Environmentalism is an issue that has become controversial in the fields of economics and business. It runs against the basic idea of profit-maximization, which is fundamental to both of these faculties. According to this blog post, Tim Haab, an environmental economics professor, debunks the myth that the ideal level of pollution is zero pollution. I found it interesting that someone with an environmental background would take a stance that seems to oppose the conventional thought of his peers, but he justifies his points succinctly and clearly. Essentially, he states that the pollution level is optimized when the marginal benefit that the last unit of pollution provides to society is equivalent to the marginal cost of that same unit. The only catch to his explanation is that all of the externalities (the costs that members of society who don’t necessarily enjoy the benefits of the polluting act have to bear) are currently not accounted for. By implementing a tax that incorporates these externalities, Tim believes that the market will show the true net benefit to society and will adjust accordingly.
The topic of this blog post is a direct application of not only my business fundamentals class, but also my elementary microeconomics course. Because of this, and the post’s simplicity, it is an excellent read for any business student that is beginning their academic career.
Image Source: http://www.greenpeace.org/canada/Global/canada/image/2010/4/teaser/tar%20sands/Jiri%20Rezac.jpg