Calculating gains losses raises practical questions What activities produce pollutants? With acid rain it is not known how much is associated with factory production versus natural activities like plant decay Which pollutants do harm? Pinpointing a pollutant s effect is difficult. Some studies show very limited damage from acid rain What is the value of the damage done? Difficult to value because pollution not bought/sold in market. Housing values may capitalize in pollution s effect 16
16 Calculating gains & losses raises practical questions • What activities produce pollutants? – With acid rain it is not known how much is associated with factory production versus natural activities like plant decay. • Which pollutants do harm? – Pinpointing a pollutant’s effect is difficult. Some studies show very limited damage from acid rain. • What is the value of the damage done? – Difficult to value because pollution not bought/sold in market. Housing values may capitalize in pollution’s effect
Private responses Coase theorem Mergers Social conventions 17
17 Private responses • Coase theorem • Mergers • Social conventions