Government Intervention to Protect the Environment (Edexcel IGCSE Economics)

• Source of revenue for government

• The tax provides financial incentives for firms to source alternative forms of packaging

• The use of plastic may be inelastic in the short term, but very elastic in the long term as firms make alternative plans

• Firms may pay the tax and pass on the increased costs to their customers

• Higher prices will disproportionately impact low income consumers

• To avoid the plastic tax on import, firms may seek to manufacture their own plastic bags in country

• The combination of regulations mitigates the noise impact for the community

• A higher variable landing charge for noisy planes incentivises airlines to invest in noise reducing planes

• Loss of revenue for airlines as they have to provide fewer flights during the night hours

• If the size of the variable landing charge is too small, there will be no incentive to invest in modern technology

• Fewer flights does not mean no flights. Residents will still be disrupted

Taxation

• The tax acts acts as a cost incentive to reduce use of fossil fuels

• Government revenue can be used to invest in renewable energy

• Increased cost for firms, may cause them to go out of business

• Cost passed on to consumers

Pollution permits

• There is an incentive for coal powered plants to invest in cleaner technologies

• Incentive to reduce emissions at the lowest cost, as it is cheaper than buying permits

• Coal powered firms may choose to buy permits rather than reduce emissions

• Governments may issue to many permits, resulting in little change to the level of emissions

• Regulation on pesticides and fertilisers use send a clear signal to stop using them

• Can prevent harmful substances from entering water supplies, protecting public health from diseases and toxic exposures

• Effective regulations help preserve aquatic ecosystems by controlling pollutants that can harm wildlife and natural habitats

• The cost of monitoring and enforcing compliance of water quality is high

• Compliance with regulations can be costly for businesses, particularly small and medium-sized enterprises, potentially leading to increased operational costs

• Strict regulations might stifle innovation by creating a rigid framework that discourages the development of new contamination prevention technologies

• This reduces government expenditure on healthcare, as it creates an incentive to be outdoors and lead a healthier lifestyle

• It protects large areas of land, wildlife and ecosystems

  • E.g. Fiordland in New Zealand contains a significant portion of protected woodland, contributing to its ecological and biodiversity conservation

• Land can be used for recreational and tourism purposes

  • E.g Visitors to Yosemite national park in the USA can hike, camp, rock climb and watch wildlife

• There is an opportunity cost of using land for other purposes

  • Land and money could be used for alternative uses such as housing, schools or hospitals, particularly in urban areas

• Land used for parks could lead to loss of job creation from other uses

  • E.g If the government decides to provide a park rather than allowing it to be developed into a shopping centre or office complex, potential job losses in retail and construction will occur

• Parks are a public good so are free and will not be a source of income for the government

• Governments need to fund provision, maintenance and upkeep of park