Ch. 4 The economic theory of pollution control: The optimal level of pollution

Divergence between economic and ecological

-anthropocentrically based, but doesn't account for future life -bias toward more pollution, underestimate welfare of future and resilience of ecosystem -optimum pollution is calculated w/o consideration of reducing benchmark pollution Wo -Optimum pollution may not consider future generations and ecosystems in the case of irreversible ecological change

Total waste disposal cost

Total pollution control (abatement) cost + Total Pollution Damage Cost A dollars work of investment is only worth it if society is compensated by benefits realized from avoidance of environmental damage

Pollution control (abatement) cost (MCC)

cleanup effort, tech, out-of-pocket expenditures eg. sewage treatment, smokestacks, soundproofing, catalytic converter private (eg. soundproofing) or public (eg. sewage) incrementally higher levels of env. qual require investments in tech that is increasingly costly NOT EXTERNALITIES

Pollution-damage cost (MDC)

damage from untreated waste discharged into environment considered above assimilative capacity depends on amount and nature of waste eg. -plants/animals→ habitat -Aesthetic impairments -Rapid deterioration to physical infrastructures and assets -Harmful effects on human health/mortality -⇒ Needs to be expressed in monetary terms (graph represents social cost in monetary terms, each additional unit of waste, cumulative effect) IS AN EXTERNALITY: incurred by members of society after pollution damages have already occured

Persistent pollutants

eg. toxic metals, lead, mercury, radioactive waste, inorganic compounds, pesticides -Dangerous to living organisms -Very slow decomposition -transcend present action → difficult to estimate long-term damage cost

Optimal level of pollution

intersection of MDC and MCC graphs, minimize total waste disposal cost any deviation in either direction would not be cost effective It is only beneficial to spend $1on MCC if incremental benefit arising from MDC exceeded or equaled $1

baseline/benchmark pollution

x-axis of MDC graph, total pollution before any cleanup