Entire Book - Southwest Consortium for Environmental Research ...
Entire Book - Southwest Consortium for Environmental Research ...
Entire Book - Southwest Consortium for Environmental Research ...
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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 />
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