Environmental Economics: Rivers, public goods, same value?

Water is a resource which everyone can value, as for everyone uses it. The value of each person will depend on the importance and different uses that people give to it, becoming in this sense subjective topic.

What happens when an industry upstream pollutes water? Instead of being available to drink, it becomes risky or mortal. If it meant an economic source for families, it ends being a resource not available anymore. In this sense, no one favors from the contamination of it, and value changes whenever pollution enters into the game. Fisherman will give more value to it once they understand their source is exhausted (whatever becomes scarce acquires more value), same thing will happen to the people who benefited from being able to drink the water, cook or just take a clean recreational bath. Respecting to biodiversity, it’s a pity we can’t ask the lives involved in it, but I’m sure they will have given their value and their complaint. On the other hand, industry will still use water to its original purpose- getting rid of the waste- and value it the same way, in the sense that things keep on going the same way for the factory.

Science the topic becomes subjective and the wildlife involved cannot be included for evident communication issues, real value is not measurable. As humans, we can quantify the economic loses of the fisherman if we look at the sector in an economic and historic way. The alterations of price in the water market can also be registered- again, if clean water becomes scarce, the prices in the water market would rise as a natural consequence.

Considering what can be measured, we can make the company pay for what’s measurable. It’s evident that, even if we cannot assign value to water (it’s subjective), water is something we all benefit from (we cannot live without it). From this point on, pollution must be prohibited, loses must be compensated and a waste disposal facility must be built by the company in order to keep operating. For this, State can offer the company financial sources. This alternative can only be considered so that the company can pay the damage and build the necessary facilities to keep running, so it doesn’t keep making the damage worse, cooperating by so not increasing water prices for society.

It’s difficult to arrive at this issue with just one point of view. Depending on the different externalities that are related to the main problem (the river is now polluted), Pigouvians, Coasians and Environmentalists will approach accurately at some pints. Nonetheless, it’s clear that externalities have to be covered, reason why effectiveness emerges as a main factor for the decision making among the resolution of this issue. Money arises with the issues alone, but all approaches considers it, in this sense, all of them get even to have at least a point in common.

Comments Off on Environmental Economics: Rivers, public goods, same value? / 28 Nov 2011 por Rodrigo Capriles Mazzei
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