Policies to Reduce Pollution

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The two policies that are mostly used to reduce pollution are the taxation of the pollution producers (Pigovian tax) and standards-change approaches. The Pigovian taxes are usually generally levied as an excise tax, which will raise the price of the goods produced. This causes the company to produce less which in turn lowers pollution.

The standards-charge approach is to tax the pollution directly. The government determines the level of pollution that it thinks is appropriate, and then will charge a fine for each unit that is above the appropriate amount. This is how the standard-charge approach rewards the companies that produce less pollution and punishes the companies that exceed the allotted pollution amount.

Unfortunately, standard-charge approaches don’t enable policy makers to control the air quality. The government has to estimate how much a company will reduce their pollution when they are fined. If the government sets a fine to low, the company may determine that it is cheaper to pay the fines rather than reduce its pollution. This also will not give the company an incentive to reduce their pollution level below what the government has set as the desired limit.

The positive benefits to these measures are that our ecosystems are healthier and this also helps the health of the people living in the local environment. Air pollution is known to cause a great deal of disease in the population, especially respiratory disease. The environments ecosystems will benefit when people and companies lower their use of fossil fuels, this will help to lower greenhouse gases.

Taxes and fines always have some sort of losses involved, both to the companies and to the government applying the fines. When the different taxes are levied, companies will find ways to reduce costs by either cuts in staffing or outsourcing what they are able to send to foreign companies. Another cost involves the failure of the government. The different taxes and fines levied on...
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