Comments on: Reducing negative externalities - the European market for carbon emissions http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/ for students and teachers of AP and IB Economics Mon, 08 Sep 2008 01:01:12 +0000 http://wordpress.org/?v=2.5.1 By: Welker’s Wikinomics Blog - for students and teachers of AP and IB Economics » An answer to Kevin Yeh’s excellent question about emissions monitoring… http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3861 Welker’s Wikinomics Blog - for students and teachers of AP and IB Economics » An answer to Kevin Yeh’s excellent question about emissions monitoring… Thu, 31 Jan 2008 08:06:20 +0000 http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3861 [...] Towards the end of our last Micro unit, which was on Market Failure, SAS AP Econ student asked a good question in a comment on my blog post “Reducing negative externalitites - the European market for carbon emissions” [...] [...] Towards the end of our last Micro unit, which was on Market Failure, SAS AP Econ student asked a good question in a comment on my blog post “Reducing negative externalitites - the European market for carbon emissions” [...]

]]> By: julie.lin http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3798 julie.lin Mon, 21 Jan 2008 12:53:07 +0000 http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3798 i think that the system of pollution permits are helpful to reduce pollution and at the same time also somewhat push the economy. Environmentalist groups who buy these permits and kept them for the goods of the people are largely appreciated and more firms should start to support these groups as the issue of global warming continues to increase. I believe that if all other countries start to adopt this policy global warming rates could slow down by a lot and also help the economy. i think that the system of pollution permits are helpful to reduce pollution and at the same time also somewhat push the economy. Environmentalist groups who buy these permits and kept them for the goods of the people are largely appreciated and more firms should start to support these groups as the issue of global warming continues to increase. I believe that if all other countries start to adopt this policy global warming rates could slow down by a lot and also help the economy.

]]> By: serenatu http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3792 serenatu Mon, 21 Jan 2008 11:58:06 +0000 http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3792 This isn't the first time i heard about this, last year in environmental science we talked about the selling and buying the right to pollute, when I first heard about this last year, i was like wow people actually pay for it to pollute. Setting a price for the right to pollute is a great idea, this would cause firms to reduce the amount of pollutants they release to the airs. These years global warming has become one of the biggest problems we are facing; I hope the selling and buying the right to pollute will slow down the speed of global warming. =) This isn’t the first time i heard about this, last year in environmental science we talked about the selling and buying the right to pollute, when I first heard about this last year, i was like wow people actually pay for it to pollute. Setting a price for the right to pollute is a great idea, this would cause
firms to reduce the amount of pollutants they release to the airs. These years global warming has become one of the biggest problems we are facing; I hope the selling and buying the right to pollute will slow down the speed of global warming. =)

]]> By: Michael Daily http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3790 Michael Daily Mon, 21 Jan 2008 11:31:35 +0000 http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3790 It is a little bit scary that firms are willing to pay $100 billion dollars just for the right to pollute the air that everyone breathes. But putting a price tag on pollution makes it somewhat fair. Now instead of polluting the environment endlessly, factories have to think about the costs placed on them from purchasing the pollution rights. Further causing less pollution would be the fact that all the money they are paying will be used to help lessen pollution. I also understand that if an environmental group did not like the pollution they themselves could purchase the pollution rights. However, the problem with this is that they will have to raise the money, whereas businesses are constantly making money from their products. Therefore, although this seems like a fair compromise polluting businesses can still have their way as long as they are making good profits. I mean how can an environmental agency genuinely compete with a multi-million dollar company? But then again pollution is still lessened through pollution rights, so overall they are a good idea. It is a little bit scary that firms are willing to pay $100 billion dollars just for the right to pollute the air that everyone breathes. But putting a price tag on pollution makes it somewhat fair. Now instead of polluting the environment endlessly, factories have to think about the costs placed on them from purchasing the pollution rights. Further causing less pollution would be the fact that all the money they are paying will be used to help lessen pollution. I also understand that if an environmental group did not like the pollution they themselves could purchase the pollution rights. However, the problem with this is that they will have to raise the money, whereas businesses are constantly making money from their products. Therefore, although this seems like a fair compromise polluting businesses can still have their way as long as they are making good profits. I mean how can an environmental agency genuinely compete with a multi-million dollar company? But then again pollution is still lessened through pollution rights, so overall they are a good idea.

