Property Rights for the Common Good
Page 129 6 Property Rights for the Common Good 6.1 LESSON LEARNED Economics and the Environment For some, the word “economics” conjures up images of environmental degradation by big business, unbridled greed, resource exploitation — in short, visions that are anathema to a caring, environmentally sensitive society. In fact, economics has much to offer people who are concerned about environmental degradation and resource exploitation, and provides guidance as to how these difficult problems may be solved. The ‘‘economics” approach to the environment, including natural resources, focuses on the importance of identifying the externality that underlies the problem at hand. Environmental problems stem from the fact that the full cost of someone's actions is not being borne by that person (or firm). Polluters do not pay the full cost of their emissions, and resource users do not take into account the costs imposed on others by their activities. Once the externality is identified, we need to determine who is not paying the full cost of their actions. Solving the problem entails forcing the polluter or the user to internalize this external cost. The essence of the economic model, therefore, is that everyone should be forced to bear all of the costs of their actions. To illustrate the power of the economics framework — and why some polluters would prefer that environmentalists did not rely on it — let's consider the example of the Exxon Valdez oil spill off the coast of Alaska. On 24 March Page 130 1989, the Exxon Valdez oil tanker ran...
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