Chapter 07: The Safety Standard

Question 1

What is the basis of the safety standard

Compared to the efficiency standard

Answer 1

Fairness rather than efficiency
WE HAVE THE RIGHT TO BE SAFE

• Rejects benefit-cost approach to decisions about “correct” amount
• People = right protection from unsolicited, significant harm immediate environment

Question 2

What is the efficiency argument for the safety standard?

Answer 2

Always willing to acccept certain amount of risk

Therefore: always cost-benefit analysis

• Many important benefits of protection from pollution often left out benefit-cost analysis = cannot be measured
• Material growth society feeds conspicuous consumption, fueling rat race, then no one better off
• Cost protection overstated rat race
  
  • Benefits understated
  • Safe regulation reality meet benefit-cost test

Is Accepting Some Risk same as Efficiency Approach?
Declaring safety standard > then adopting economic feasily policy = generally result less policy (compared efficiency standard)

Question 3

Is Accepting Some Risk same as Efficiency Approach?

Answer 3

Is Accepting Some Risk same as Efficiency Approach?

Declaring safety standard > then adopting economic feasily policy = generally result less policy (compared efficiency standard)

Question 4

What is the mandate approach?

Answer 4

MC > MB:
Cost to society

**Add graph

Capitalism: profits goods > innovation

♻️ Use of fossil fules overused: not wrong fossil fuels but incorrect (low) pricing to make up for externalities

Question 5

What is the market approach?

Answer 5

**Graph

Question 6

Who has the “right” to pollute and how is the answer different when considering efficiency and safety?

Answer 6

Efficient outcome same (if either consumer or producer pay)

Safety standard: Right to safety
- correct
- Must pay to “violate” safety

Question 7

How does the safety standard influence environmental policy?

Answer 7

Safety Standard stated goal much environmental policy:

Laws covering air, water, and land pollution require cleanup to “safe” levels

• No mention benefit-cost test
• Clean-up costs still play role policy determination

Question 8

How is the safety standard expressed as a social welfare function?

Answer 8

Ex: Tyler and Brittany wrangling over smoking in office

• Smoking bad Brittany and good Tyler
• Weight given w large enough - justify banning smoking altogether

Question 9

What are the objections to the safety standard?

Answer 9

1. Inefficient? Often
2. Not Cost-Efficient? Often
3. Regressive? Maybe

Question 10

What other problems does the safety standard have?

Objections:

1. Inefficient? Often
2. Not Cost-Efficient? Often
3. Regressive? Maybe

Answer 10

1. Subjective levels
2. Environmental damage is not done in the name of environmental damage:
   Done profit incentives
   Therefore, there are benefits (both consumers and producers)

Question 11

How is the safety standard inefficient?

Objections:
1. Inefficient? Often
2. Not Cost-Efficient? Often
3. Regressive? Maybe

Answer 11

By definition, SS, inefficient

♻️ Efficiency advocates claim that saying environmental health is a “right” involves committing too many resources of society to environmental protection

• Should be: safety per dollar spent (to be more effective)

Ex: Air toxics regulations and Landfill Policy

Question 12

How do air toxic regulations illustrate the how safety is inefficient?

Answer 12

• 1990 amendments to Clean Air Act designed control emissions
• Law required frims impose control tech reduce risk below 1 in 10,000 levels

Total Cost: $6 to $10 billion per year

Total Benefit: $4 billion per year

80% Americans still support despire cost-benefit disparity

Question 13

How do air landfill policy illustrate the how safety is inefficient?

Answer 13

• EPA’s regualtion landfills protect people depend contaminated groundwater were predicted reduce cancer cases 2 or 3 over next 300 years
• Potential benefits not quantified include:
  
  1. Increase ease siting landfills
  2. Reduce damage surface water
  3. Fairness future generation
  4. Overall reduction wate generation and related “upstream” pollutoin

Total Cost: $5.8 billion
Total Benefit: $2 billion per cancer case reduced

Question 14

What is Type I and Type II Error?

Answer 14

TYPE I ERROR: Not accept claim but it is true
TYPE II ERROR: Accept the claim but it is false

Question 15

How does the claim “drug is safe” illustrate that the safety analysis could be wrong?

