intervene in private-sector markets if the outcome shown in Figure 17-2
is to be attained.
The second problem is that the optimal level of pollution abatement is
not easily known because the marginal benefit and the marginal cost
curves shown in Figure 17-2 are not usually observable. In practice, the
government can only estimate these curves, and accurate estimates are
often difficult to obtain, especially when the technology of pollution
abatement is changing and the health consequences and other costs
associated with various pollutants are not easily measured. An important
example of our ignorance regarding the marginal costs and benefits of
pollution abatement is related to the effects of greenhouse-gas emissions
on global climate change. Though there is now an overwhelming
consensus among scientists that humankind’s emissions of greenhouse
gases are contributing to global climate change, the estimates of the
magnitude of the effects of Earth’s climate change, as well as the resulting
costs, vary considerably.
The third problem is that the available techniques for reducing pollution
are themselves imperfect. Even if the optimal level of pollution abatement
were known with precision, there are both technical and legal
impediments to achieving that level through policy actions.
This brings us to a discussion of the various policies governments can use
to reduce pollution. As we will see, some policies are more effective than
others.