Suppose that the governmental wished to decrease the use of a pesticide that is leaking into water supplies in a watershed by 60% from current use levels.
Discuss the advantages and/or disadvantages of distributing marketable pesticide permits to each farm operating in the watershed equal to 40% of its current level of use of that pesticide, versus simply ordering each farm to reduce pesticide use to 40% of current levels under threat of heavy fines for non-compliance.© BrainMass Inc. brainmass.com March 21, 2019, 12:38 pm ad1c9bdddf
Pollution permits are a combination of command and control and market-based approaches to the task of limiting pollution emissions. Polluters can bid for a permit that allows them to create a fixed amount of pollution. These permits can be resold: The government can gradually reduce the number (volume) of pollution permits available so that total pollution emissions can be controlled. The market for permits will reach a market-clearing price where the marginal benefit of pollution emissions is equal. Businesses can either buy permits or invest in technology to reduce pollution emissions - whichever approach saves them money. Gradually the total amount of pollution allowed can be reduced - as the stringency of pollution limits is tightened, so the value of permits may rise, they will be ...
The pros and cons of distributing marketable pesticide permits are discussed.