1.5 Pollution control: instruments Flashcards
(21 cards)
cost-effectiveness
Does the instrument attain the target at the least cost
- allocation the smallest amount possible to pollution control (condition: target being achieved)
- minimum opportunity cost
-prerequisite for achieving an economically efficient allocation
long-run effects
does the influence of the instrument strengthen, weaken or remain the same over time
dynamic efficiency
does the instrument create continual incentives to improve products or production processes in pollution-reducing ways
ancillary benefits
does the use of the instrument allow for a ‘double dividend’ to be achieved
equity
what implications does the use of an instrument have for the distribution of income or wealth
dependability
to what extent can the instrument be relied upon to achieve the target
flexibility
is the instrument capable of being adapted quickly and cheaply as new information arises, as conditions change or as targets are altered
costs of use under uncertainty
how large are the efficiency losses when the instruments is used with incorrect information
information requirements
how much information does the instrument require that the control authority possesses and what are the costs of acquiring it
abatement
the reduction or removal of something unwanted, especially pollution or harmful emissions
least-cost theorem of pollution control
A necessary condition for abatement at the least cost:
the marginal cost of abatement should be equalized over all abeters
command & control
Most used method; top-down method
(+)
- certain of outcome
- desired results very quickly
(-)
- cost-inefficient
- lack good dynamic incentives (once threshold is reached not further looking)
- high info requirements
- monitoring & control!! (hard & without it no outcomes)
economic incentive instruments
- taxes & subsidies
(+) cost-efficient - marketable emission permits
Altering the structure of pay-offs & creating incentives to VOLUNTARY change the behavior
- relative prices are change
marketable emission permits
There is a limit on the total quantity emission allowed, but no attempt to determine how this is allocated on individual sources
Increase in emissions can be offset by an equivalent decrease elsewhere
- doesn’t matter were the emission takes place (uniformly mixing pollutants)
Emission trading system in Europe
(+)
- doesn’t require that much info
- equalization between marginal abatement costs from companies
emission cap
total quantity of emissions; the target level of emissions
EPA
environmental protection agency
- auctions of permits & allocation without charge
offset system
A company in a controlled sector pays a company from an uncontrolled sector.
controlled emitter pays for a reduction of an uncontrolled source
(+)
- Influence outside of the controlled zone
- given total quantity of emissions reduction will be achieved at a lower total cost
(only if their is a lower marginal cost outside the controlled zone)
(-)
- The controlled firms emitter a greater amount then their cap
- difficult to ensure that the awarded reduction is an ADDITIONAL reduction
Precaution
This reduces the probability that something happens and reduces the impact if something happens
strict liability
if an accident occurs, the injurer pays full compensation to the victim
- property rights to the potential victims
negligence liability
if an accident occurs, the injurer pays full compensation to the victim
ONLY IF
- the injurer were not prior to the accident undertaken the efficient level op precaution
ELSE
- no compensation is payed
precaution will increase until point Q=Q*
- more room for discussion & court cases
- property rights to the potential injurer
