311
Special Topic 12
Difficult Environmental Cases and the Role of
Government
OUTLINE
I. Government Regulation and the Environment
A. When it is difficult to assign and enforce private property rights, markets often results
in outcomes that are inefficient.
1. This is often the case when large numbers of persons engage in actions that impose
harm on others.
2. Government regulation has some promise, but also poses problems of its own.
II. The Economics of Global Warming
A. There is much uncertainty regarding global warming. Scientists agree on some facts,
but disagree on many others.
B. Mitigation versus Adaptation Strategy
III. Market-Like Schemes: Reducing the Cost of Specific Regulations
A. Market-like schemes for reducing pollution
1. Pollution charges or taxes.
IV. Property Rights as a Tool for Government Policy
A. Ocean Fisheries: A Lack of Property Rights Causes Overfishing
1 Overfishing in the oceans is a classic example of overexploitation of a resource that
is not privately owned. To reduce the harvest so that a sufficient breeding stock is
left, regulators typically mandate a shorter fishing season.
V. Government Ownership of Resources and Provision of Services
A. Federal ownership of national parks, as with other lands, has brought troublesome
results along with benefits, but there seems to be progress in moving closer to market
solutions that provide better information and incentives for federal managers.
312 Special Topic 12/Economics and the Environment
OBJECTIVES
This special topic examines the possibilities for achieving environmental goals though
governmental control of pollution and of natural resources, as well as the problems that arise from
government action in these areas. The special topic discusses the issue of global warming. It also
discusses the use of market-like schemes to achieve environmental goals. Lastly, it outlines the
advantages and disadvantages of government ownership of resources and services.
IMPORTANT POINTS AND TEACHING SUGGESTIONS
1. Point out that even though environmental decisions are often made outside a market context,
the basic principles of economics still apply. That is:
a. Purposeful choices, influenced by prices (or their absence) and other incentives, are made
without full knowledge.
b. Values are subjective.
c. The secondary effects of decisions are often important.
HINTS FOR ANSWERING CRITICAL ANALYSIS QUESTIONS