ECON 2J03 Lecture Notes - Lecture 9: Carbon Tax, Environmental Policy, Environment And Climate Change Canada
14 Mar 2017
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Document Summary
Five primary criteria for policies: efficiency and cost effectiveness, fairness, incentive effects, enforceability, morality. Centralized policy is one where an administrative agency is responsible for determining the policy: eg. Polices enacted by the government and enforced by environment canada. Decentralized policy is where many different individuals make decisions about the policy: eg. When it is hard to measure the benefits of a program we often focus on cost-effective policies rather than finding efficient polices. A policy is cost-effective if it produces the maximum environmental improvement possible for the resources being expended or, equivalently it achieves a given amount of environmental improvement at the least possible cost. An efficient policy is one that moves us to, or near, the point where marginal abatement costs and marginal damages are equal. For a policy to be efficient it is by definition cost-effective, but not necessarily vice versa.
