This first part of the course has introduced you to the larger picture of Environmental Economics,...

Question

This first part of the course has introduced you to the larger picture of Environmental Economics, and provided some arguments for why it came into existence. One basic reason is this proposition: "Environmental quality is the ultimate public good."
Please explore this in more detail by explaining the nature of a public good, and how environmental quality exhibits the characteristics of a public good.
Support your answer by providing an example of where there has been a failure of markets, or a failure of government enforcement of environmental regulation, to protect the environment, and how this failure was related to the nature of a public good.
Your answer should be composed using the Student Template provided in the Course Documents section, be no less than two, and no more than five, pages in length. Do not use any citations or footnotes, as this should be an expository essay. Upload your answer to the dropbox provided in Week 5.

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Robert · Accepted Answer

ECO 245
Environmental Economics (online)
Fall 2012
Assignment [X]
By [Your Names]
[Date]
Definition of public good and 
Public goods are those goods which are non-rival and non-excludable in consumption i.e. these are those goods 1) whose consumption by one person does not reduce their availability for another person and, 2) nobody can be denied or exclude from the consumption of public goods. Examples; public park, clean air, public roads etc.
Environmental quality exhibits these two characteristics and therefore it is a public good. If environment is clean and neat, it would be beneficial to all and nobody can be denied access to it. So it is non-excludable in consumption. Also there is no case where consumption of environment quality by one person will reduce its availability for other person. Hence it is non-rival in consumption as well. Thus environmental quality exhibits characteristics of public good and therefore it is the ultimate public good.
If left to market or to private players, public good is often underprovided.  In fact, the non-excludable feature of public goods is the root reason for under-provision of public good by private markets. If a private player makes an arrangement for a public good, it would not get adequate compensation because it would not be able to exclude anybody from consuming it and therefore it would have less incentive to provide the public good in sufficient quantity. Moreover,

This first part of the course has introduced you to the larger picture of Environmental Economics, and provided some arguments for why it came into existence. One basic reason is this proposition:...

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