value, and we are more familiar with applying the concepts of supply and
demand for goods with positive values. If no pollution is abated, the
watershed will have the amount of pollution that would occur in an
unregulated market. The greater the amount of pollution abated, the
smaller the amount of pollution that remains. Thus, as we move to the
right along the horizontal axis, there is more pollution abatement and
therefore less remaining pollution. On the vertical axis, measured in
dollars per unit, we show the marginal benefit and marginal cost of
pollution abatement.
Marginal Cost of Abatement
The marginal cost of abatement is the cost associated with eliminating
one extra unit of pollution. The marginal cost of abating pollution is often
small at low levels of abatement but rises steeply after some point. This is
the upward-sloping line shown in Figure 17-2. There are two reasons
for believing that this shape is accurate. First is the familiar logic behind
increasing marginal costs. Because some antipollution measures can be
taken fairly easily, the first units of pollution abatement will be cheap
relative to later units. After some point, however, the easy fixes are
exhausted, and the marginal cost of further pollution abatement rises
steeply. Second, it is likely that pollution reduction of any degree will be
easier for some firms than for others. New facilities are likely to run more
cleanly than old ones, for example. Pollution abatement in a factory that
was designed in the era of environmental concern may be much easier
than obtaining similar abatement in an older factory.