13 Jul '11, 7am

What if the polluter has to pay the victim for the right to pollute? #cleanair

First, they confuse GDP with well being. As is widely recognized in the economics profession, GDP includes some activities that don’t reflect net increases in welfare, such as the goods and services needed to rebuild infrastructure after a natural disaster. It also does not count many activities that do provide net increases in welfare, such as the intrinsic value people place on nature (e.g. national parks, coral reefs, or rare species). Do these things not exist? Is cleaner air a figment of our imagination? Second, the authors ignore the fact that GDP does not include damages to people who are not compensated for having to breathe polluted air. Economists call these damages “negative externalities,” to reflect the notion that they are not “internalized” in the market price of the good whose production is causing pollution. A proper cost benefit analysis therefore estimat...

Full article: http://switchboard.nrdc.org/blogs/ljohnson/neras_flawed_c...

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Press contact: Bob Keefe, 202-289-2373, [email protected] If you are not a member of the press, please write to us at nrdcin...

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