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Upstream Pollution, Downstream Waste Disposal, and the Design of Comprehensive Environmental Policies

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  • Walls, Margaret
  • Palmer, Karen L.

Abstract

Many environmentalists and policymakers are shifting their focus from media-specific pollution problems to product-specific, life-cycle environmental problems. In this paper, we develop a model of production and consumption that incorporates life-cycle environmental externalities-specifically, an upstream manufacturing byproduct, air or water pollution from manufacturing, and downstream solid waste disposal. We then use the model to derive optimal government policies to address all three externalities. We assume throughout that a Pigovian tax on waste disposal is precluded because of the potential for illegal dumping. We then examine four cases: one in which Pigovian taxes on the upstream externalities are feasible, one in which such taxes are infeasible, and two final cases in which the upstream pollutant is subject to one of two different types of regulatory standards. In general, we find that no single instrument can solve multiple problems, contrary to what some observers have suggested. However, we find that there are alternative ways of reaching the social optimum. We also discover that a so-called "integrated" approach to policy appears to be important, no matter what policy options are adopted. And finally, we find that there is only a limited role for product "life-cycle assessments"-enumerations of all of the resources used and pollutants emitted throughout an entire product life-cycle.

Suggested Citation

  • Walls, Margaret & Palmer, Karen L., 2000. "Upstream Pollution, Downstream Waste Disposal, and the Design of Comprehensive Environmental Policies," Discussion Papers 10837, Resources for the Future.
  • Handle: RePEc:ags:rffdps:10837
    DOI: 10.22004/ag.econ.10837
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    References listed on IDEAS

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    1. Anderson, Curt L., 1987. "The production process: Inputs and wastes," Journal of Environmental Economics and Management, Elsevier, vol. 14(1), pages 1-12, March.
    2. Don Fullerton & Wenbo Wu, 2002. "Policies for Green Design," Chapters, in: Don Fullerton & Thomas C. Kinnaman (ed.), The Economics of Household Garbage and Recycling Behavior, chapter 5, pages 102-119, Edward Elgar Publishing.
    3. Don Fullerton & Thomas C. Kinnaman, 2002. "Garbage, Recycling, and Illicit Burning or Dumping," Chapters, in: Don Fullerton & Thomas C. Kinnaman (ed.), The Economics of Household Garbage and Recycling Behavior, chapter 2, pages 49-62, Edward Elgar Publishing.
    4. Hahn, Robert W., 1986. "Trade-offs in designing markets with multiple objectives," Journal of Environmental Economics and Management, Elsevier, vol. 13(1), pages 1-12, March.
    5. Don Fullerton & Ann Wolverton, 2002. "The Case for a Two-Part Instrument: Presumptive Tax and Environmental Subsidy," Chapters, in: Don Fullerton & Thomas C. Kinnaman (ed.), The Economics of Household Garbage and Recycling Behavior, chapter 10, pages 175-200, Edward Elgar Publishing.
    6. Hilary A. Sigman, 1995. "A Comparison of Public Policies for Lead Recycling," RAND Journal of Economics, The RAND Corporation, vol. 26(3), pages 452-478, Autumn.
    7. Palmer, Karen & Walls, Margaret, 1997. "Optimal policies for solid waste disposal Taxes, subsidies, and standards," Journal of Public Economics, Elsevier, vol. 65(2), pages 193-205, August.
    8. Dinan Terry M., 1993. "Economic Efficiency Effects of Alternative Policies for Reducing Waste Disposal," Journal of Environmental Economics and Management, Elsevier, vol. 25(3), pages 242-256, November.
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    Environmental Economics and Policy;

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