General

Re: Phosphate Ban

Marissa — Tue, 10 May 2011 04:47:32 GMT

I'm pretty sure devices to test for water pollution have already been created, one would simply have to link it to a small computer/communication device that links up to the company's main system. The SmartMeter device for electricity already exists. The installation of the device, along with pipes, would be built into each individual's contract, just like a cable/TiVo box. If an excessively high concentration of a certain toxic substance is detected, it would alert the company who would then add a fee to the individual's bill for the additional cost of having to dispose of it in a different manner than draining into the Gulf. Too many violations (possibly by richer people who can afford to keep paying fees) and the company might just drop them as a customer. Or, if fee collection generates enough profits to justify keeping them as customers, that is yet more R&D money to, hell, find a way to dispose of toxic substances more cheaply and effectively.

The liability issue is a huge incentive for the company to plow back profits into R&D to make this detection system more efficient and effective. Am I missing something here? Is water pollutant detection prohibitively expensive?

Re: Phosphate Ban

liberty student — Tue, 10 May 2011 03:35:29 GMT

Student:
when you are able to solve that question for nutrient pollution you should let the world know. you'll make a fortune.

Which is an argument for markets.

Re: Phosphate Ban

Student — Tue, 10 May 2011 03:31:02 GMT

^ this was discussed on the previous page. The bottom line is....

I'm not certain how the private company could verify which individual is polluting--possibly some kind of monitoring system that determines that percentage of certain pollutants in disposed water.

when you are able to solve that question for nutrient pollution you should let the world know. you'll make a fortune.

Re: Phosphate Ban

Marissa — Tue, 10 May 2011 03:23:19 GMT

Of course, the fact that many environmental problems are not solved in this fashion makes me wonder if there are costs I am not accounting for that make this approach less efficient than it first appears.

But I also agree that the approach may not be lead to efficient solutions for other types of problems like nutrient pollution or global warming. I think the problem in these cases is that it would be impossible to determine who was liable or really what the damages of any individual's "negligence" would be.

Environmental problems are not currently solved in this fashion due to the immunity of municipal water systems and a lack of ownership of the polluted property. First of all, several different water providers and disposal systems would likely exist in any large area. These private companies would be responsible for the quality of the water they're dumping (presumably upon another person's property--part of the Gulf of Mexico, say). If those disposal companies want to dispose of polluted water, they will have to meet the qualifications of whoever owns that part of the Gulf. The ease with which these pollutants can affect another person's property in the same Gulf ensures that once a "deadzone" spreads, the initial person who allowed the pollution would be liable.

The liability of the Gulf owner is a negative incentive for that owner to allow excessive pollutants into the water. That is a push on the water disposal company to clarify in their contracts with individuals that excessive pollutants will not be tolerated. As I am nowhere near familiar with water systems, I'm not certain how the private company could verify which individual is polluting--possibly some kind of monitoring system that determines that percentage of certain pollutants in disposed water.

Re: Phosphate Ban

Student — Tue, 10 May 2011 03:19:59 GMT

Hmm... I'm not as familiar with Coase's work as other Austrians but I don't think it's necessarily appropriate to conceive of liabillity rules as res extra commercium outside of the market, but rather as part of a well functioning market system based on the enforcement of private property rights.

Well, lets not get too loose with the term "market" or "market system". A market is one type of institution where individuals meet to exchange goods and services (or as coase says above, it is more accurate to say they exchange rights to use those goods). And we can ussually expect this institution to allocate resources to their highest value uses when transaction costs are low and propety rights can be well defined. Indeed, if this were always the case, we would NEVER need civil courts. Don't like the waste a paper factory is dumping into that river? Buy the rights from them!!

This is actually one of the insights of Coase's paper on the Problem of Social Cost. The other lesson to draw from that paper is that we don't actually live in that world of zero transactions costs. So we cannot expect markets to allocate rights efficienctly in every instance. So we need another institution to help this process. Coase and others would say that this is exactly why we have common law.

These are two seperate institutions and historically the latter institution has been housed in the state judicial system. So there is really nothing inherently "market" about it.

If you would like to read more about Coase (and liability v. property rules in general) in a reader friendly format, I recommend Chapter 1, 2, 5, and 19 of David Friedman's "Law's Order".
http://www.daviddfriedman.com/Laws_Order_draft/laws_order_ToC.htm

Also, the other thing I think that is relevant to take into consideration is that through the operation of the market, when finally given a free hand, solutions often are produced that could not even be conceived or conceptualised by economists beforehand.

That is true, but it shouldn't be a blanket response to any and all questions raised regarding efficient resource allocation. And it should not be a satisfactory answer to a social scientist seeking to understand the insitituions around him. I know I personally want to understand exactly the market mechanisms that will lead "the" market to some outcomes and not others.

