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This essay will cover the topics of why polluters should pay the price for polluting, market failure in relation to polluted seawater, the affects of pollution on the economy, local households contributing to seawater pollution, the carbon tax is only for big polluters, the negative externalities, the marginal- cost and marginal-benefit analysis on the system of fines and pollution taxes impact on the level of pollution, and discussing policy alternatives on elution control regulatory systems.

Currently in Australia there is a carbon tax on Australia’s biggest polluters, although households and small business are exempt from paying a carbon tax, the biggest polluters in Australia’s account for around 60% of pollution in Australia (Australian Government, Clean Energy Future, 2013). “Be Warned: Pollute and Pay the Price” by Catherine Hockey suggests that polluters should pay the price for polluting, so that pollution can ultimately be reduced. Seawater has been recognized as the major source of pollution in streams and coastal waters of Australian cities (Duncan et al. 10). If polluters are not penalized for polluting the environment they will continue to pollute without hesitation. Imposing fines on polluters can reduce and restrict the amount of pollution created and force the polluters to create or use more efficient processes. The market system has failed to provide adequate protection for the environment resulting in market failure. As polluted seawater has already entered rivers, lakes and the sea causing serious environmental damage from various manufacturing industries, the market system has only acted once the damage has been done.

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As for small businesses and households there is no accurate way to measure where the pollution is coming from. The market system needs to establish a policy or regulations to deter small businesses and households from polluting seawater drains. Regulations need be created for both sources of polluting, if only one source is controlled, I. E. The manufacturing industries, and not both the damage to the environment will continue to grow. The market system needs to protect the environment before it is too late. Pollution not only harms the environment but can have a negative effect on he economy as well.

The more pollution created the more greenhouse gases is created which effects climate change. As a result of climate change the world will endure increased temperatures, and sea level and floods, droughts, heat waves and other extreme weather events will become more severe and more frequent. These natural disasters cost the economy billions of dollars in lost output. The flooding in Queensland and cyclone Ways cost the economy 12 billion dollars in lost output affecting the agriculture, tourism, mining and insurance sectors (Australian Government, Clean Energy Future, 013).

As cyclone Ways destroyed a substantial amount of crops, it affected the nation’s fruit and vegetable supply and the price for these products increased dramatically. Bananas in particular rose from $1. 98 per kilogram to $5. 98 per kilogram (Financial Review, 201 1). Reducing pollution now reduces the affects it has on the environment and economy in the future. Whether it’s a large company, small business or household, we all contribute to pollution in some way. Households and small business contribute to seawater pollution by putting harmful products down the sink, toilet or tormenter drains.

Substances such as petrol, grease oil pesticides and herbicides, solvents (paint stripers) are difficult to remove in the sewage treatment process and cause pollution problems in the local Waterways, downstream and the ocean. Large businesses are taxed on pollution and are forced to cut their pollution by finding more efficient ways to operate. By reference to the Australian Government, Clean Energy Future, 2013 documentation, small business and households would account for 40% of pollution in Australia and similarly should also be taxed.

This will provide a rueful incentive for small business and households to reduce pollution, invest in clean technology and/or change their polluting habits, so that Australia’s pollution is reduced as a whole. People allow pollutants to enter seawater drains even though they know they can cause serious environmental damage, because of ignorance, lack of knowledge and lack of concern for future generations. They don’t understand the extent of the damage they can cause the environment, and when and if it will affect them.

It’s easier for people to put something down the drain or gutter then to dispose of the waste in an environmentally friendly way. By creating more convenient and easier ways for people to dispose of their waste will also help reduce seawater pollution. Lack of knowledge, lack of concern for future generations, ignorance and poor decision making are the results of people polluting without second thought of the affects in the environment. The nation needs to be educated more on waste disposal to help reduce pollution.

As the environment is a public good, negative externalities are gained such as the affect on environment from seawater which damages waterways, land and the ocean. When the environment is polluted, the cost is absorbed by there. As seen in fig 1. 1, the greater the external costs the lower the socially efficient output. Figure 1. 1 Most businesses operate to achieve maximum profit. The profit-maximizing output is determined where MR. (Marginal Revenue) = MAC (Marginal Cost). MASC. (Marginal Social Costs) may not be the same as ‘VIC; therefore the cost to the environment does not become a cost to businesses.

