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Confronting
Environmental Failures Through Pollutant Damage Charges
Loucks,
O.L Presented
at the 43rd Conference on Great Lakes and St. Lawrence River Research Economists suggest pollution fees or taxes can be a natural way of incorporating costs of negative effects into the price of goods causing those effects, while avoiding onerous regulation. However, pollution taxes are used rarely, being seen by political leaders as unacceptable. This paper will review outcomes from the lawsuit against manufacturers of cigarettes in which the externality costs of a product that damages a public good (human health) have now been incorporated in the market price, but not as a pollution tax. Instead, "compensation for damages" may be seen as acceptable where pollution taxes are not. This paper proposes that Pollutant Damage Charges (PDC) be levied on fossil fuel acid gas emissions, as the injuries to public health and natural resources are coming to be well documented. Calculations for the U.S. show these damages are over $200 billion annually, or about $ 144 per ton of carbon (on the order of $ 1.00 per U. S. gallon of gasoline). A PDC proportional to these damages would adjust the price of fossil fuels so that the full cost is reflected in their price, thereby facilitating adoption of competitive, less polluting fuels. |
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