Using Marginal Damages in Environmental Policy: A Study of Air Pollution in the United States

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    Using Marginal Damages in Environmental Policy: A Study of Air Pollution in the United States
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America has struggled to strike the proper balance between environmental stewardship and economic well-being when regulating air pollution. Economics Professors Nicholas Muller and Robert Mendelsohn suggest a path-breaking solution to this conundrum: an original and efficient regulatory model that they contend would lead to both clearer air and millions in industry savings.   

In Using Marginal Damages in Environmental Policy, Muller and Mendelsohn illustrate the shortcomings of current air pollution policy, demonstrating how catch-all solutions fail to distinguish between different regions where the costs of pollution damages vary widely. The authors provide convincing evidence of these failures: pollution in urban areas, for example, does more harm than it does in rural areas — but those differences are not accounted for.

Muller and Mendelsohn lay out an innovative and prioritized roadmap to reform this outdated policy, proposing that air pollution policy should account for the damage done by pollutants based on their location. This path-breaking system would enable policymakers to establish taxes or tradable permits that result in efficient outcomes that neither over-value nor under-value pollution damages.

At once a documentation of failures, a record of successes, and a convincing argument for change, Using Marginal Damages in Environmental Policy contends that striking an acceptable balance between environmental and economic health is not an impossible task.

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