Here are the basics of the economics of pollution:
- Pollution, as a by-product of economic activity, imposes a cost on someone other than those making the decision of how much to pollute.
- Because those deciding how much to pollute don't bear the full cost of polluting, they over-pollute.
- Over-pollution results in total costs of the economic activity higher than is optimal (efficient).
- To reduce the total costs to optimal levels, policies or instruments are needed to bring the external costs of pollution into the market where the pollution is generated.
- Those in the market where the pollution is generated are unhappy when external costs are internalized.
- Those outside the market where the pollution is generated are happy when external costs are internalized.
- The Supreme Court has to decide who should be happy.
The Supreme Court has declined to hear a challenge to the Chesapeake Bay cleanup plan, the largest attempt by the federal government and states to rid the pollution from a body of water and to restore its health.
The high court’s refusal ends an attempt by the American Farm Bureau Federation to stop the cleanup. The organization argued that the Environmental Protection Agency overstepped its authority in leading the effort because the bay can be managed only by the states that sit in its watershed.
Farmers worry that regulations such as those in the bay plan could cut their profit margins or run them into debt. The cleanup placed the bay on a pollution diet that called on farmers to spend tens of thousands of dollars to install barriers to fertilizers, soil and manure that poured off farms with storm water into streams, creeks and rivers that lead to the bay.
Municipalities also complained about requirements that called on them to limit sewer overflows during heavy rain that sent human waste awash in storm water into tributaries to the Chesapeake. Those fixes will cost tens of millions of dollars to cities such as the District and counties such as Anne Arundel.
I grew up in Anne Arundel county, and I am happy(ish) with the Supreme Court decision. I would prefer the remedy be more market based, but in the case of the Chesapeake Bay, a bad economic instrument (command and control) seems more efficient than no instrument.