Question

For each of the following examples, state which of these approaches is being taken to manage a common resource or supply a public good: social norms, quota, tradable allowance, government provision, or property rights. a. A nonprofit organization spray-paints signs on storm drains reminding everyone that it "drains to the ocean" with a picture of a fish. b. A city starts a free program that collects recyclable glass, paper, and plastic from residents doorsteps. c. In England, municipal-waste authorities are given a percentage of an overall limit that can be put in the landfill each year. These percentages can be traded among municipalities. d. American bison, which once roamed freely across the Great Plains, are now raised on ranches for commercial purposes.

Short answer

a. Social norms; b. Government provision; c. Tradable allowance; d. Property rights.

Step-by-step solution

Identify the Approach for Example (a)

For example (a), when a nonprofit organization spray-paints signs on storm drains, they are leveraging **social norms**. This approach is encouraging individuals to be mindful of their environmental impact, hoping peer pressure and awareness influence behavior.

Determine the Approach for Example (b)

In example (b), a city program collecting recyclables supports the provision of a public good. This falls under **government provision** as the city, a government entity, provides a service for the well-being of its residents.

Recognize the Approach for Example (c)

The scenario in example (c) involves trading allowances for landfill disposal. The **tradable allowance** system is at play here, where municipalities can buy or sell their allocated percentages, incentivizing them to reduce waste.

Ascertain the Approach for Example (d)

In example (d), American bison are managed by assigning **property rights**. They are commercially raised on ranches, indicating ownership, control, and responsibility are in private hands, aligning with a property rights approach.

Key concepts

Social Norms

Social norms play a vital role in shaping behavior within a community. They act as unwritten rules, which guide individuals on what is acceptable or frowned upon. Rather than laws or regulations, social norms rely on the collective attitudes and expectations of society.
For instance, environmental groups may use public awareness campaigns to encourage responsible actions. By spray-painting messages like "drains to the ocean," they aim to instill a sense of environmental duty.

• People are encouraged to prevent pollution.
• Peer pressure and social responsibility are key drivers.

Essentially, when people believe a behavior is widely accepted or expected, they are more likely to adopt it themselves. This approach works effectively for common social issues, promoting widespread positive change through community conscience.

Government Provision

Government provision refers to the actions taken by government entities to supply goods or services that benefit the public. These services are often funded through taxes and cater to the needs of the population.
For example, programs that facilitate recycling or waste collection are typical forms of government provision. Here, cities organize free collection services for recyclables directly from residents’ doorsteps.
This provision helps in:

• Reducing environmental impact by ensuring proper waste management.
• Providing accessible services that contribute to the public good.

With government provision, the goal is to enhance the quality of life by making essential services readily available, especially when the market fails to provide them efficiently.

Tradable Allowances

Tradable allowances are economic instruments used to control pollution and manage resource use by setting a cap on total emission or resource usage. Authorities allocate allowances, which can be traded, creating a market incentive for reducing environmental impact.
In England, for example, municipalities receive landfill disposal allowances. These allowances permit a set amount of waste disposal. Each municipality can trade these with others if they manage to reduce their waste.

• Creates a financial incentive for waste reduction.
• Encourages innovation and efficiency in municipal services.

By allowing these trades, municipalities are motivated to minimize waste generation, leveraging economic tools to foster sustainable practices.

Property Rights

Property rights are legal rights that outline ownership and control over resources. Through privatization, these rights can influence efficient resource management and conservation.
When American bison are raised on ranches, ownership shifts from common resources to individual properties. This allows ranchers to invest in the conservation and commercial use of the bison.

• Encourages stewardship and better management practices.
• Ensures resources are maintained for future profitability.

Property rights create accountability because owners have vested interests in sustaining the resource. This not only benefits the resource but also aligns financial incentives with conservation goals.