ECS2606 Assignment 2 (COMPLETE ANSWERS) Semester 2 2024 (583488) - DUE 20 September 2024 ; 100% TRUSTED Complete, trusted solutions and explanations. For assistance, Whats-App 0.6.7-1.7.1-1.7.3.9. Ensure your success with us . 1. Discuss the different incentive-based policies which are available in...
Incentive-based policies in environmental economics are designed to encourage firms and
individuals to reduce their environmental impact through economic incentives. These policies
are generally categorized into two main types: emission charges (taxes) and subsidies, and
market-based systems.
Emission Charges (Taxes) and Subsidies
1. Emission Charges: Emission charges are fees imposed on the quantity of pollutants
that a firm emits. The fundamental principle behind emission charges is to make pollution
a cost to the producer, thereby incentivizing firms to reduce their emissions to minimize
costs. As emissions decrease, the cost associated with abatement increases, while the
tax liability decreases. The optimal point for emission reduction is where the marginal
abatement cost equals the emission charge. Emission charges create a continuous
financial motivation for firms to adopt cleaner technologies and reduce pollution.
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