Answer 15

Question 16

How does the claim “person is a nice guy” illustrate that the safety analysis could be wrong?

Answer 16

Question 17

What are inefficient regulations?

Answer 17

1. Regulations protect small groups from risk - ALWAYS inefficient (high risks not generate many casualties)
2. Air and EPA’s landfills regualtions classic situations which efficiency and fairness conflict

Economics often efficiency advocates:
Find economists leveling normative criticisms at safety-based enviornmental protection laws

Question 18

How is the safety standard not cost effictive?

Objections:
1. Inefficient? Often
2. Not Cost-Efficient? Often
3. Regressive? Maybe

Answer 18

Lack of cost-effectiveness - goal at the lowest possible cost

If “safety” is goal - extreme measures taken attack minimal risk situations instead high risk situation

Question 19

How does superfund and asbestos illustrate the lack of cost-efficiency?

Answer 19

Ex: Superfund and Asbestos

Millions dollars spent purify seldom used groundwater at toxic stills

• Critics argued redirecting functions better use of resources:
  
  1. Children about 5 in 1 million chance contracting lung cancer from attending school built w asbestos
  2. Redirecting functions superfund clean-up asbestos removal could save more lives

Safety proponents response:

• Limits deal problems = not limited resources > lack political will
• Funds freed up from “overcontrol” in pollution arena more likely devoted affluent consumption

Question 20

Risk-Benefit Analysis

Answer 20

• Authorities use risk-benefit studies compare cost-effictiveness different regulatory options
• Common measure used appraoch lives saved per dollar spent
• Helps avoid devoted resources to an intractable problem, not mean backing way safety as a goal

Question 21

How is the safety standard regressive:

Objections:

1. Inefficient? Often
2. Not Cost-Efficient? Often
3. Regressive? Maybe

Answer 21

1. Safety standards more restictive than efficiency standards:
   greater sacrifice goods and services
2. Concered people fall below decent standard of living - overregulation
3. Suppose switched from a safety standard to an efficiency-based standard: Would be poor be better off?

Question 22

Do lower income people generally benefit more/less from environmental regulations?

Answer 22

Lower income people generally benefit less environmental regulations:

Do not have the resource to avoid engading in dirty industry

• cant buy a Tesla - cars inefficient

Change regulation: cannot afford new car
Therefore, impose costs on lower income people

Ex: GST

5% sales tax

• Low income person: spends all of their income > all of their income affected by tax
• High income person: not spend all their income (%) > paying GST on practically non of their income
  Try compensate marginalized communities:
  • Some goods not taxed (milk) and chocolate is taxed
  • GST money back programmes

Same principle would apply to pollution tax

• LIP spend more on their income on dirty goods

Hence: Safety standard also not inherently fair

Question 23

Regressive impact on income distribution:

Answer 23

Regressive impact income distribution:

(Unless compensated for) higher prices consumer goods induced regulations take bigger percentage bite income poor than rich people

Much pollution generated production of necessity - cost environmental regulations borne unevenly

Question 24

Progressive Beneftis from Pollution Control:

In relation to regressive influence of the safety standard

Answer 24

Poor people live more polluted areas
- benefit more from clean-up
- Harmed more when standards relaxed

Question 25

Define Environmental Racism:

Answer 25

**Racial inequality exposure pollution** (eg. **Flint 2015**) ♻️ Policys for environmental regulation disproportionatly affect marginalized communities Environmental Justice Movement in response *Exposure due to low income or race?* - Poor, working-class, and minority people pay more, relative to income, for pollution control (Also benefit more) - Hard determine whether it results in net benefits or net costs

Question 26

How does socio-economic influence influence the placement of LULUs?

Answer 26

“**Locally unwanted land uses**” or (LULUs) refer sites for disposal waste - LULUs impose negative externalities on neighbors from potential hazards exposure to decreased land values - By def, communities nnot want LULUs and wealthier community, higher level of safety community will demand - Located poorer communities: - *Based efficiency/safety/both?* - WTA larger ## Footnote *Summers Memo*: Internal memorandum to staff, then chief economist at World Bank

Question 27

How does safety "need time?"

