Paying for International Environmental Public Goods - Essay Example

Incentives to conserve marine biodiversity conservation within the framework of impure public goods Public goods are thosegoods which can be consumed everyone or no one in a society. Public goods cannot be produced for individual gain because it is difficult for individuals to pay for the large beneficial externalities associated with these goods. Public goods have two characteristics; they are non-excludable and are non rivalrous. Non-excludable implies that the individuals who do not pay for these public goods cannot be excluded from enjoying the benefits of such goods. Non-rivalrous, on the other hand, means that an individual’s consumption of these goods does not affect another individual’s opportunity to enjoy the good. Public goods are divided into two categories: pure and impure public goods. Pure public goods are both non-rivalrous and non-excludable. Impure public goods, on the other hand, are those public goods which satisfy the two conditions of non-rivalrous and non-excludable but do not fully satisfy these conditions. An impure public good, therefore, can be non-rivalrious but excludable. An impure public good can be subject to congestion (Arriagada, and Charles 790). Indirect economic effects that arise out of the use of impure public goods are referred to as externalities. These effects are felt by those individuals who are not directly involved in the use of the impure public good. Externalities can either be positive or negative, but most externalities are negative. Externalities arise when the production possibility of an agent are dependent on the actions of another agent. Externalities, in this regard, can either be pecuniary on non-pecuniary. The only type of externality that requires public intervention is non-pecuniary externalities. Examples of externalities that affect impure public goods include pollution and tragedy of commons. Tragedy of the commons occurs where the common right of access to public goods leads to overexploitation. In order to achieve a social optimum in the use of a public good it is imperative to correct these externalities. An effective way of correcting these externalities is through the user of economic incentives. (Erwin, Cornelis, and Timothy 9). In order to develop the correct economic incentive for public goods, it is necessary to understand the technology of public good supply associated with these goods. There are three different types of technologies for the supply of public goods. These are best shot, the weakest link, and additive technologies. In the case of the best shot technology, the benefits to all players are established by the most effective source. In this scenario, although a public good maybe produced and financed by one party, the benefits of such public goods are enjoyed by all other members. The Center for Disease Control and Prevention, for example, is exclusively funded by the US, but it provides infectious disease information to all countries. In the case of the weakest link public good, the overall benefit of a public good is limited by the benefits offered by the least effective party. A good example of the weakest-link public good is the control of an infectious disease. In such a case, the level of protection available is as good as the level of control of the infectious disease in the weakest party. In the case of additive technologies, the available amount of public goods is the sum of individual amounts produced by each member. In the case of a simple sum, each unit of the public good has the same value irrespective of the source. In the case of weighed sum, the contribution of each unit of a public good is dependent on the characteristics of that good (Arriagada, and Charles 800). The preference of economic incentives in correcting externalities associated with impure public goods and is because resources are allocated by the market and the government acts as a regulator. The role of the government in such circumstances is to act as regulator and for the provision of legal and institutional services. The government in this approach does not interfere with the provision of the public goods. Economic incentives are appropriate for the conservation of marine biodiversity because they are the least cost approach, easy to enforce, dynamic and can raise revenue. These economic incentives available for the conservation of marine biodiversity includes regulation consist of permits, regulation, taxation and bargaining solutions (Erwin, Cornelis, and Timothy 11). Regulations can be imposed to reduce negative externalities associated with goods. Legal sanctions on pollution, for example, reduce externalities associated with pollution. The advantage of using regulation to reduce externalities is that it provides a clear design and is easy to enforce. An example of such a regulation is the Endangered Species Act, which prohibits the destruction of wildlife habitat. Regulatory methods often involve monitoring and enforcement. These regulations can still be ineffective if the formal rules and social norms do not correspond. Regulations can also result in improper incentives that may discourage conservation if the established restrictions are erroneous (Arriagada, and Charles 801). Taxes and subsidies are economic incentives that can be used in the conservation of marine biodiversity. Taxes are meant to lessen externalities associated with the consumption of impure public goods. Imposing taxes on activities that produce externalities ensure maximization of social welfare. Taxes reduce overexploitation of the marine habitat and ensure that income is generated from marine activities. Taxes also limit the number of actors in the exploitation of marine habitat. Subsidies, on the other hand, help in conserving marine habitat by providing incentives for conservation programs. Subsidies at an international level provide fair compensation for positive external effects. These subsidies act to safeguard large areas of marine habitat, in the long run. Involvement of NGOs is also another approach to providing economic incentives. Environmental NGOs are best suited for transferring marine conservation funds from wealthy countries to poor countries. NGOs can assist in the management of marine habitats through active participation in policies related to the conservation of the environment (Erwin, Cornelis, and Timothy 14). Externalities associated with public goods arise because of lack of definition of property rights. Establishment of property rights generates markets for externalities. The assignment of these property rights affects the distribution of externalities associated with these goods. Wildlife habitat banking and the transfer of development rights, for example, assist in planning the use of the marine environment to provide minimum degradation and reduce cases of overexploitation (Erwin, Cornelis, and Timothy 18). Works cited Arriagada, Rodrigo, and Charles Perrings. ‘Paying for International Environmental Public Goods’. AMBIO 40.7 (2011) 789-806. Erwin Bulte, Cornelis van Kooten, and Timothy Swanson. ‘Economic Incentives and Wildlife Conservation’. (2003) 1-37. Read More