BRILLLIANT TUTORS
ECS2606
Assignment 2
DUE 20 September
2024
[Year]
[Type the company address]
, Book
Environmental Economics
ECS2606 Assignment 2 (COMPLETE ANSWERS) Semester 2 2024) - DUE
20 September 2024 ; 100% TRUSTED Complete, trusted solutions and
explanations.
. 1. Discuss the different incentive-based policies which are available in
environmental economics. [10]
In environmental economics, incentive-based policies are mechanisms designed to encourage
businesses, individuals, and other entities to reduce their environmental impact by aligning
economic incentives with environmental goals. These policies often aim to internalize the
external costs of pollution, promoting more sustainable behavior. Here are some of the primary
types of incentive-based policies:
1. Taxes and Fees (Pigovian Taxes)
Description: Taxes imposed on activities that generate negative externalities, such as
pollution. The tax is set equal to the estimated cost of the external damage, thus
internalizing the cost.
Example: Carbon taxes are levied on the carbon content of fossil fuels, encouraging
reductions in greenhouse gas emissions.
2. Subsidies and Grants
Description: Financial incentives provided to encourage environmentally beneficial
activities. These can lower the cost of adopting green technologies or practices.
Example: Subsidies for renewable energy installations, such as solar panels or wind
turbines, can encourage investment in clean energy.
3. Tradable Permits (Cap-and-Trade Systems)
Description: A market-based approach where a cap is set on the total amount of
pollution allowed. Permits are distributed or auctioned to polluters, who can trade them.
Firms that can reduce emissions at a lower cost can sell their excess permits to others.
Example: The European Union Emissions Trading System (EU ETS) is a cap-and-trade
system for carbon emissions.
4. Deposit-Refund Systems
