I just had to respond because your policy idea is to put it bluntly, nonsense. I'm a 3rd year economics student taking a course in environmental economics. Economists look at environmental issues the same way they look at any other issues, by looking at the actors involved. In this case, there are two: 1.the polluter, and 2.the polluttee (yes, that is a word). 1.The polluter is a benificiary of pollution, essentially they are using the environment as a free resource. They have no interest in paying to use more environmentally friendly processes when they don't have to. 2.The polluttee has an interest in protecting the environment, but economists identify two problems in having them actually do it.
A.The 'free rider problem'. Essentially, nobody is going to pay for something if they think they can get the other guy to pay for it. Consider a polluted lake. It likely could be cleaned up. Chemists have no doubt identified substances that could cause pollutants to break down into their constituent parts and would leave the lake clean. The people living near the lake would probably like it: they could swim, maybe restock the lake with fish and go fishing... Yet, lakes all over the United States remain polluted. This is because it's impossible to get interested individuals to pay to clean up the lake, they're simply going to try and wait for somebody else to do it and 'free ride' off of them. The only exception to this is where you have a limited group that lives near a lake (like a small collection of cotteges) and they require every member of their little rate paying authority to pay a certain amount to have it cleaned up. Of course, that sounds just like a government. There are, of course, a handful of exceptions to this. Notably charitable organizations where like minded environmentalists get together and each puts into the pot however much they choose. The most famous of these are nature conservancy organizations. I gather some have purchased large tracts of land, but this is still rather limited.
B.The 'information problem'. There are dozens, if not hundreds of pollutants. There are a handful of high profile media cases with carbon dioxide being the latest. This is the case you've identified and you've suggested that market forces respond with people buying hybrids. However, as I said, that is one pollutant out of many. Some of the biggest pollutants are used in agricultural production. DDT and others were particularly bad pollutants. Some people have known about the negative consequences of these pollutants for around 50 years now, and yet, organic agriculture is still only about 4% of the market. Even then, most people into that are into it for health reasons and not to better the environment. Simply put, the consumer can't be expected to be aware of the myriad array of pollutants in existence in order to change their buying habits to deal with them. After all, do you know how much pollution the plant that produced that last product you bought produces? Even in the example you gave, automobile hybrids are becoming more common not necessarily because of market demand but because federal government and state governments have mandated them.
The problem for you is your 'limited government' solution to environmental problems simply doesn't work in the real world. There are additional problems as well. For instance, many pollutants travel a lot. If a manufacturing plant in the Midwest puts out pollution that causes acid rain in the Northeast to make a product purchased by somebody in Wyoming, is the person in Wyoming likely to care?
Economists have examined 3 ways to address environmental issues.
1.Standards that limit the amount of pollution a plant can put out.
2.Technology mandates that require companies to use certain technologies that reduce (or more likely, alter the form) of certain pollutants.
3.Taxes
Economists generally prefer the last method wherever it can be used. Essentially the government is saying on behalf of the public "we own this airspace and from now polluters from now on have to pay to use it." I would think as a supporter of property rights, you would like that as a solution. Many governments in Europe are doing this by lowering other taxes while raising environmental taxes. This is known as environmental tax shifting. Economists really like it because while other taxes distort markets, environmental taxes actually correct a market imperfection by adding in the costs to the polluter and the consumer polluters are imposing on society. This removes the 'free lunch' polluters and their consumers have been receiving from society as a whole. Again, I would think a conservative like you would like that.
- Adam from the Blogosphere (http://adam-t.dailykos.com)
I shall further elaborate why my idea is, to put it bluntly, correct. First we will examine the individual level, and then the corporate level.
On the individual level you bring up organics and hybrids. I don't buy organic because it costs more... simple as that. Charge less and then more people would buy it, simple economics, regardless if for personal or environmental reasons. Farmers will switch to organic methods as it becomes more profitable to do so. Studies are showing that organic farming has long term benefits economically... if they are right, then the market will shift. More people care about the personal health effects... then the market will shift. It should be up to the customer to decide what prudct they want to buy, not the federal government. The federal government has not mandated hybrid cars, and at present hybrid sales are low because the cost to buy it does not outweigh the economic benefits of ownership. There should not be tax incentives on hybrids, but rather let the market incentives work. Hydrogen fuel cell technology provides a better return on investment (ROI) then the current technology, so the market will lead to this shift. Current tax benefits on hybrids only discourage further technological development. For example, for about $1500, one could retrofit a late 80’s model Buick with a simple hydrogen fuel cell device that increases horse power, reduces harmful emissions, and increases gas mileage. One person I know who built a device himself and has been testing it is getting about 6 miles per gallon better mileage over the last two years. At an average price of $3.00 per gallon, and an adjustment from 22 to 28 mpg (13.6 to 10.7 cents per mile), the ROI is met in about 40,000 miles. Keep in mind this is a crude device made by a guy just tinkering in his garage… With more time and resources he could do better, and that better already exists as companies have poured hundreds of thousands if not millions of dollars into this research. However, car manufacturers choose not to sell a better product because they can make more money selling the current hybrids due to government interference with economic factors! This is just one example of where market forces make it economically beneficial to do something for the environment. Energy Star is another example. Where paying slightly more for an appliance provides consumers with valuable ROI through a lower utility bill.
On the corporate level, taxing is not a solution. If this is what economists think, then I fear the worst because you can see it not working today in simple math. Businesses basically pay money to pollute because it is cheaper to pay the fines than to bring old refineries or plants up to code. If the cost is further forced on businesses, they will simply outsource the jobs to other countries that will not tax for pollution, (i.e. China) or raise prices to cover the costs of these taxes. This will make it even harder for consumers to purchase and lead to collapse of smaller companies that already work on tight profit margins. If consumers do not like that business pollute, then they can choose not to buy a certain product. In a similar fashion they can choose to support companies that are more environmentally friendly (Target I recently read is going more green). Companies use these practices to get positive PR and often they find them economically efficient as well. Currently power plants are some of the worse polluters, moving toward nuclear and other alternative energy sources will reduce pollution, reduce dependence on foreign energy, and increase national security (production of in country power prevents other countries from holding energy hostage, think 1970s oil crisis). Businesses look to do what they can to maximize profit. Rather than impose a tax or penalty on polluting, we should focus on ways to encourage positive environmental changes through positive reinforcement. We see private companies trying to develop alternative sources of energy in the form of wind farms, tidal energy, and others… because they see a future in making money with this technology… not because they want to avoid paying a pollution tax!
To summarize, the environment will get better when we use incentives for people and companies to do something about it and when the government butts out and allows market forces to work.
