Question

Is zero pollution possible under a marketable permits system? Why or why not?

Short answer

Under a marketable permits system, zero pollution is unlikely to be achieved due to reasons such as economic incentives, imperfect enforcement, uncertainty and external factors, and cost-benefit analysis considerations. While this system can help reduce pollution levels, it should be viewed as a tool to manage and reduce pollution rather than completely eliminating it.

Step-by-step solution

Introduction to Marketable Permits System

Marketable permits, also known as cap-and-trade systems, are a policy tool used by governments to regulate the level of pollution by setting a cap on the total amount of pollution that an industry or sector can emit. Under this system, companies are given permits that allow them to pollute a certain amount, which can be bought, sold, or traded among them. The goal is to create incentives for companies to reduce their emissions by either investing in cleaner technologies or purchasing permits from others.

Concept of Zero Pollution

Zero pollution refers to an ideal state in which there is no or insignificant pollution emitted into the environment. It involves preventing the release of harmful pollutants into the ecosystem, including the air, water, and soil, to protect human health and environmental quality.

Possibilities of Zero Pollution under Marketable Permits System

Under a marketable permits system, zero pollution is unlikely to be achieved for several reasons: 1. Economic incentives: Firms may still find it profitable to pollute up to their permit limit rather than incur the costs associated with eliminating all pollution. While the price of permits may encourage some firms to reduce their emissions, others may still prefer to pay for permits and continue polluting. 2. Imperfect enforcement: Monitoring and enforcing compliance with the permits system can be difficult and costly, leading to some degree of non-compliance among firms. It requires a robust regulatory framework and constant supervision, which might be challenging to maintain. 3. Uncertainty and external factors: Inherent uncertainties such as economic fluctuations, technological advancements, and changes in input prices can affect the efficiency and outcome of the marketable permits system, making zero pollution a difficult target to achieve. 4. Cost-benefit analysis: Achieving zero pollution may not always be the most cost-effective solution. Instead, the focus could be on reducing pollution levels to an acceptable and manageable level.

Conclusion

While a marketable permits system can effectively reduce pollution levels by incentivizing firms to invest in cleaner technologies and practices, it is unlikely to result in zero pollution. Economic, regulatory, and practical factors limit the potential for achieving a pollution-free environment within this framework. Therefore, marketable permits systems should be viewed as a tool to effectively manage and reduce pollution, rather than a means to eliminate it entirely.