Property Rights for the Common Good
Chapter 5: Controlling Environmental Degradation without Property Rights
Page 102 5 Controlling Environmental Degradation without Property Rights 5.1 CONTROLLING THE ENVIRONMENT As a society, we are surrounded by the problems associated with pollution and environmental degradation. While property rights can solve many of these problems, it is clear that they also fall short of their goal on a number of occasions. It is also clear that governments are not always willing nor able to implement a propertyright solution — even when this solution may be an appropriate one. Nevertheless, virtually every national government on the face of the earth takes credit for initiating, implementing or enforcing some type of environmental policy. If not private property rights then what? In this chapter, we focus on the “then what” part of this question. In other words we describe and discuss the various other types of policies or approaches that have been used to mitigate environmental harm. One of the goals of policy makers is to try to encourage firms to emit only an “acceptable” amount of pollution. The propertyrights solution creates clear incentives for firms to find the best, cheapest ways of reducing their level of emissions — since each unit of emissions costs the firms the market price of the allowance or permit. In technical parlance, the pollution externality can be internalized. When correctly implemented, the number of pollution permits or rights is set by the regulator so that the price of the permit on the market reflects the social cost of the unit of pollution “bought” by the...
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