chapter  11
16 Pages

Pollution

In the previous chapter, we looked at the impact of planetary limits on the inputs to production processes. In this chapter, we will look at the same issue from the other end by addressing the outputs from production processes that have to be assimilated by the environment. From a conventional economics perspective, pollution is an inevitable part of economic life. As long as we are engaged in transforming material inputs (raw materials and energy) into economic goods, we cannot avoid creating residuals. One of the most important concepts underlying economics is the trade-off, which is implicit in Milton Friedman’s famous statement that ‘there is no such thing as a free lunch’: you cannot receive a benefit without sacrificing something in return. Section 11.1 discusses neoclassical economics’ view of pollution as part of a trade-off – if we wish to have the goods then we will have to endure the pollution that their production generates. Section 11.2 then moves on to explore a regulatory approach to tackling pollution, which begins from the assumption that it is a social and political, rather than a market, problem.