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This lecture is from Economics of Environmental Resources. Key important points are: Taxes Vs Standards, Value of Innovation, Ambient Charges Or Subsidies, User Charges, Natural Resource Taxes, Product Charges, Input Charges, Resource Management Subsidies, Tax of Subsidy, Environmental Quality
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The Value of Innovation
Ambient Charges or Subsidies
User Charges/fees/natural resource taxes
Product Charges
Input Charges
Resource Management Subsidies
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Ambient Charges or Subsidies
Base the tax of subsidy on the environmental quality of the receiving resource Best suited to environmental problems with few regulated parties
User Charges/fees/natural resource taxes
User charges for municipal waste collection and disposal Charges for hazardous material disposal Congestion Pricing
Product Charges and Subsidies
Vehicle taxes or subsidies Nuclear waste taxes Plastic bag taxes Green payments for certain crops Cross-compliance Can promote life cycle approach
Refillable Bottles Tire Recycling Fees Pesticide Containers
Fees for Violation of a standard or law Usually proportional to damage caused
A deposit paid, repayable on achieving adequate compliance
Bond price must be set high enough to get behavior, but not so high as to create exit
Generates revenue
Well understood costs of environmental damage Observable regulated party actions Few agents to monitor Fixed time horizon for remittance Well define “states of nature” and their likelihood of occurrence Relatively small bond value
Insurance against lower profits if experiment with environmental protection systems Insurance against environmental risks
The loss must be amenable to risk pooling (I.e. multiple risks are not correlated) Must be a clear loss Loss must e in well defined period of time There must be an ability to allow a calculation of the premium Moral hazard must not be too severe Adverse selection must not be significant
