Government Intervention to Protect the Environment (Edexcel IGCSE Economics)

Revision Note

Author

Steve Vorster

Expertise

Economics & Business Subject Lead

Types of Government Intervention

Governments uses a combination of policies to protect the environment
- A combination of solutions are generally used to reduce impacts

Some of the following government interventions to protect the environment have been explained earlier:
- Taxation (Government Intervention: Taxation & Subsidies)
- Subsidies (Government Intervention: Taxation & Subsidies)
- Regulations and fines (Government Intervention: Fines, Regulation & Permits)
- Pollution permits (Government Intervention: Fines, Regulation & Permits)
- Provision of parks

Tackling Plastic Waste

Over 5 trillion plastic bags are produced around the world each year, and much of it ends up on streets or in landfill
- Plastic can take 500-1000 years to break down
Many countries use bans or taxes to reduce their use
- Some governments force retailers to sell the plastic bags and then donate the money raised to environmental causes (this is a form of regulation)
- Other governments charge firms a 'plastic tax' which they have to pay whenever they import plastic packaging into the country

An evaluation of 'plastic taxes' to reduce plastic bag usage

Advantages	Disadvantages
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

Tackling Aircraft Noise

Over 700,000 people are impacted by the noise from flights at Heathrow airport
Heathrow has some of the strictest regulations in order to reduce noise pollution.
These include:
- A limit on the number of flights that can take off and land between 11:30pm and 6:00am
- Variable landing charges linked to the level of noise that the aircraft makes
- Noise insulation around the airport perimeter

An evaluation of regulation to reduce aircraft noise

Advantages	Disadvantages
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

Advantages

Disadvantages

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

Tackling Fossil Fuels

Coal powered plants emitted 15.22 billion metric tonnes of carbon dioxide in 2022
Many governments respond by taxing emissions, selling pollution permits, or limiting the amount of emissions that can be produced (regulation)

An evaluation of using taxation and pollution permits to reduce emissions

Solution	Advantages	Disadvantages
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

Tackling Agricultural Water Pollution

Agricultural fertilisers and pesticides are a major source of water pollution
- Many governments regulate surface and ground water quality

An evaluation of using regulation and fines to reduce water contamination

Advantages	Disadvantages
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

Providing Parks and Green Spaces

Parks are free open spaces and are considered a public good
- For example, the Canadian government provides 48 national parks in order to conserve land, protect ecosystems and provide recreational activities

An evaluation of the provision of parks

Advantages	Disadvantages
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

Advantages

Disadvantages

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

Examiner Tip

When assessing policies to protect the environment, the most effective way to protect the environment is by combining different types of government intervention (regulation, fines, taxation, subsidies)

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