Environmental Factors

Human actions have inevitably led to such a notion as pollution, which is the emission of various contaminants into the natural ecosystem. One can differentiate water, air, and soil pollution as well as littering, noise, light, and radioactive contamination. If there is no pollution control, companies can use dangerous technologies and harmful substances, which can affect one’s health. However, the government is constantly taking measures to prevent it. The federal Environmental Protection Agency (EPA) was created in 1970, resulting in the Clean Air Act Amendments. As each industrial company has a number of pollution sources, the EPA tries to set numerous standards to different pollutants. Building new devices to decrease the pollution rate can be expensive for factories and plants. In 2003, the EPA revised its regulations and came up with the idea of modernizing facilities without comprising the main design change, so they would not cost more than 20 percent of the new equipment (Crandall, 2008). It is very hard to estimate the cost of pollution controls. The expenditures can count billions of dollars for private companies and factories. Private entities are difficult to regulate due to different reasons. They are numerous, paid little attention to from the government, and usually do not have funds to invest into pollution control. According to the Clean Air Act of 1970, corporations were obliged to use new equipment, regularly report on the results, and invest into related researches. This could result in the reduction of the amount of produced goods, high prices, and a slowdown in the economic progress. Benefits of pollution control are evaluated according to the reduction of harm caused by contamination to human health, water, air, soil, and ecosystem in general. Although, the costs of pollution control are rather high, benefits are seen through the decreased rate of dangerous emissions into the air, water, or soil.

The Clean Air Act of the 1990 differs from the one of the 1970 as it includes market-based incentives (Crandall, 2008). Pollution fees are the type of market incentives, which include taxes for the emission of more contaminants into air, water, or soil than they are supposed to. These fees are mostly used in Europe. Marketable or tradable permits allow to buy or sell the right to pollute at a certain level. If a company emits more pollution than their permit allows, it has to buy another permit from different companies. They can sell permits if they contaminate less than it is allowed. Thus, some companies can pollute more as long as others pollute less. This system works. According to Crandell (2008), sulfur dioxide emissions have decreased to half of their 1980 level as well as the use of lead in gasoline and chlorofluorocarbons (CFCs).

Although this program of marketable permits helps to control pollution with minimal expenses, it has some disadvantages. While some companies pollute more than others, some parts of the world can become extremely contaminated whereas some will stay fairly clean. In some countries, there is a small amount of companies and bigger firms may influence tradable permit prices.