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Unformatted text preview: 10/29/2009 1 • TODAY – class 21 – Environmental solutions continued • Next class Next class – Class exercise – see class notes on web – Let them eat pollution Policy approaches/solutions 1) Assign property rights – solution through private negotiation by the affected parties 2) “Internalize the Externality” - allocate ownership of common lands to one party 3) Voluntary carbon offsets 4) Pollution Standards 5) Taxes/subsidies - Adjust MC to account for social costs social costs 6) Assign Property Rights (permits) and Create a Market in permits 10/29/2009 2 2) Internalize the Externality • Open access to grazing lands led to the destruction of grass to the point that it could not support cattle – Tragedy of the commons. ¾ Historical result: fencing of the property (the enclosures).- ownership “internalized the externality”. Fees then take into account the effect of grazing on the feed left for others ➔ no market failure. • But internalization through ownership by one firm or one country is often not possible or desirable – Overfishing – has destroyed fish stocks. No one firm can own the oceans and lakes. – Environmental externalities – too widespread for common ownership 3) Voluntary carbon offsets • Al Gore (known for the environmental film: An Inconvenient Truth ) owns a mansion that uses electricity at more than 20 times the US average electricity at more than 20 times the US average.electricity at more than 20 times the US average....
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This note was uploaded on 02/14/2010 for the course COMM 296 taught by Professor Dasgupta during the Fall '08 term at UBC.
- Fall '08