]]> By: Drew Venkatraman http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3783 Drew Venkatraman Mon, 21 Jan 2008 09:43:28 +0000 http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3783 This solution is simply brilliant! Just think. You have an incentive to be a non-polluter. But if for instance one year you screw up, you have to pay. Big time. The prices will probably be more than what the government will charge you, but at least you get to keep your business's nose clean. So next year you decide to clean up your act. In the long run it will allow for more people to get clean, and not put so much bad stuff into the world around them. This solution is simply brilliant! Just think. You have an incentive to be a non-polluter. But if for instance one year you screw up, you have to pay. Big time. The prices will probably be more than what the government will charge you, but at least you get to keep your business’s nose clean. So next year you decide to clean up your act. In the long run it will allow for more people to get clean, and not put so much bad stuff into the world around them.

]]> By: Sunny Kim http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3753 Sunny Kim Sun, 20 Jan 2008 10:45:11 +0000 http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3753 One of the largest problems corrupting the modern world is the pollution problem. As we know, the pollution problem is causing the global warming and sudden deaths of many living organisms. However, as some people have already said, this new policy will obviously be a major step toward the slowing down of the global warming. Even though the price of carbon would rise, this policy will eventually protect the enviroment. Moreover, I agree with the idea that if China would adopt this policy like the EU, the global warming and other pollution problem will slow down dramatically. One of the largest problems corrupting the modern world is the pollution problem. As we know, the pollution problem is causing the global warming and sudden deaths of many living organisms. However, as some people have already said, this new policy will obviously be a major step toward the slowing down of the global warming. Even though the price of carbon would rise, this policy will eventually protect the enviroment. Moreover, I agree with the idea that if China would adopt this policy like the EU, the global warming and other pollution problem will slow down dramatically.

]]> By: jacqueszhang http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3733 jacqueszhang Sat, 19 Jan 2008 15:02:03 +0000 http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3733 This is obviously on the major steps towards slowing down the issue of global warming and pollution in general. By making a market out of something that normally would be free, the EU has successfully (and will gradually) fix the problem of pollution. Now if only nations like China would adopt this sort of methods.. We wouldn't be drowning in an atmosphere of 170 API... This is obviously on the major steps towards slowing down the issue of global warming and pollution in general. By making a market out of something that normally would be free, the EU has successfully (and will gradually) fix the problem of pollution. Now if only nations like China would adopt this sort of methods.. We wouldn’t be drowning in an atmosphere of 170 API…

]]> By: Jack Lo http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3722 Jack Lo Sat, 19 Jan 2008 09:27:18 +0000 http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3722 I tip my hat to the European environmentalist economists who came up with this plan. The US should definetly adopt this solution for market control. I love this idea, although there are some things I'm not sure about. Like someone mentioned above, what if a company is unable to purchase pollution permits because all the environmentalist groups have bought them all and the company would have to close down. This would cost many people their jobs. Is it morally right to put hundreds, or maybe even thousands of employees out of their jobs and potentially ruining their lives? I tip my hat to the European environmentalist economists who came up with this plan. The US should definetly adopt this solution for market control. I love this idea, although there are some things I’m not sure about. Like someone mentioned above, what if a company is unable to purchase pollution permits because all the environmentalist groups have bought them all and the company would have to close down. This would cost many people their jobs. Is it morally right to put hundreds, or maybe even thousands of employees out of their jobs and potentially ruining their lives?

