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Please mark my econ 25 mark essay


Extract C (lines 17–19) states: ‘Many environmental economists suggest that making firms pay for the costs of landfill associated with their products, or taxing raw material inputs, will be necessary to ensure a sustainable future for all.’ Using the extracts and your knowledge of economics, evaluate policies, if any, that governments in developed countries should pursue to reduce waste and encourage the recycling of waste products.


One policy that a developing government could use is to place high import tax on waste imports from abroad. This can also help encourage waste product recycling as it will allow existing governments to reconsider the cost of the now tax burdened, ‘collect, sort and export’ system.

A developing government can use import taxes to reduce waste abroad and this in turn can also be used to reduce waste or correct market failures through the revenues earned. For example, China could place a tax on goods which are more expensive to store as waste such as plastics which are difficult to store as compared to cardboard and paper. This differentiated tax can raise government revenue for developing countries which is important as it could possibly allow for an increase in productive potential as with an increase in income the nation may become developed. Additionally, the funds can be used for possible innovation projects such as research and development of recycling that could be a global positive externality. This is shown in the diagram where by using this policy of import tax a government can increase revenues by a more than proportional amount to the fall in demand of waste exporting due to the inelastic demand that developed nations have for waste export. [diagram showing inelastic demand shifting to left causing a small fall in quantity demanded but larger revenues earned]. However, even though developing nations could possibly use revenues earned for positive externalities it is quite likely that the revenues could be used for other purposes, this is due to developing nations having a history of instability and possible corruption, this means that the revenues could be simply allocated to the wealthy leaders and leaving their nation fill with waste whilst citizens pay as a consequence, which incentivises developed countries even more to innovate and solve the issue of waste instead of using this traditional method.

Furthermore, countries in developed countries could also use policies such as subsiding recycling schemes to help encourage recycling of waste products. For example, introducing different coloured bins to make it easier for consumers to recycle, or advertising the effects that climate change has had and could have on Earth partly due to waste and thus incentivise consumers to make a change. These schemes should be a main priority for developed countries and one reason for this is that ‘landfill is gradually being regulated out of existence’, this means that not only monetary costs are high to deliver and transport waste but also there could be social unrest about the matter invoking costly boycotts or strikes which could cause political instability. By investing in recycling the government is helping reduce negative externalities of consumption and production as there will be less pollution caused by them, and it could also generate revenue in the long run. This could be in the form of patents of a newly found way to discard of waste, this patent could be sold to other nations bring in large revenue for the country, this can then be reused to further improve consumer and economic welfare. However, the success of a recycling scheme could be uncertain as consumers may be reluctant to carry the burden of the costs of waste that has been incorrectly allocated by the government, for example consumers may feel paternalized and this could lead to political unrest.

Thirdly, a policy that governments could use in developed nations is taxing of firms that use products made of certain environmentally damaging materials. For example, introducing a tax on plastic products to incentivise firms to switch production to cardboard and paper products and packaging which are much easier to store as waste and can be recycled more efficiently. This means that through government intervention the market failure of pollution and the externalities it causes can be corrected, also the revenue gained can be used to fund regulatory costs of administrating uncooperating firms and introduce new recycling schemes. However, taxes which are imposed at incorrect amount can cause a large burden for the government. The Laffer curve shows this relationship where past a certain point taxation at an excess amount will actually cause government revenue or it can also increase unemployment as firms make workers redundant, overall emphasising the importance of the government assessing the level of information they have on the market before intervening.

Overall, there are multiple policies that developed nation governments could use to help reduce waste and promote recycling however this depends on the citizens reactions and the difficulty of simply exporting waste to less developed nations.

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