04 09 2014 WE MUST DEAL WITH EVERY NEGATIVE EXTERNALITIES DIRECTLY 1 DEFENSE OF ECONOMIC POLICY Petroleum stockpile Strategic Petroleum Reserve 2 WELFARE POLICY cost of energy Give money to the poor as a function of cost of living which includes Or if that is politically infeasible voucher for energy Do not make it generous unless consumers are elderly 3 ENVIRONMENTAL POLICY impose sanctions for pollution simplest is charging for it more later POSSIBLE MARKET FAILURE RESEARCH POLICY PROBABLY NOT o Normal government sponsored R D o Most R D accomplished in private sector for economic reasons so probably little or no market failure INFRASTRUCTURE MAY NE PROVIDED BY GOVERNMENT WHEN WE KNOW MORE o At some point government may have to create or expand our infrastructure depending on the type of energy developed o We are no where near knowing that DO NOT BELIEVE ANY PREDICTIONS We and our so called experts are bad at predicting We and our so called experts are bad at logic We and our so called experts are ignorant of our inabilities in these areas The above 3 points are from Nassim Taleb Fooled by Randomness 2001 and the Black Swan 2007 ENVIRONMENTAL POLICY GOAL CLEAN AIR WATER SAFE FOOD AND VISUALLY ATTRACTIVE Environmental policy strategies Command and Control Hybrid C C M I Market Incentives Regulations specifying pollution standards emissions and technology Government market in pollution rights cap and trade tradable discharge permits Pollution tax or pollution fees charge for pollution More government Less government 1 HISTORY OF US ENVIRONMENTAL PROTECTION COMMAND AND CONTROL A Water Pollution o Refuse Act 1899 Limits debris in navigable streams o 1948 1966 State enforcement with federal funding o CLEAN WATER RESTORATION ACT 1966 Water quality enforcement to Department of Interior o WATER POLLUTION CONTROL ACT AMENDMENTS 1972 Goal by 1985 end all discharge of pollutants into waterways Goal by 1983 water safe for fish shellfish animals and people Goal by 1977 the best practicable control technology to eliminate contaminants Goal by 1983 the bet available technology Emphasis on discharge control not water quality Outcome length legal battles Air Pollution B o 1955 1965 federal funding for research on air pollution o MOTOR VEHICLE AIR POLLUTION CONTROL ACT 1965 First Federal program to directly regulate air pollution HEW set automobile emission standards o CLEAN AIR ACT AMENDMENTS 1970 Goal eliminate all air pollution by 1977 o NATIONAL ENVIRONMENTAL POLICY ACT 1970 Nixon created advisory group ENVIRONMENTAL IMPACT STATEMENTS Address positive and negative impacts alternatives etc Filed by federal agencies for public projects affecting environment Important tool for environmental groups challenging federal projects 04 09 2014 04 09 2014 04 09 2014