Essays on ECON329 Environmental And Natural Resource Economics Assignment

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IntroductionPrevention of environmental pollution from industries has been a challenge to various countries. This is because most of large emissions are attributed to the industries. As a result, it calls for the reduction of emissions from the industries in an efficient and cost-effective way. This article assesses the strengths and weaknesses of conventional command and control regulations and economic instruments (emissions trading) in regulation of industrial pollution. Conventional command and control regulationAccording to McManus (2009), conventional command and control regulation involves direct regulation of an industry by legislation which states what is illegal and what is permitted.

The command represents the quality of targets or standards by that the company has to comply as directed by the government authority. Control represents the negative sanctions which may lead to non-compliance such as prosecution (Baldwin, Cave, & Lodge, 2011). The conventional command and control enforcement involves application of uniform sanctions. The deliverance of its objectives requires the highest possible level of compliance which can be achieved through appropriate enforcement and implementation. It is worth noting that due to its application of uniform sanctions, the small companies feel its burden more severely as compared to large size companies (Abbot, 2009). StrengthsAccording to Gruber (2005), conventional command and control regulation are usually preferred in cases where there is highly toxic pollutant such as the concern of the impact of toxicity outweighs any concern on economic efficiency.

It is also effective where marginal costs curves abatements are uniform in all the companies where that the industry is regulated. As a result of this, it will be easier for the government to easily know abatement curve.

It is also preferred when the initial reduction in regard to the amount of pollutant will lead to significant benefits to the society, while the continued reduction will not be in a condition of providing much benefit. In this case, the marginal benefit of reduction is said to be highly inelastic. Conventional command and control has high dependability as well as predictability and it is seen as imposing fixed standards which are usually enforced by the law. This makes it to respond quickly to various issues that do not abide to the set standards or regulations.

The system also has political benefits because the regulator which is the government acts decisively and swiftly (Baldwin, Cave, & Lodge, 2011). WeaknessesDue to the advancement in technology, the regulatory agency finds it difficult to stay current with the methods that are most effective. All the standards which include performance, design and input are aimed at reducing pollution, but integration of the standards leads to drastically reduction in the flexibility of the choice for the industries. This means that the firm is limited to its capability of getting the most cost-effective way in continuing with production while at the same time, reducing pollution.

This is because every individual has different cost structures and the one-that-fits-all from the government denies the firms the flexibility of addressing certain external problems. This results to economic inefficiency (Gruber, 2005). As a traditional method, it can also lead to inefficient solution where the method draws unfairness accusations from polluting firms. This is because efficiency and fairness requires the regulators to split the responsibilities for pollution reduction in an equal manner among the polluting firms.

It is difficult or impossible for the government to understand each polluting firm’s cost structures. This knowledge is essential and is required if regulation must be efficient (Ogus, 2004).

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