Redistribution consequences of society’s response to pollution

ABSTRACT

Although both the efficiency and equity implications of individual pollution policies have been researched for decades, comparative analysis within the context of the legal system’s approach to redressing damages from pollution is not common. This paper examines the income and wealth distribution consequences of major pollution policies including legal decisions to compensate those impacted by damaging emissions.

KEYWORDS:

• Pollution control
• income distribution
• compensation

Acknowledgments

The author wishes to thank Don Dewees for comments on an earlier version of the paper, an anonymous reviewer for insightful suggestions and the Editor for his advice and assistance in preparing the final draft of the paper.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. In his analysis of social and private net product, Pigou noted: ‘In general industrialists are interested, not in the social but only in the private, net product of their operations … .When there is a divergence between these two sorts of marginal net products, self-interest will not, therefore, tend to make the national dividend a maximum: and consequently, certain specific acts of interference with normal economic processes may be expected, not to diminish, but increase the dividend (p. 172)’. Pigou then argues that: ‘ … there are certain rates of tax, the imposition of which by the State would increase the size of the national dividend and increase economic welfare (p. 224)’. Pigou does not state explicitly that the tax must be imposed per unit of output and there is no reference to a tax being imposed per unit of emissions.