Choosing an environmental intervention
| English | 中文 | Pinyin |
|---|---|---|
| regulation/ˌreɡjʊˈleɪʃn/ | 监管规定 | jiān guǎn guī dìng |
| pollution permit/pəˈluːʃn ˈpɜːmɪt/ | 排污许可证 | pái wū xǔ kě zhèng |
A decision you can investigate
- Two factories discharge waste into a shared stream. One can reduce discharge cheaply; the other must replace expensive machinery.
- A rule can set the aim, but its design changes the cost of meeting it.
Build the explanation
- A tax charges for a polluting activity and changes incentives. A subsidy can support cleaner methods. Regulation 监管规定 sets a requirement; a fine penalizes a breach. Tradable pollution permits cap allowed emissions and let firms trade permission.
- A cap controls total permitted emissions if it is enforced; trading lets lower-cost reducers sell permits. A tax makes the charge explicit but does not guarantee a fixed quantity reduction.
Work through the evidence
- Factory A can remove a unit of discharge for 20 yuan and B for 60. A permit priced at 40 gives A an incentive to reduce and sell unused permission; B may prefer buying permission to a 60-yuan reduction.
- A can save resources relative to forcing both to make the same costly reduction. This reasoning assumes valid measurement, a credible cap and a functioning trading system.
At permit price 40, which factory has the cheaper incentive to reduce one unit?
A can reduce for 20 and sell a permit worth 40, under the stated trading assumptions.
Test the limits
- A fine matters through both its amount and the chance of detection. A large fine rarely enforced may change little. Subsidies need funding and may reward improvements that would occur anyway.
- Permit allocation affects distribution, and local pollution hotspots can remain even if total emissions fall. Compare the exact harm, measurement, enforcement, cost and access to cleaner alternatives.
What distinguishes a fine from a pollution tax?
Both need implementation, but their triggering conditions differ.
A subsidy can support cleaner production while imposing a cost on public finances.
It may change incentives but must be funded and targeted.
Apply and explain your answer
- Why might permits lower the cost of achieving an emissions cap?
- Firms with cheaper reductions can reduce more and trade permits with firms facing higher reduction costs.
Which limitation directly concerns permit effectiveness?
Without monitoring the cap may not constrain actual emissions.
Use the terms precisely
- pollution permit 排污许可证: Permission for a specified amount of emissions under a controlled system.
- regulation: A rule setting requirements or limits on behaviour.
Match the terms to their meanings.
Each term describes a specific mechanism in this lesson.
Factory A can remove a unit of discharge for 20 yuan and B for 60. A permit priced at 40 gives A an incentive to reduce and sell unused permission; B may prefer buying permission to a 60-yuan reduction. A can save resources relative to forcing both to make the same costly reduction. This reasoning assumes valid measurement, a credible cap and a functioning trading system.
A fine matters through both its amount and the chance of detection. A large fine rarely enforced may change little. Subsidies need funding and may reward improvements that would occur anyway. Permit allocation affects distribution, and local pollution hotspots can remain even if total emissions fall. Compare the exact harm, measurement, enforcement, cost and access to cleaner alternatives.
A tax charges for a polluting activity and changes incentives. A subsidy can support cleaner methods. Regulation sets a requirement; a fine penalizes a breach. Tradable pollution permits cap allowed emissions and let firms trade permission.