Re: Phosphate Ban

abskebabs — Tue, 10 May 2011 02:41:20 GMT

Hmm... I'm not as familiar with Coase's work as other Austrians but I don't think it's necessarily appropriate to conceive of liabillity rules as res extra commercium outside of the market, but rather as part of a well functioning market system based on the enforcement of private property rights. The case of soil erosion I think is possibly a bit more clear cut than global warming, even in the case of wide expanses of land. For instance, farmers could form loose, voluntary collective organisations akin to housing associations(I forget the precise term), to ensure that members who are sold and assigned certain property make use of it in such a way that doesn't damage the value(in this case in terms of soil fertility) of surrounding properties.

Also, the other thing I think that is relevant to take into consideration is that through the operation of the market, when finally given a free hand, solutions often are produced that could not even be conceived or conceptualised by economists beforehand. Indeed I often think the market system has done far more to influence the growth of knowledge in economics than anything to the opposite effect. I think this is worth keeping in mind with respect to the criticisms from others in this thread you referred to in your above post.

Re: Phosphate Ban

Student — Tue, 10 May 2011 02:20:37 GMT

abskebabs,

I agree that in a world of positive transaction costs prevent markets from allocating resources to their most valuable uses, liability rules might prove to be an efficient alternative (especially for local pollution issues). In that sense, I am largely in agreement with Coase in his seminal paper on Social Cost and summarized concisely diuring his Nobel Lecture:

If we move from a regime of zero transaction costs to one of positive transaction costs, what becomes immediately clear is the crucial importance of the legal system in this new world. I explained in The Problem of Social Cost that what are traded on the market are not, as is often supposed by economists, physical entities but the rights to perform certain actions and the rights which individuals possess are established by the legal system.

While we can imagine in the hypothetical world of zero transaction costs that the parties to an exchange would negotiate to change any provision of the law which prevents them from taking whatever steps are required to increase the value of production, in the real world of positive transaction costs such a procedure would be extremely costly, and would make unprofitable, even where it was allowed, a great deal of such contracting around the law. Because of this, the rights which individuals possess, with their duties and privileges, will be, to a large extent what the law determines.

As a result the legal system will have a profound effect on the working of the economic system and may in certain respects be said to control it. It is obviously desirable that these rights should be assigned to those who can use them most productively and with incentives that lead them to do so and that, to discover and maintain such a distribution of rights, the costs of their transference should be low, through clarity in the law and by making the legal requirements for such transfers less onerous.
http://nobelprize.org/nobel_prizes/economics/laureates/1991/coase-lecture.html

Of course, the fact that many environmental problems are not solved in this fashion makes me wonder if there are costs I am not accounting for that make this approach less efficient than it first appears.

But I also agree that the approach may not be lead to efficient solutions for other types of problems like nutrient pollution or global warming. I think the problem in these cases is that it would be impossible to determine who was liable or really what the damages of any individual's "negligence" would be. In those situations, caps and trading systems might provide greater efficiency. Of course, such alternatives would not have the benefit of a feedback mechanism like common law would.

As far as Rothbard et al go, I kind of remember reading an article by him on Air Pollution. i don't remember any specifics, just the general feeling of not being impressed. What do you think about them? Was I missing something?

Re: Phosphate Ban

abskebabs — Tue, 10 May 2011 00:00:27 GMT

Student,

I would agree environmental economics does seem a lacuna for libertarians. That being said, have you looked at Walter Block and Murray Rothbard's work on this in the early 90s, and if so what were your impressions? I personally think disincentives provided by the right to sue for environmental violations of property, would provide far more organic disincentives for pollution, while not removing consumer choice. As in the case of recycling or private landfill management, these costs would be imputed "backward" to onsumers, as opposed to the tragedy of commons situation that occurs with municipal waste management.

That being said I'm not sure how the above approach would tackle broader issues such as ozone depletion or global warming(assuming we don't dispute it).

Re: Phosphate Ban

Student — Sun, 08 May 2011 06:06:56 GMT

The burden of proof is always on you to prove that intervention is warranted. Always.

I am not interested in defending intervention. I am not an evangelical and have no interest in converting people to my view point (which is actually not all that well defined with regards to politics anyways). :P

Instead, what I have tried several times on this board to do was start a conversation about how and when environmental problems can be solved through voluntary means. It seems like a very interesting subject to me (environmental econ will be my research focus when i enter phd this fall) and I would think self-identified anarchists would have a few ideas on the subject.

