How Environmental Problems Can be Solved by Markets?

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This assignment will tackle the possible solutions of how environmental problems can be solved by markets on a global scale. In defining terms, environmental problems will be classed as any negative impact on the environment driven by markets. In turn markets shall be defined as economics and moreover the drive to make profit, capitalism.

Firstly this assignment will begin with a brief explanation of the magnitude of markets, and how in many instances they are creators of environmental problems. Indeed by going directly to the culprit of environmental problems markets will eventually offer effective responses.However there are limitations with this sole approach, as they fail to address the mass inequality in the world. In addition the future is scarred with great risk and uncertainty.

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These two factors are barriers together with belief that future generations will offer better alternatives. Leading on will be an evaluation of responses offered, in the form of economic instruments. Then pre conclusion, further ideas will be added to help aid environmental solutions. Most countries in the world build towards economic growth.

A good economy provides a country with high employment levels, education, housing and moreover a good standard of living.Though interestingly enough there is no psychological evidence that increasing income relates to happiness Blowers et al, 2003 pg 139. Wealthier countries, similar to the UK, are encouraged to consume more by sweeping trends, which occur on a frequent basis. This new wave of consumerism is stemmed from intelligent marketing and easy access to credit facilities.

High levels of purchasing are good for the economy, but its knock on effects reduce the life –cycle assessment levels of goods. This has a negative impact on the environment.In short extra goods produced are adding pressure onto natural resources, energy supplies, transportation and unnecessary packaging, for example carrier bags. All this action for goods, which maybe replaced within a short space of time.

In contrast the developing world currently offers a very different picture. Due to the mass power in balances in the world inequality is rife. As a net result economies vary in strength. Different countries have different priorities.

Therefore political agendas vary significantly. Therefore global environmental problems, like climate change carries unequal weight across the world.However the nature of economic globalisation, has helped many economies grow especially those in the developing world. Trade has become increasingly more interconnected and fluent.

For example communication levels with China are significantly higher than they were 20 years ago. Clearly this has been supported by technological advances and greater transport links. In addition businesses have also been attracted to the developing world, as cheap labour and relaxed environmental laws allow them to maximise their profits. Overall in both instances, environments are mainly valued instrumentally.

By using the Livelihood model illustrates that in the contemporary world it’s rational to pollute if your goal is too make money. In addition the Tragedy of Commons model points out the importance ownership. If the atmosphere or the seas were owned, it would be in the owner’s interest to monitor pollution, if only for commercial reason. As this is currently not the case environmental injustice will continue penalty free.

So the world faces many environmental problems and as the developing world grows richer, the reality of living in westernised style societies becomes stronger.This additional economic growth accompanied by a rising birth rate adds immense pressure to the environment. So how do we respond to this? In attempt to control pollution levels various economic instruments are offered. These include: Permits to pollute Private property Taxes Subsidiaries Fines Regulations Evaluating these responses add an instrumental value to the environment, which is how the contemporary world understands.

But will this slow down pollution levels? Or will payment offer some environmental justice?Obviously developing countries, which already struggle on a daily basis, may initially have to be exempt. In general terms their current actual contribution to pollution is minimal. The real problem lies in implementation, distribution, quantifying and monitoring. Permits to pollute, popular in USA add an unusual angle of acceptance to pollution.

With this particular response disadvantages occur with distribution, monitoring pollution levels and perhaps more importantly changing the discourse of pollution. Questions are raised firstly who is entitled to a permit? Is there an annual fee?Or charged accordingly to pollution levels? Who sets the pollution levels? If so how are pollution levels monitored? Perhaps more importantly in the developed world, pollution is condemned as relatively bad. By offering a permit or a license lends itself to a more relaxed and ‘ok’approach to pollution, which ultimately could change this discourse. On a positive note, finances accumulated from the sale of these permits can be fed back into the environment in its search for a sustainable future.

Private property, begs the question what is classed as private property?When institutions become privatised they often become more economically effective as they are owned. They look at overheads and try to cut back. They are profit driven not environmentally driven. On a positive note they would be accountable for their pollution, and any environmental fee or tax endorsed, would encourage them to innovate and look for more sustainable options.

Furthermore it’s less government cost. Taxes are perhaps one of better environmental responses. They offer an incentive not to pollute, which in turn encourages innovation. Monies raised can be feed back into the environment.

Disadvantages are with implementation and monitoring. How much do companies pay? Would smaller family run businesses be exempt? Could it be a percentage of annual profits? How is pollution monitored in accordance to the taxing system? In addition lobbying by the government would be apparent, due to the sheer power of business makes them reluctant to implement. Also the prices of goods would increase, as previously members of the public have not paid for externalities. It is most definite that companies will not deduct this extra cot from profit, they will just pass it on.

Taxes would deliver fairer trade and the monies raised can be fed back into the environment. Subsidiaries for more environmentally friendly solutions positively encourage change and offer a helping hand. Though questions are raised who pays? In addition who receives subsidiaries? Fines occur once the event has happened in addition disadvantages lie in calculation. How much would be charged? Would it stop re offenders? Who receives the money? Though fines do encourage best environmental practise.

Regulations again this offers an incentive not to pollute and prevents pollution from happening in the first place.Disadvantages lie in implementation may be too difficult and expensive to regulate and monitor effectively. Additional ideas include rent agreements. Tariffs could be drawn up for countries, which have forests as they offer carbon sinks and purify our air.

Though difficult to quantify, countries could pay a sum to prevent deforestation and instrumentally acknowledge their importance. This sum would contribute to economic growth and in addition encourage eco –tourism. Industrial ecosystems are another option though unique. Companies if possible use each other’s waste to function.

For example in Demark, 3 commercial sites succeeded in doing this effectively, causing minimal environmental damage Blowers et al, 2003 pg. In summarising and offering environmental responses, it seems quite rightly we do have to work with markets, however there are limitations. Not only are numerous questions raised, but also presumptions are made about countries being able to communicate together in a civil manner. As countries are sovereignties, their immediate interest lie within in their own land, not abroad this hurdle proves difficult to overcome, especially when there is so much inequality in the world.

In terms of evaluating economic instruments suggests a combination of responses namely private property, taxes and subsidiaries could hold potential answers. Firstly, power in balances have to be re addressed. Along with this, palming off method that future generations may hold improved answers. Quite rightly it is easy to become overwhelmed by flaws, however this situation is not impossible to deal with.

This situation purely demonstrates that the environment is not valued enough non-instrumentally.

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How Environmental Problems Can be Solved by Markets?. (2018, Jun 05). Retrieved from

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