Thinking it Through

Art Carden:

I can throw away biodegradable coffee grounds and a non-biodegradable, poisonous chemical-laden, broken, and useless cell phone and battery for the same price: $0.

That’s the full text of his post, entitled “Environmental Economics in One Sentence.”

Marginal cost to the one throwing stuff away, since refuse disposal is usually a paid subscription service.

It’s all externalities these days! Maybe you need a refresher course!

The problem in environmental economics is that the costs of responsible behavior are borne by the direct actor (because separating garbage is tedious, for example), whereas irresponsible behavior causes a negative externality, or at least it transfers the responsibility to another entity, such as a refuse disposal company, which also may not be incentivized to behave responsibly. Ultimately, it’s a Tragedy of the Commons.

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