Radical approaches to pollution: when economics and environmentalism collide

When it comes to pollution we’ve tried the stick, says University of Waikato economist Professor Les Oxley. Now, why don’t we try dangling a carrot?

Providing incentives to farmers not to pollute could be more effective than fining them when they do, Oxley said.

“Rather than simply punish the farmers for polluting, let’s consider paying them not to.

“We would still retain the fundamental environmental law principle of ‘polluter pays’ if they do pollute, but let’s give them an incentive not to do the things we don’t want them to do, rather than punishing them for doing the things that they may decide to do, simply because they’re interested in production rather than profit.

“If it’s profitable for them not to pollute and we made it even more profitable by giving them a subsidy, then that solution is both radical and different … Punishment is ex-post (and we would still have this for those that do offend) whereas these are ex-ante attempts to change behaviour.”

While his “radical” ideas extend to the management of freshwater resources, Oxley says agriculture should not have to bear all of the costs when the benefits are more widespread.

“The incentives and approach can be applied to any case where third parties are unwilling recipients of any ‘nasty’ outcome, and the originators of the problem could be in any geographic or industrial, agricultural or service sector.”

And not only would such a programme be only one economics-based option of many, but it wouldn’t necessarily require tax funding.

“The basic economics we teach in first year tells us that there are a wide range of options we could apply to water allocation mechanisms and attempts to reduce emissions of any kind.

“One that seems to have caught the attention is the idea of ‘paying farmers not to pollute’.

The interesting issue here is that this need not be a tax-funded incentive programme at all, and it need not be a single option.”

Oxley will deliver a seminar on economics-based environmental management at Fieldays on Friday June 13, at 12:45pm. He welcomes everyone, and particularly those who are “interested in thinking outside the box, have a sense of humour but can also see the need to be part of the solution. This likely rules out policy makers and politicians who, in my experience, lack many/most of these qualities”.

If there is one message he hopes people will take away, it’s that “everyone affects the environment, the issue is how big and how bad.

“Unlike carbon, say, which is a global issue, water is NZ’s problem and will require an NZ solution – the rest of the world really isn’t that interested in our problem.”

And what does Oxley have to say to the policy makers?

“Listen to scientists and lawyers and economists and those creating the ‘problem’, because they are the key to the solution, but not just one group, in one place.”