In order for businesses to take account for the damages to the environment taxes are implemented. Where a firms pay a tax equal to the external costs it creates, MAC = MASC.. In fig 1. 2 the maximized profits are tact where P = MAC + Tax Slogan, Norris & Garrett, 2010). Figure 1. 2 Taxes and subsidies are used to correct externalities, where the aim is to tax those goods or services where there is a lot of pollution and subsidies where there is less pollution. The government should impose a tax equal to the marginal external cost and the marginal external benefit (Slogan, Norris & Garrett, 2010).

The taxes received from heavy polluters should be used to subsidy or invest in cleaner non polluting technologies. Fines and taxes impact on the level of pollution emitted, as they are a deterrent for firms to rate more and more pollution and invest into other appropriate ways to avoid the fines and taxes, therefore ultimately producing less pollution. An example of this is the Carbon tax in Australia, Urine (2013) states that carbon emissions from the electricity sector have dived in the first six months under the carbon tax, with much greater use of renewable energy and cutbacks in consumption.

There is an uncertainty of environmental impacts of pollutants over the long term. Governments and regulations tend to play it safe when imposing harsh standards with the view of relaxing the standards if the effects to the environment arena as serious as first thought, but even then any damage done cannot be reversed. Regulations are easier for firms to follow and understand and are safer when the environmental costs of certain actions are unknown. Whereas taxes and charges are more sophisticated, but they are harder to distinguish the charge or tax rate as they vary upon environmental impact (Slogan, Norris & Garrett, 2010).

There are various policy alternatives to consider which the most efficient pollution control regulatory system will ensure that there would be zero pollution. An environmental charge can be imposed on consumers and firms or using natural resources such as water and for using the environment as a waste dump such as sewage and rubbish collection. This policy is just a charge to users of the environment, there is no limit of how much can be consumed or created and pollution is still bring created. Figure 1. 3 explains the environmental charge.

With a charge on the emissions, the socially efficient level of emission is AL and the socially efficient level of emission charge is PA. If there was no charge there would be no emissions at L 1, as the private marginal costs equals its private marginal benefit (Slogan, Norris & Garrett, 2010). Figure 1. 3 An environmental ‘green’ tax could be forced on the output or consumption of a good when external environmental costs are generated such as fuel taxes (Slogan, Norris & Garrett, 2010). The socially efficient output is where the rate of tax should be equal to the marginal external cost which can be seen in Fig 1. . A green tax has an alternative to subsidies certain activities that reduce pollution, such as installing a solar hot water system. This policy helps to decrease pollution by taxing the output or consumption of a good and helps consumers to purchase less polluting products through a subsidy, UT there is still pollution being emitted and there is no cap on how much can be used. Laws and regulations set maximum permitted levels of emissions, or resource use and environmental quality. Laws and regulations make certain practices illegal or by putting limits on discharges, such as releasing mine water.

If firms go over the set limit they are fined accordingly. Although the laws and regulations have set a limit on pollution, firms are still creating pollution (Slogan, Norris & Garrett, 2010). Treatable permits are another policy that could be used. Much like the carbon tax in Australia, each firm is even a permit to produce a certain level of pollution, the firm uses less than the set level, they are given a credit which can then be sold to another firm allowing it to exceed it given level (Slogan, Norris & Garrett, 2010).

This policy places a restriction on how much a firm can pollute, but it is still creating pollution. All four alternative policies either charge or tax consumers or firms for pollution or restrict the level of pollution created. Under these policies there could never be zero pollution. There will never be zero pollution, as no matter what pollution control regulatory system is place now, t can’t make up the damage that has already been done. Even the most efficient pollution control regulatory system will not insure that there would be zero pollution.

Not all places or countries would have the same regulatory framework pollution on a global level. A pollution control regulatory system needs to control future pollution while helping to eliminate pollution from the past. In conclusion, it has been determined that imposing charges, taxes or regulations can ultimately reduce the amount of pollution as it forces firms and consumers to be more wary of their pollution and invest in other cosmologies or products to avoid penalties and help reduce their amount Of pollution.

This has been seen through the example of Australia’s carbon tax, where the electricity sector emissions have decreased dramatically in first 6 months of the carbon tax being introduced, and using renewable energy. It has been discussed how market failure has affected the environment. It is shown that not only does pollution affect the environment, but the economy as well through natural disasters. It is evident that small businesses and households create pollution and that they should be taxed similarly to large impasses to help reduce pollution.

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