Answer 27

To create safety: MUST NEED TIME - Safety standard: must determine safety standard at the time y want to impliment policy (**moving policy**)

Question 28

Define moving policy?

Answer 28

Must determine safety standard at the time you want to impliment the policy

Question 29

How does Compensation for LULUs work?

Answer 29

- **Society whole benefit** greatly having toxic facilities - One solution - **monetarily compensate communities** with LULUs Compensation could pay schools, libraries Poorer communities accept lower compensation levels than wealthier communities ## Footnote trade in LULUs

Question 30

How does LULUs create a (unfair) global marketplace for garbage disposal?

Answer 30

- Society whole benefit greatly having toxic facilities - One solution - monetarily compensate communities with LULUs (*Compensation could pay schools, libraries*) - Poorer communities accept lower compensation levels than wealthier communities (*trade in LULUs*) **Global marketplace garbage disposal** Still unfair: Poor countries do not choose to be poor - Poorly governed - Might not be effective at disposing garbage

Question 31

What is the efficiency argument behind toxic trade?

Answer 31

- Lower income - poor country has marginal benefit of cleanup schedule lying below that of rich countries Rich countries: rich enough to care about environmental problems - Current pollution levels lower poor countries > MB of cleanup also lower - Transferring 10% waste of rich country to poor country reduces monetary damages in rich country more than it increases damages in poor country - Poor countries then compensated for its damages and overall monetay damages will reduced by trade **Graph

Question 32

How does the toxics trade create winners and losers?

Answer 32

**Winners**: - Wealthy countries no longer exposed waste - Around world can buy cheaper products - People (poor) in dump sites **Losers**: - Poor country individuals (now and future generations) contract diseases - Rely natural resources may damage transport and disposal process ***Everyone Wins?*** - Dumping toxics = efficient, total monetary gains to winner outweight total monetary loss to losers *Theory:* winners compensate losers (tho complete compensation unlikely)

Question 33

What are some problems with the toxic trade?

Answer 33

- Majority benefit from dumping flow to relatively wealthy while poor will bear the burden of costs - Political structure in many developing countries is far from democratic, highly susceptible to corruption - Few poor countries have resource for effective regultion - Still regulation or high taxes increase rate illegal dumping; unregulated trade waste may thus lower welfare of recipient country

Question 34

What does the safety standard say about the siting of LULUs?

Answer 34

Politically acceptable definition “safety” - not worked out *why*: small group bears burden risks - nobody wants in backyard Compensation thus play role in stiting of hazardous facilities - Firms and governments **seek poorer communities and less political power** Thus: less compensation package

Question 35

How to ensure the majority benefits from sitting LULUs?

Answer 35

- government capable providing effective regulation - open political process and democracy

Question 36

# Compare Safety and Efficiency: Social Goal?

Answer 36

**Efficiency**: MB = MC **Safety**: Danger to health and environment "minimized"

Question 37

# Compare Safety and Efficiency: Social Goal?

Answer 37

**Efficiency**: MB = MC **Safety**: Danger to health and environment "minimized"

Question 38

# Compare Safety and Efficiency: Implied social welfare function:

Answer 38

Question 39

# Compare Safety and Efficiency: Advantages and Disadvantages:

Answer 39

**Efficiency:** Maximizes measurable net monetary benefits; relies heavily on assumptions of benefit-cost analysis **Safety:** Seems consisted with public opinion; often cost-ineffective and may be regressive

Question 40

Compare the safety and efficiency standard:

Answer 40

**(1)*Safety Standard**:* - Relies liberty argument: weight welfare **Stricter pollution** standard than efficiency standard - Still subjective - Still unfair - Overmake case for safety = weakens argument *Not want to get to point of no return (say 5°) - overstate line (to make sure not get point)* ***(2)Efficiency Standard:*** - Attack “fairness” argument of safety: regressive - *difficult prove/refute in general* ## Footnote Both have the **same problems** - at least the efficiency standard (cost-benefit analysis) better understood