When an effluent fee is put in place,
A) all polluting sources will abate the same number of units, regardless of cost differences
B) cost savings can be realized
C) an efficient solution is assured
D) each polluting source reduces effluents to zero to avoid the fee

Question

Quizplus · Accepted Answer

When an effluent fee is put in place, polluting sources will have an economic incentive to reduce their effluents to avoid paying the fee. This can lead to cost savings, as sources that can reduce effluents at a lower cost will do so, while sources that would have incurred higher costs to reduce effluents to the same level may opt to pay the fee instead. However, it does not necessarily lead to an efficient solution, as some sources may still choose to pay the fee even if it is more cost-effective to reduce effluents, and some sources may struggle to afford the cost of reducing effluents. Additionally, it does not require each polluting source to reduce effluents to zero to avoid the fee.

When an Effluent Fee Is Put in Place