Knowledge that Transforms

Jerome Stein's article in a recent issue of this Review is subject to misinterpretation which could lead to seriously misleading results. He makes several arguments against the Council's conclusion that Many, though not all, pollution problems are local in character, and therefore determination of the appropriate level of environmental quality in these cases is likely to be more accurate if it is done locally rather than by the Federal Government . (quoted by Stein, p. 532). One of his arguments is that local pricing (effluent charges) would result in inefficiency because the marginal product of pollution would then differ from region to region. Possible confusion results from the fact that two separate measures of pollution are not consistently distinguished. The first is a physical measure like pounds of biochemical oxygen demand or tons of sulfur oxide discharge. The other is the dollar value of damage. In Stein's Figure 1, the horizontal axis represents pollution damage and what is demonstrated is that a dollar's worth of damage must be charged for at the rate of a dollar if efficiency is to prevail. This is emphatically not the same as saying that every pound of discharge should be charged for at the same rate, no matter where in the nation it occurs. But the latter is a conclusion that could easily be inferred from Stein's discussion. instance, Stein says, For example, if the firms were ordered to reduce the rate of pollution by Ax, . (p. 533) where the correct reference is to pollution damage. A similar sliding over from pollution emission to pollution damage occurs again in the first full paragraph of page 535. The translation of pounds of discharge into dollars of damage depends, among other things, on meteorological and hydrological conditions and on the presence and preferences of receptors. Charging a dollar for a dollar's worth of damage requires quite different rates of charge per pound of discharge depending upon the locality. A uniform national charge might be defended on other grounds (see Kneese) but not as a requirement for efficiency strictly speaking. Charges which reflect local conditions could in principle be set locally or nationally. If the Council's argument is right, and I am not trying to assess it here, that the optimum level of environmental quality is more likely to be accurately determined locally, then, problems of implementation aside, more efficient charges could be set locally.