A prominent article in this morning’s News & Observer discusses North Carolina state government’s plans to fight new federal air-quality restrictions.
Some people will ask, “Why would North Carolina stand in the way of cleaner air? Shouldn’t we do everything we can to decrease pollution?”
The answer is no, and the recently revised and updated Common Sense Economics (co-authored by a team including Richard Stroup and Dwight Lee) offers a great explanation why the answer is no:
If asked how much pollution we should allow, many people would respond none ? in other words, we should reduce pollution to zero. In the voting booth they might vote that way. But marginal thinking reveals that this would be extraordinarily wasteful.
When there is a lot of pollution ? so much, say, that we are choking on the air we breathe ? the marginal benefit of reducing pollution is very high and is likely to outweigh the marginal cost of that reduction. But as the amount of pollution goes down, so does the marginal benefit ? the value of the additional improvement in the air. There is still a benefit to an even cleaner atmosphere ? for example, we will be able to see distant mountains ? but this benefit is not nearly as valuable as saving us from choking. At some point before all pollution disappeared, the marginal benefit of eliminating more pollution would decline to almost zero.
But while the marginal benefit of reducing pollution is going down, the marginal cost is going up and becomes very high before all pollution is eliminated. The marginal cost is the value of other things that have to be sacrificed to reduce pollution a little bit more. Once the marginal cost of a cleaner atmosphere exceeds the marginal benefit, additional pollution reduction would be wasteful. It would simply not be worth the cost.
