose some restrictions.Steady-State Economy
Herman Daly said in a book that an absolute level of efficiency existed, arguing against traditional economics. He also suggested two measures that should be taken as a result.
Sustainable Economics
A sustainable economy is one where the population and total output of goods remains constant over time.The Anti-Regulation Movement
Many objections to environmental regulations and calls for deregulation have come from business people and others. They have many reasons why
countries need to begin to deregulate.The Costs of Global Warming
The environmental problem of global warming has created costs for agriculture and could be a huge threat to island nations.The Economic Theory Behind Pollution Control
Companies that pollute create negative externalities,
costs that affect society but not the company. As a result, pollution control seeks to eliminate enough pollution to achieve the maximum social good.Tradable Landfill Permits
Because garbage is also a negative externality, some governments might attempt to achieve economic efficiency by giving out permits to create garbage that people can buy and sell.Tradable Pollution Permits
The most advanced system of combating the inefficiency created by negative externalities of pollution is the tradable pollution permit system, which distributes permits to pollute then allows them to exchanged.Tragedy of the Commons
The theory of the Tragedy of the Commons states that when a
resource is collectively owned by a group of people, each will exploit the resource, overusing it, and thus ultimately destroying the resource. |
