This article throws light upon the top three methods to control activities that damage environment. The methods are: 1. Moral Suasion 2. Direct Control 3. Fiscal Techniques.
Method # Moral Suasion:
Moral Suasion is a non-mandatory investment made by industries and organisations making a moral appeal for the control of pollution by behaving themselves as the pioneer or forerunner in reducing the emissions. The industrial organisation has some social obligations in the present democratic society.
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Voluntary trash recycling programmes, voluntary use of unleaded and low lead gasoline, sales of auto emission control kits, carpooling, energy saving programmes are some of the popular voluntary programmes, voluntary use of unleaded and low lead gasoline, sales of auto emission control kits, carpooling, energy saving programmes are some of the popular voluntary programmes in the U.S.A.
It is pointed out that the reports by firms of their growing accomplishments in pollution control activities, is in reality and exaggeration of the actual magnitude of achievements. Some firms are also said to be using voluntarism as a diversionary tactic.
In order to avoid an effluent charge or the restrictions that direct controls may impose, firms are often found, supporting voluntary programmes like voluntary recycling etc. Despite these limitations, voluntary programmes have useful roles.
Firstly, where the fiscal processes of a country fails to generate enough funds for the maintenance of environmental quality, voluntary programmes can be relied upon.
Secondly, voluntary organisations in the country could come forward in educating the public about the environmental hygiene and care and civic responsibilities of the citizens, Voluntary programmes, hence, have an important role to play in the protection of environmental quality particularly in brief unexpected emergencies or where effective surveillance is impossible.
Method # Direct Control:
The direct control takes two forms:
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1. Imposition of legal ceilings on the amount any polluter is permitted to emit or discharge. For example, in India, Minimum National Standards (MINAS) for wastewater discharges and emission standards for several industries have been fixed by the Central Board for Prevention and Control of Water Pollution and Air Pollution.
2. Specification of how particular activity must be carried on. For example, direct control may require industries to install and electrostatic precipitator (ESP) or scrubbers to capture some of the emissions of the following firm.
In U.S.A, there are five Federal Regulatory Commissions in addition to the Environmental Protection Agency. These are,
1. Inter – State Commerce Commission – ICC (relating to transportation and oil pipelines
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2. The Federal Communication Commission – FCC (to look after telephone, telegraph, radio and television transmission)
3. The Federal Power Commission -FPC (having jurisdiction over power projects and inter-state transmission of electricity and natural gas)
4. Federal Aviation Administration FA A (having control over civil aviation)
5. The Nuclear Regulatory Commission – NRC (control over nuclear energy)
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6. Various State Commissions are also functioning at the State level.
Direct control is particularly significant in cases of pollution involving highly hazardous pollutants. In the case of pollutants like cyanide, even a small quantity of which has serious consequences on health of human beings, direct control should be used to totally prohibit their discharges altogether.
Method # Fiscal Techniques:
Government tax, subsidy and expenditure policies play an important role in influencing economic activity. These fiscal instruments allocate resources between the public and private sectors of the economy. These instruments can also be used to reallocate resources within the private sector.
(i) Taxes:
Most economists do not advocate exclusive reliance on direct controls and have suggested that financial penalties on pollution can do the job more dependably, more effectively and more economically.
A tax on pollution requires the polluter to install a meter that registers the effluents released from the production processes in the same way as the meter records the consumption of electricity and water. Thus the higher the level of wastes discharged by a firm, the higher will be the tax bill for the firm and a firm can reduce its tax bill by polluting less.
(ii) Effluent charges as a special form of tax:
The tax when it is correctly imposed will internalise the full external costs of production to the firm. Effluent charges as one of the categories of tax weapons are having the most direct application and effect to the problems of environmental quality.
If the polluters are not subject to any effluent charge i.e. if they do not have to pay at all for the discharge of the firm’s wastes, then it means that the price for the opportunity of polluting is zero. Hence the supply curve for pollution opportunities will coincide with X axis when there is no effluent charges curve for pollution opportunities will coincide with X axis when there is no effluent charges.
In the figure 1. DD is the demand curve for pollution opportunities, It is also called marginal pollution abatement cost curve. It slopes downward from left to right showing that if price for pollution removal is set at a sufficiently high level, polluters will be careful about the amount of pollution they cause.
When the price for pollution opportunity is zero, the level of pollution is OM1 .When an effluent charge of Rs.10 is imposed, the equilibrium quantity of pollution, given by the intersection of the demand and supply curves for pollution opportunities reduce from OM1TO OM2Thus it can be seen that a pollution tax reduces the level of pollution.
(iv) Optimal Effluent Charge:
However optimal reduction of pollution will require a residual charge given by the intersection of the demand curve for Pollution opportunities and marginal social cost curve, and the supply curve for pollution opportunities should pass through the point of intersection as shown in the figure 2.
In the figure, OX axis is pollution and OY axis measures the effluent charges. DD is the demand curve for the pollution opportunities and SS is the supply curve. The new curve is entering the marginal social cost curve MSC.
This curve has reduced the pollution from OM1 to OM2 and it is one of the costs paid by the polluters, so, this diagram explains the optimal effluent charges, The optimal effluent charges is r at which OM2 units of wastes are discharged by the polluter. Besides these the crucial point is that a pollution tax is said to promote the equal distribution of the burden of pollution control cost on all firms.
2. Subsides:
Subsidies are already in use. The advocates of subsidies say that financial inducement can be just as effective when they take the form of penalty (tax).
Subsidies take one of the following two forms:
1. Partial payment of the cost of installation of some sort of pollution control equipment.
2. The offer of a fixed reward for every reduction in emissions from same base level, usually some amount that the polluter used to emit in the past.
Subsidies mostly cover a part of the investment on pollution control equipment. Subsidies for the purchase of equipment sometimes take the form of outright grants – for example, for the installation and operation of a treatment plant.
A subsidy to help pay the cost of control equipment can be effective when the purchaser of the equipment was considered doing it anyhow, but did not do it because of the high cost. For example, the wastes from a firm maybe recycled and put to valuable use but the prohibitively high cost of a recycling plant may prevent the firm from doing so.
The subsidy being only a partial payment of the cost of the equipment, the other part of the cost of the equipment is to be borne by the firm, and with no gain from such equipment, the firm has little incentive to opt for such a subsidy.
A subsidy based on quantity of emissions reduced produces the same effect as a tax for an individual polluter. In both cases, the more he emits; the worse off he is financially because he either receives a smaller subsidy or a higher tax bill.
(i) Subsidy Vs. Tax:
There are a number of crucial differences between a tax and a subsidy. In the first place, while effluent charges clearly reduce the net profits of a business, subsides increase them. Hence it is being misused. It is being used to keep alive a polluting enterprise that would otherwise have been unprofitable even without an effluent tax.
A tax on polluting output raises cost and hence the supply curve shifts upward from SS to S1S1 position. The new equilibrium point is at E1 resulting in an output OM that is less than the pre – tax output level ON.
But a subsidy for reduction in the volume of polluting output reduces costs and shifts the supply curve downward to S2S2 position. As a result the new equilibrium is E2 which results in an output OQ greater than pre – tax output level ON.
Secondly, the enforcement of subsidy scheme poses administrative problem, when subsidy is raid for every reduction in pollution beyond a certain level, it is necessary that a bench mark must be established from which reductions are to be measured.
Finally a tax on pollution generates revenue while a subsidy is a demand for revenue from public treasury. Thus an effluent charge confers the incidental benefit of revenue generation. A tax is considered by economists to be more efficient and economical, subsidies can play a useful role when the least cost method of pollution control is already known.