Proverbial Talk

The Impact Of Air Pollution

By Jakob Culver

There is the need of defined rules and regulations so as to define the varied acts as what may be right to someone may be quite offensive to others. The one major area that requires the property rights explanations is environment as the lack of defined property rights leads to the abuse of certain activities as a result of a differing perceptions regarding how choices affect marginal private benefits and social costs.

Property rights for environment

If we consider any conceptual firm that is polluting the air will continue to do so because to the firm, the private cost of polluting is zero, and the social costs need not be considered. Moreover the external costs imposed on society (the social cost of the pollution) will not be taken into cost analysis of the firm.

So finally the total impact is the massive generation of pollution, to the nearby landowner the experience of production externalities, because there is no preventive law allocating the air to any individual or entity.

One possible solution of preventing the overproduction of the ‘bad’ of pollution is to allocate air property rights to individuals. But if the firm were to produce air pollution that was in excess to what particular land owners were comfortable with, these property owners would be provided a method to seek compensation for the pollution infringing on their land.

If considered the financial aspect of creating property rights for air is one which involves the avoidance of the overproduction of air pollution by creating a self-discipline effect with the establishment of the property right.

In this way the firms will be mindful of the neighboring property owners, and will be more responsible in their acts and also the social costs of their pollution production.

Other very important aspect of the property law is property value. If there is no uniform rule to govern the specific value of land with extensive pollution will be lower, passing on the externality to the owner once again.