Environmental Policy with Pollutant Interactions

Pollutant Interactions and Environmental Policy Target Setting

In our economic analysis of the use of environmental policy instruments, we assume in part three that the object of environmental policy was to reduce the quantity of an individual pollutant emitted (or several pollutants that can be considered separately from each other). Under this condition, various instruments of environmental policy were looked at for their ability to reach the environmental policy target cost effectively.

Considering single pollutants in isolation is primarily advisable because it enables a simplified presentation of the complex problems of the use of environmental policy instruments. In the long run, though, analysis in environmental economics cannot ignore the fact that pollutants interact in manifold ways in the media that comprise the environment. Where such interactions are present, environmental policy goals can no longer be defined and pursued independently for individual pollutants because the hazardousness of each individual pollutant depends on the quantity of other pollutants emitted. The consequences arising from this complication for the employment of environmental policy instruments are considered here.

Pollutant interactions may be of very varied natures. The simplest case is where several pollutants jointly consume the environment's assimilative capacity, while the environmental burden effect of each additional unit of each pollutant remains constant. Here the environmental burden B produced by two pollutants x, y comes out as B=a1x+a2y, where a1, a2 (>0) are constant coefficients of damage capacity.