18.08.2013 Views

Entire Book - Southwest Consortium for Environmental Research ...

Entire Book - Southwest Consortium for Environmental Research ...

Entire Book - Southwest Consortium for Environmental Research ...

SHOW MORE
SHOW LESS

Create successful ePaper yourself

Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.

Improving Transboundary Air Quality with<br />

Binational Emission Reduction Credit Trading<br />

POLICY OPTIONS FOR THE CONTROL OF<br />

POLLUTION<br />

<strong>Environmental</strong> degradation, like that evident in the Paso del Norte,<br />

reduces quality of life and adversely affects public health. Yet at the<br />

same time, it is neither possible nor financially plausible to eliminate<br />

pollution altogether since doing so would impose onerous<br />

restrictions on human activity. An optimal policy will balance benefits<br />

gained from improved quality of life and public health against<br />

the benefits from pollution-generating human activities. Achieving<br />

this balance requires that each potential abatement project be considered<br />

individually. In particular, if a potential abatement project<br />

results in an environmental benefit that exceeds the cost of the project,<br />

the project should be undertaken. Conversely, if the benefit<br />

from the abatement project is less valuable than the cost of executing<br />

the project, the project should not be undertaken. It follows that<br />

abatement activity should continue up to the point at which the<br />

benefit from the last or incremental abatement project equals the<br />

cost of that project. That is, incremental benefit should equal incremental<br />

cost.<br />

One possible policy to adopt in response to air pollution is laissez<br />

faire, in which the level of emissions is determined by the market.<br />

Un<strong>for</strong>tunately, laissez faire is not optimal; unregulated markets<br />

will result in inadequate abatement and excessive pollution.<br />

Pollution is created as a byproduct from the production of desired<br />

commodities. Because the pollution is released into the collective<br />

environment without charge to the emitter, the price of the desired<br />

commodity does not reflect the cost of pollution to society. Thus,<br />

the price is set too low, consumption of the commodity is too high,<br />

and excessive pollution is emitted. Moreover, emitters have an inadequate<br />

incentive to undertake abatement activity. Because the environment<br />

is the collective property of society, if society fails to limit<br />

its use, there will be exploitation and excess pollution. This is an<br />

example of the “problem of the commons” (Halvey 2002). Markets<br />

inadequately price the environment and the consequence is excessive<br />

pollution. Given the failure of markets in providing correct incentives,<br />

government intervention through the regulatory process has<br />

been appropriate. In this regard, there are three basic regulatory<br />

4

Hooray! Your file is uploaded and ready to be published.

Saved successfully!

Ooh no, something went wrong!