Environmental & Natural Resource Economics 10th Edition by Thomas Tietenberg,Lynne Lewis

Exercise 1

his book ( What Price Incentives ?) Steven Kelman suggests that from an ethical point of view, the use of economic incentives (e.g., emission charges or emission permits) in environmental policy is undesirable. He argues that transforming our mental image of the environment from a sanctified preserve to a marketable commodity has detrimental effects not only on our use of the environment but also on our attitude toward it. His point is that applying economic incentives to environmental policy weakens and cheapens our traditional values with regard to the environment.
a. Consider the effects of economic-incentive systems on prices paid by the poor, on employment, and on the speed of compliance with pollution control laws-as well as the Kelman arguments. Are economic-incentive systems more or less ethically justifiable than the traditional regulatory approach?
b. Kelman seems to feel that because emission permits automatically prevent environmental degradation, they are more ethically desirable than emission charges. Do you agree? Why or why not?