So when I press Jeff or Phaedros for more specific answers than "the market will figure it out", it is mostly because I myself am curious. It is an interesting intellectual issue (whether such solutions are possible) but it could also have important implications (many forms of pollution cross political boarders, making traditional "tax it or cap it" solutions difficult or impossible to implement).

Re: Phosphate Ban

Student — Sun, 08 May 2011 05:53:08 GMT

And on a final note. Tucker, you still haven't said how you think a voluntary solutuon would arise in the presense of such high transaction costs (not to mention ill defined property rights).

Am I the only person on this board that actually is interested in thinking about that question? I mean, no one around here shys away from explaining how a voluntary agreement can be made in the exchange of goods in a market setting. Why not extend that same analytical perspective to non-market settings? Isn't understanding the nature of social interactions what got you interested in economics in the first place!?!?!

Or maybe it was just the politics. Its always the politics.

Re: Phosphate Ban

Student — Sun, 08 May 2011 05:43:35 GMT

Ug. No. I can't leave it at that.

Your op-ed said:

the scientific evidence on the issue of algae's effect on fish runs in all directions

The unspecified study mentioned in the weekly standard piece:

Last month the University of Washington released a study suggesting that some of the phosphorus being discharged into the Spokane River never actually worked as fertilizer for algae to begin with. Some of the effluents making their way into the river contained phosphorus in complex molecular forms which are not bioavailable. Algae lack the enzymes necessary to break down this phosphorus, meaning it is essentially harmless.

See how the two don't match? One is about the impact of algae on fish. the other is about the effect of phosphorus on algae. Please tell me I'm not the only one who sees that difference.

And the results of that washington study don't surprise me. I've read various articles in the past about how different species of algae react to nutirents differently. So if your orginal claim was as weak as your current claim of "the cause and effect relationship between nutrients and harmful algae blooms is complex" i would have just said fair enough and moved on (though "complex relationship" does not mean "a total mystery" nor does it mean "a relationship that doesn't actually exist").

Honestly, if you just wanted to come up with ANY justification for your op-ed, why didn't you just google for 2 extra seconds? You would have found this very old article in Science (one of the worlds most cited scientific journals):

The distribution of inorganic nitrogen and phosphorus and bioassay experiments both show that nitrogen is the critical limiting factor to algal growth and eutrophication in coastal marine waters. About twice the amount of phosphate as can be used by the algae is normally present. This surplus results from the low nitrogen to phosphorus ratio in terrigenous contributions, including human waste, and from the fact that phosphorus regenerates more quickly than ammonia from decomposing organic matter. Removal of phosphate from detergents is therefore not likely to slow the eutrophication of coastal marine waters, and its replacement with nitrogen-containing nitrilotriacetic acid may worsen the situation.

http://www.sciencemag.org/content/171/3975/1008.abstract

I understand it wouldn't allow you to just shrug away the entire problem of nutrient pollution, but is that really so bad?

PS* I have no idea how the findings of this article stood the test of time. But it seems like a better start than a weekly standard op-ed. just sayin'

Re: Phosphate Ban

liberty student — Sun, 08 May 2011 05:17:02 GMT

Student:
Wow.

Your most intelligent post yet.

Re: Phosphate Ban

Student — Sun, 08 May 2011 05:04:51 GMT

WHat first tipped me off was the comment at the end of this article http://www.weeklystandard.com/articles/another-triumph-greens_536862.html?page=3 where the Washington State ase is discussed. you can look up the studies to which he refers

and this is consistent with everything I've read since, and I invite you to do the same. It turns out that the cause and effect relationships are extremely complex and I'm not even sure they matter in any case.

The point of this ban was not to save the planet. The point was to feed the resentment of those who hate our prosperity - and that's why it is consistent with every other thing they are doing to our households from bulbs to toilets. Wise up and stop trusting the central planners.

Wow.

Re: Phosphate Ban

William — Sun, 08 May 2011 04:43:35 GMT

Hmm well I don't really have answer for the moment, besides this would be strayig from the topic on hand - If there are a couple major themes of mine on this forum one of them is the nature of intellectualism and its dangers and its boundries and its limits. This is something that I take very seriously and I always am playing around with and reworking it in my head.

Those have been some of my favorite topics covered by Mises, Hayek, and Schumpeter

Re: Phosphate Ban

jmorris84 — Sun, 08 May 2011 04:37:30 GMT

This quote from the article is classic!

"Jim Correll, of CH2M Hill, the engineering firm hired to build the new plant, explained in 2006 that the state’s requirement was not scientifically possible. “The technology does not yet exist to do anything like what we expect the DOE to require,” he told the Spokane Journal of Business."

At least the state is good for providing a good laugh every now and then. :p