]]> By: kevin ma http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3703 kevin ma Thu, 17 Jan 2008 13:15:12 +0000 http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3703 I think the pollution permits are a great idea and should be able to control the amount of pollution released into the air. Also how they can make money by selling the permits when they don't need it anymore. The countries that need this method of pollution control are the developing countries since they pollute the most. If China had pollution permits and there was a fixed amount of permits, the air here would be much cleaner. I too have the same questions as some of people that commented. How can you be 100% sure that the amount of pollution released into the air is the amount they say it is? isn't there like a way where they can alter the numbers? Also if the country is really desperate and they can not find another way to keep the economy up, would they resort to selling more pollution permits? I think the pollution permits are a great idea and should be able to control the amount of pollution released into the air. Also how they can make money by selling the permits when they don’t need it anymore. The countries that need this method of pollution control are the developing countries since they pollute the most. If China had pollution permits and there was a fixed amount of permits, the air here would be much cleaner.

I too have the same questions as some of people that commented. How can you be 100% sure that the amount of pollution released into the air is the amount they say it is? isn’t there like a way where they can alter the numbers? Also if the country is really desperate and they can not find another way to keep the economy up, would they resort to selling more pollution permits?

]]> By: robertwang http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3698 robertwang Thu, 17 Jan 2008 10:28:33 +0000 http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3698 The notion of buying the right to pollute seems like it would work extremely well, but I would like to propose a scenario (though it may be rather extreme) that I'm not too sure how firms would economically respond to: In this blog, the ability of environmental awareness groups to purchase these rights to pollute and hold them to lower the amount of pollution is an interesting idea. But what if all the environmental awareness groups somehow form an alliance and essentially buy all the permits to pollute and hold them off? What will happen to the economy? 'Course, the best response for the world is that because the firms that need to buy these permits can't since the environmentalist groups aren't even selling (consider the price of one permit to be infinite, if you may), and thus all the firms will commit to researching for methods to abate the amount of pollution emitted by their factories. However, is that likely? Research for this sort of technology is extremely expensive, and many firms will likely have to shut down due to their inability to achieve any success with this sort of research. Another possible outcome to me is that the firms simply secretly pollute. Many people question in earlier comments of how a government will be able to monitor the pollution of every plant, and because the government likely won't be able to the monitor every single plant, the plants will just secretly pollute. Finally, the scariest potential outcome of the 3 in my opinion... Will the government, for the sake of keeping its economy up and running, begin to sell more permits to pollute exclusively to the firms? The notion of buying the right to pollute seems like it would work extremely well, but I would like to propose a scenario (though it may be rather extreme) that I’m not too sure how firms would economically respond to:

In this blog, the ability of environmental awareness groups to purchase these rights to pollute and hold them to lower the amount of pollution is an interesting idea. But what if all the environmental awareness groups somehow form an alliance and essentially buy all the permits to pollute and hold them off? What will happen to the economy?

‘Course, the best response for the world is that because the firms that need to buy these permits can’t since the environmentalist groups aren’t even selling (consider the price of one permit to be infinite, if you may), and thus all the firms will commit to researching for methods to abate the amount of pollution emitted by their factories.

However, is that likely? Research for this sort of technology is extremely expensive, and many firms will likely have to shut down due to their inability to achieve any success with this sort of research.

Another possible outcome to me is that the firms simply secretly pollute. Many people question in earlier comments of how a government will be able to monitor the pollution of every plant, and because the government likely won’t be able to the monitor every single plant, the plants will just secretly pollute.

Finally, the scariest potential outcome of the 3 in my opinion… Will the government, for the sake of keeping its economy up and running, begin to sell more permits to pollute exclusively to the firms?

