Quiz 4: Property Rights, Externalities, and Environmental Problems
It has been stated that certain environmental laws prohibit EPA from considering the costs of meeting various standards when the level of standards are set. This is simply an unjustifiable waste of resources because in absence of estimates with regards to costs of meeting various standards when the levels of the standards are set, it becomes difficult or rather impossible to achieve the desired level of standard in least expensive way. Measurement of cost helps in undertaking cost - effective analysis of various policy alternatives used to achieve the desired environmental standards and its associated cost. Also cost - effective analysis will further help us in determining the extent to which cost could be expected to increase if cost - effective policies are not implemented. Thus, consideration of cost helps us in undertaking cost - effective analysis which leads to least - cost effective technique otherwise in absence of cost estimation, technique chosen may be expensive one and produce same result that could have been achieved by applying a technique that costs much lower than the one used. In this way, considerable amount of resources could be saved because as we know that eliminating wasteful expenditure is an important goal in its own right.