Economics and the Environment, 8th Edition

CHAPTER 7The Safety Standard

7.0 Introduction

In Chapters 4–6, we explored the logic of controlling pollution at an efficient level. The efficiency approach emphasizes trade-offs—pollution control has opportunity costs that must be weighed against the benefits of environmental protection. This is not, however, the kind of language one hears in everyday discussions of pollution control. Instead, pollution is more generally equated with immoral or even criminal behavior, a practice to be stamped out at all costs. In this chapter, we explore the pros and cons of a safety standard that, as much popular opinion, rejects a benefit–cost approach to making decisions about the “correct” level of pollution.

The safety standard fundamentally springs from fairness rather than efficiency concerns. Recall that the efficiency standard makes no distinction between victims and perpetrators of pollution. Instead, efficiency weighs the dollar impact of pollution on victims’ health against the dollar impact on consumers’ prices and polluters’ profits. Each is considered to have an equal say in the matter, based on the reasoning that, in the long run, most people will benefit as consumers from the larger pie made possible via efficient regulation. Advocates of a safety approach, on the other hand, contend that our society has developed a widespread consensus on the following position: People have a right to protection from unsolicited, significant harm to their immediate environment. Efficiency violates ...