]]> By: kevinchiu http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3673 kevinchiu Wed, 16 Jan 2008 04:00:19 +0000 http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3673 This concept of the "right to pollute" appears to be a viable solution towards restricting companies from emitting CO2 and other GHGs; however I have a few questions towards the "right to pollute" in individual nations. As mentioned before, one nation's pollution not only affects the nation producing it, but those it around it as well. Thus, my question is how can one nation, that adopts the pollution permit idea, fairly determine the amount of pollution it is allowed to produce, when neighboring nations do not adopt the "pollution permit" concept? For example, some nations in Europe have adopted the market for carbon emissions, but its pollution will still affect other nations and add to the total pollution produced. So if other nations, that do not adopt the concept, and continue increasing to produce, will it affect the supply of the nations that have the carbon emission market? This concept of the “right to pollute” appears to be a viable solution towards restricting companies from emitting CO2 and other GHGs; however I have a few questions towards the “right to pollute” in individual nations. As mentioned before, one nation’s pollution not only affects the nation producing it, but those it around it as well. Thus, my question is how can one nation, that adopts the pollution permit idea, fairly determine the amount of pollution it is allowed to produce, when neighboring nations do not adopt the “pollution permit” concept? For example, some nations in Europe have adopted the market for carbon emissions, but its pollution will still affect other nations and add to the total pollution produced. So if other nations, that do not adopt the concept, and continue increasing to produce, will it affect the supply of the nations that have the carbon emission market?

]]> By: Alex Goldman http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3670 Alex Goldman Wed, 16 Jan 2008 02:18:29 +0000 http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3670 The "right to pollute" is even being adopted in the states as methods to control pollution. For instance, large chicken farms in the US are now required to pay annual permits to raise their poultry because the bird waste pollutes the surroundings with excess nitrogen and phosphorus. Similar to the EU's view, US senators see buying the rights to pollute as a method of regulating companies which are producing goods at the expense of the environment. The “right to pollute” is even being adopted in the states as methods to control pollution. For instance, large chicken farms in the US are now required to pay annual permits to raise their poultry because the bird waste pollutes the surroundings with excess nitrogen and phosphorus. Similar to the EU’s view, US senators see buying the rights to pollute as a method of regulating companies which are producing goods at the expense of the environment.

]]> By: Chan Min Park http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3662 Chan Min Park Tue, 15 Jan 2008 14:56:24 +0000 http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3662 I have heard about this idea of the "right to pollute" and it can help in many ways. If a firm feels like they are going to be producing a lot of pollution, they can buy more rights to pollute. In some cases, they can also buy some rights to pollute from other firms who do not pollute as much. By making a whole new market and using economic methods for this problem, it seems like it is going to work very well. I have heard about this idea of the “right to pollute” and it can help in many ways. If a firm feels like they are going to be producing a lot of pollution, they can buy more rights to pollute. In some cases, they can also buy some rights to pollute from other firms who do not pollute as much. By making a whole new market and using economic methods for this problem, it seems like it is going to work very well.

]]> By: Hansen Gu http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3660 Hansen Gu Tue, 15 Jan 2008 13:06:45 +0000 http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3660 I think the rising prices per ton of pollution show a good sign towards environmental awareness. I can see this as pressure from the government for companies to spend the money in researching new technologies to cut down their carbon emissions. Do you guys think such a plan would work in China? I think the rising prices per ton of pollution show a good sign towards environmental awareness. I can see this as pressure from the government for companies to spend the money in researching new technologies to cut down their carbon emissions. Do you guys think such a plan would work in China?

]]> By: Jo Lo http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3658 Jo Lo Tue, 15 Jan 2008 12:38:38 +0000 http://welkerswikinomics.com/blog/2008/01/11/reducing-negative-externalities-the-european-market-for-carbon-emissions/#comment-3658 This idea of buying and selling pollution rights is a good start to actually tackling the issue of climate change and the problems it pose to the environment. It seems like the part of the world that seems to be doing something good for the world is Europe. After seeing the success that Europe has had with this program and how carbon emissions have been cut, the US should follow suit (if it hasn't already, and I doubt there is such a thing there). This idea of buying and selling pollution rights is a good start to actually tackling the issue of climate change and the problems it pose to the environment. It seems like the part of the world that seems to be doing something good for the world is Europe. After seeing the success that Europe has had with this program and how carbon emissions have been cut, the US should follow suit (if it hasn’t already, and I doubt there is such a thing there).

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