Negative externalities occur when production and/or consumption impose external costs on third parties outside of the market for which no appropriate compensation is paid (e.g. polluting the sea). This causes social costs to exceed private costs.
Consumption is the final purchase of goods/services/commodities by individuals
Carbon trading is the process of buying and selling permits and credits to emit carbon-dioxide
At the United Nations conference in Kyoto, Japan in 1997 MEDC governments pledged to reduce emission of greenhouse gases. However, the USA (greatest carbon-dioxide emitters in the world) refused to ratify the treaty as this would slow down the country's economic growth (in the form of infrastructure progression and the export of goods)
Depletion of resources occurs when the consumption of a resource is faster than it can be replenished. This can cause a tragedy of the commons scenario.
Subsides is a sum of money granted by the state or a public body to help an industry or business keep the price of a good or service low/reasonable/stable.
Government intervention is regulatory or legislative action taken by government that "interfere" with decisions made by individuals, groups and organisations about social and economic matters.
Indirect taxation is a tax levied on goods and services rather than on income or profits (e.g. VAT).
14 marker plan
In order to reduce the issue of pollution (litter) in the city of London, the council has decided to ask businesses top help with the clean-up program. Do you think that this is appropriate/fair? Using your research on this topic and on government intervention, give your reasons for your answer.
Introduction
Government are asking businesses to help up in litter cleaning program to reduce government expenditure on the clean-up process. This would prevent any hindrance in the UK's GDP growth.
Litter is a form of pollution. It is also an environmental issue which is a harmful affect due to human activity.
Litter has a negative consequence on the economy. It is a negative externality as the private benefit is less than the social cost (also known as external costs).
Paragraph for
AO1: Firstly, this could be seen as a fair and justified strategy because the government are not the people who have designed the packaging and waste products which are classed as litter. Rather, the responsibility of not designing and enforcing the use of bio-degradable packaging is manufacturing companies of goods and commodities.
AO2: If the government were to ensure that manufacturing businesses aided in the litter-clean-up program, the government can save money as well as making businesses consider making biodegradable and less bulky/unnecessary packaging for products. I believe this would be a positive externality to the economy.
AO3: The money which the government saves by making it obligatory for manufacturing companies to clean up the litter on the streets of London can be used to help to grow the economy/GDP and focus on achieving the government objectives. The money can also be used to invest in new methods to reduce/deal against other environmental issues (e.g. rises in air pollution, increased congestion on the roads and public transport means…)
Paragraph against
AO1: On the other hand, it may be deemed unfair to ask businesses to help out in the clean-up program because the manufacturing companies didn't directly drop any litter on the ground but instead expected the litter to be dropped in designated bins all around the streets of London rather than the pavement and roads
AO2: It could be deemed that it is the governments fault for not placing more bins out in public and not advertising the fact that bins need to be used at all bins. Moreover, it could be considered that the government hasn't been strict enough by authorising government intervention in the form of tariffs and fines for those that litter on the ground which would have definitely di-incentivised litter pollution.
AO3: By demanding the government to fund for the clean-up process on their own, the government expenditure would increase so less finance can be feed into the economy to support its progression. Therefore, economic growth may not be at its maximum potential (unless the government cuts spending in other sectors, the government's trade deficit will rise)
Evaluation
Overall, I do not believe that it is fair for the government to ask businesses to provide assistance in the litter clean-up program in London.