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[GreenYes] Re: Landflll economics

Title: [GreenYes] Re: Landflll economics

Hi Gary
Interesting tactic to start with downstream disposal fees and then
switch to upstream producer fees. This may be politically easier than
going straight for the more efficient upstream fees, especially where
disposal taxes of any kind already exist.

Landfill taxes such as in the UK are probably not worthy of Pigou.
They were carefully designed not to apply to all forms of disposal (eg
dumping to air) in an attempt to meet the 1999 EU Landfill Directive
without having to rethink running economies dependent on making waste.
The funds from Landfill tax go straight to the Treasury, not to clever
processing of organics. Government's primary tactic for getting
organics out of landfills is an expansion of national incineration
infrastructure with secretive 30 year public-private finance deals
that will be paid via local taxes on the unsuspecting public. We can
guess the actual lifetime of this infrastructure given the UK
government's intentions to cut Greenhouse Gases by at least 60%.

Please see further comment below...

> Gary Liss wrote:
> I suggest that Pigovian fees and
> taxes also consider helping to decrease the
> uncertainty and help in capitalizing the Extended
> Producer Responsibility (EPR) systems that we
> advocate. They could do that by setting up a
> grant program with revenues from tipping fee
> surcharges that funds startup costs of industry
> sponsored EPR systems, IF the industry commits to
> levying whatever fees are necessary to keep those
> programs going over time.
> The level of Pigovian fees and taxes being levied
> in Europe is on the order of $20-40/ton, in order
> to fund initiatives to phase organics out of landfills.
> Gary

Hi Paul
Yes, costs of externalities are not generally knowable, due to
complexity and time-delays. Future unpredictable costs cannot be
included in current prices. Whilst the costs of damage can inform
policy-making, it is the costs of preventing damage that are possible
to generally include in prices.

Transaction costs are important. Can be minimised in various ways -
two in particular. 1: Include the predictable costs of 'solutions'
rather than the unpredictable costs of damage. 2: Impose fees upstream
(producer pays) rather than downstream (user pays). Producers are
easier to keep track of than users and individual products.

Good to consider the regressiveness of externality reforms but also
the regressiveness of today's unreformed economics which seems to
generate inequalities very impressively. Any effective reform would
use both price signals and investments of fees, meaning that some
prices fall while others rise. There is also a gain, available to the
less wealthy, from the greater resource efficiency of not dumping
resources. For example employment in locally sustainable activities,
cheaper refurbished goods, better community cohesion and freecycle.

Not sure if surplus revenue will be widely considered a problem in a
world with more urgent tasks than funds.

If revenues from externality reforms fall this would suggest the
externalities also are falling - something to celebrate? Society is
some way from this happy scenario in which regular taxes (on profits
from business and labour) need not be falling.

Please see further comment below...

> At 03:45 PM 10/31/2007, paul.ledesma@no.address wrote:
> a criticism of Pigovian tax policy centers around two
> >assumptions that must not be treated lightly.  (1) It is assumed that
> >the appropriate Pigou tax increment is knowable.  In my experience
> >this is a fat assumption.
> (2) It is often assumed that
> >the transaction costs for administering a Pigou tax is low (or near
> >zero).  This is in many cases not true.  Administrative costs related
> >to environmental taxes is often costly.
> >
> >There are other problems with Pigou taxes that could be discussed:
> >-Inherent regressiveness of Pigou tax policy
> >-Problem of surplus revenue
> >-Diminishing tax revenue in the long-run
> >Paul Ledesma

Hi John
Valuable distinction between fees and taxes. This tells us that
economic interventions don't have to be run by government even when
government brings in the enabling laws. It also reminds us that the
fee brings us something in return even when this benefit is shared.

You provide examples of some of thousands of  existing and potential
fees for addressing different externalities and products. The sheer
number of possible fees is an obstacle to their introduction. More
fees means more administrative overheads, more market distortions and
more work for busy legislators. Hence my research on minimising the
number of reforms needed for a sustainable economy. The latest paper,
under review in a NATO Science Programme Advanced Research Workshop,
attempts to cover most sustainability issues (including solid wastes
and climate change) with one instrument and international security/
weapons spending with another.  See
- criticisms welcome.

Best wishes
James Greyson

> >On Oct 31, 9:26 am, "Reindl, John" <Rei...@no.address> wrote:
> > I specifically used Pigouvian 'fees'
> > rather than Pigouvian 'taxes'. I view taxes as
> > an amount paid regardless of the impact or
> > level of service received -- such as income,
> > property and sales taxes. Fees, however,
> > reflect the impact imposed or the service
> > delivered,.such as a recycling or advance
> > disposa fee when purchasing a computer (this
> > often takes the cost off local taxes), or a fee
> > to build roads based on the amount of gasoline
> > used, or the fee that we should be paying for the carbon we put in the air.
> > John

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