21/01/2020 Tuesday 13:00-14:00
The answers for the questions in the tutorial are on Moodle, look at them. For any questions, ask before Friday to see what you don’t understand.
Continuation of lecture slides 2, from slide [30] ish.
Notes
Lecture 2 – Topic 1: Environmental Pollution (continued)
Standards
Enforceability of standards as an environmental instrument is the ease of implementation. In practice enforcement may be difficult. This can be due to arbitrary influences and where the burden of proof lies. It is important to account for the enforcement costs in the assessment of an environmental policy. The distributional impacts of a standard is uniform. All firms in the industry adhere to the same standard and there is no obvious discrimination. However, firms may face very different abatement costs. Standards also pose lower financial burden to polluters relative to environmental tax.
An example for standards in food products is that you can test a sample to make a conclusion of the total. This demonstrates the ease of implementation.
Taxes
Emissions tax has been introduced in 1920 by Arthur Pigou, where polluters pay tax based on the damage they have caused. The optimal level of pollution control is where MAC=MD. This ‘ideal’ tax is known as Pigovian Tax. Because the polluter will pay tax for each unit of pollution emitted, there is an incentive to reduce the tax they have to pay for pollution. Taxes are not as widely used as standards.
An example of environmental tax is the tax on plastic bags in grocery stores. Tax is easier to implement if the type of pollution is easy to measure.
Home 