Article Analysis: Cruise Ship Lines, Alaska Officials Question New Air Pollution Limits by Eilperin - Essay Example

Article Analysis A Brief Overview of the Issue The article “Cruise ship lines, Alaska officials question new air pollution limits” by Juliet Eilperintalks about the measures taken by the federal government to control air pollution in the United States and Canada waters and how these restrictions have raised concerns in the cruise industry and among lawmakers. The new restrictions indicate that beginning August 2012, all large ships travelling within 200 miles of the Canadian and United States coasts will be required to burn cleaner fuel. It is predicted that the new restrictions will phase out the globe’s dirtiest transportation fuel in the United States waters. However, the restrictions have provoked a major reaction from a number of lawmakers and cruise industry players. They argue that the new measure will increase costs for vacationers and the Alaska people who rely on sea vessels for their livelihood (Eliperin, 2012). For many years, huge ships have combusted heavy fuels ( fuels which contain 2,000 times or more sulfur as the diesel utilized by locomotives, trucks, small marine vessels, and construction equipment). The new regulation dictates that large ships reduce the sulfur content of their fuel to 1 percent in August 2012 from the present 2.7%. They arealsorequired to reduce they sullphure content in their fuel to 0.1% by 2015 (Eliperin, 2012; Walker, 2012). The EPA (Environmental Protection Agency) indicates that the new regulation will prevent between 12,000 every year and at least 31,000 deaths by 2030, with the benefits offsetting the costs by 95 to 1. In other words, the new standards will reduce emissions from ships and assist in safeguarding the cities and port communities hundreds of miles away from the coast (Eliperin, 2012). The vehicle and the container shipping industries have agreed to meet the new standards but several firms have indicated that the fuel costs may rise by 25 percent. It is important to note that the playersin these industries do not spend as much time as the cruise industry players within the 200-mile zone. It is hard to estimate how much the cleaner fuel will cost because its availability is not certain. It is estimated by EPA that when fully implemented, the program will come with additional costs to shipping (about $18 for every 20-foot container) and passenger cruise tickets (an additional $7 per day). On the other hand, cruise analysts suggest that it can add as much as $19.46 per day to the passenger cruise ticket. The costs of goods in Alaska are set to increase and thuswill affect the economy Alaska. Cruise companies have suggested that they be permitted to combust higher-sulfur fuel within some sections of the 200-mile control zone and controlling emissions elsewhere. However, the proposal has been rejected by the Environmental Protection Agency (Eliperin, 2012). The Economic Theory of Pollution Control Pollution is caused by environmental imbalances. Rational behavior is a critical element in economic theory and it is equally significant in the economics of pollution. Pollution arises from the rational behavior of the company, industry, and the selfish economic person. The rational behavior is linked with minimizing costs and maximizing profit. This suggests full utilization of environmental resources for maximum prodution with minimal or no environmental protection costs or pollution costs (Joshi, 2005). The economic reason of regulating pollution is to prevent market failure. Market failure is based on the concept of externalities (external effects) arising when an economic agent fails to pay for the use of a resource. Thus, the economic burden is transferred to unrelated parties that are not sufficiently compensated for the harm or damage (Veith, 2010). AS noted by AP EnvEcon (2009, par 6), the quality or welfare of life is maximized in the market economy “when there is a perfectly competitive market, full of information to make informed choices as citizens and consumers, large numbers of profit maximizing firms, clearly assigned property rights and no externalities”. However, not all markets enjoy such appropriate arrangements and thus they occasionally experience market failure. Market failure is defined as a state in which the market, left on its own, is unable to share resources efficiently. Linked to the problem of market failure is the specific notion of externalities. Externalities can be either negative or positive. A positive externality happens when an individual’s actions enhances the well-being of others. On the other hand, a negative externality will lead to negative results in the of welfare of others (AP EnvEcon, 2009). Negative environmental externalities happen when the polluter fails to bear the cost of the damage or harm for which they are accountable. Instead, other people in the society cover the cost of the negative externalities by experiencing a decrease in their economic welfare. These environmental externalities often rise when environmental resources have are meant for public good. The economic theory indicates that treating resources as shared jointly by numerous users can result in overexploitation when some form of access rationing does not exist. Thus, externalities are generated and the market is unable to share the resources efficiently. The introduction of pollution control policies to prevent the impact of negative externality should be able to help reduce the level of pollution optimally (AP EnvEcon, 2009). Pollution control costs are described as all the monetary expenses incurred by the society (explicit or direct) to minimize the present pollution levels. The optimal level of pollution is attained at the point of intersection “of the marginal cost curve of pollution to society and the marginal benefit curve of pollution to the polluter” (AP EnvEcon, 2009, par 7). It is worth noting that it is extremely hard to attain a point estimate of pollution damage and an estimate of how the marginal external cost varies with the output (AP EnvEcon, 2009). How the Issues Presented In the News Article Aligns With Economic Theory The new law to control pollution around the 200-mile zone of the United States and Canadian coasts have raised several concerns particularly within the cruise industry and the lawmakers. Firstly, the restrictions will negatively affect the cruise industry. Secondly, the people of Alaska will have to incur the costs of a cleaner fuel because the entire shipping industry will increase the costs of shipping and consequently increase the cost of shipped goods to and from Alaska. On the other hand, the Environmental Protection Agency stresses that the restrictions have to be adopted because the benefits far outweigh the costs. These issues prsented above are in line with the theory of economic pollution control. From the theory, it is clear that polluters have the responsibility of meeting the costs of pollution control. Thus, the entire shipping industry operating along the coast of Alaska is responsible for the pollution costs. However, not all of them are willing to meet those costs and it is likely that people using the shipping services will meet the costs. As indicated in the theory, the rational behavior of most companies involves maximizing profits and minimizing costs. The theory also suggests that negative environmental externalities happen when the polluter fails to meet the cost of harm for which they are accountable. In such a case, if the cruising industry fails to comply, the public will have to meet the costs associated with the negative externalities. The actions of the Environmental Protection Agency are geared toward controlling pollution along the coast of Alaska. Although the restrictions attempt to optimally reduce the level of pollution, the economic theory suggests that it is extremely difficult to ascertain the extent of pollution damage and how the marginal costs varies with the output. This is what the theory predicts will likely to happen: the Environmental Protection Agency will not likely to ascertain the aforementioned parameters. References AP EnvEcon. (2009). Theory of pollution control: A short overview of C&C and MBI. Ireland: AP EnvEcon. Eilperin, J. (2012, July 23). Cruise ship lines, Alaska officials question new air pollution limits. The Washington Post. Retrieved from http://www.washingtonpost.com/national/health-science/cruise-ship-lines-alaska-officials-question-new-air-pollution-limits/2012/07/22/gJQAc4Jy2W_story.html Joshi, M. V. (2005). Theories and approaches of environmental economics. New Delhi, India: Atlantic Publishers & Distributors. Veith, S. (2010). The EU emission trading scheme: Aspects of statehood, regulation and accounting. New York, NY: Peter Lang Publishing. Walter, J. (2012, July 23). Deadly cruise ship emissions equal sulfur dioxide spewed from 13,100,000 cars a day, but cruise lines fight air pollution laws. Cruise Law News. Retrieved from http://www.cruiselawnews.com/articles/pollution-1/ Read More