Causes of Environmental Degradation

Topic 4: Causes of Environmental Degradation

  1. Overview of the Causes of Environmental Degradation: Market and Policy Failures

  2. Property Rights

  3. Public Goods

  4. Externalities

  5. Imperfect market structures and power

  6. Divergence of social and private discount rates

  7. Policy Failure

  8. Poverty Environment Links

  9. Summary

      Overview of the causes of environmental degradation: market and policy failures

Market failures

  Inefficient property rights

  Public goods

  Market externalities

  Imperfect markets

  Private versus social discount rates

Policy/government failures

  Unintended policy impacts

  Subsidies

  Failure to correct pervasive market failures.

      Property Rights

Efficient property right structures:

Exclusivity – All benefits and costs resulting from using the resource accrue to the owner.

Transferability – Resource ownership can be transferred through voluntary exchange.

Enforceability – Property rights secure from involuntary seizure or encroachment.

Property right regimes:

Private property – exclusive use of a resource, which is enforceable. The property right is divisible and transferable. Always a formal right

Common property – implies some arrangement for sharing use by others in a common group and excludes others; may be formal or informal.

Open access – lack of property rights or ownership, and implies non-exclusive use.

  1. Public Goods

Public property – ownership of a resource is by the government or state; rights are generally exclusive, enforceable, divisible and transferable.

Public good – nonexclusive and nonrival (or indivisible), i.e. it is available to everyone and the amount one individual uses does not diminish the amount available to others (clean air, natural beauty, radio signals).

A public good is defined by its technical characteristics, not by ownership (e.g. public agency may...