Entitlement to pollute

The discussion about ‘entitlements’ – in the sense of social welfare, employment benefits, and industry support – is raging high and wide on the Australian political scene. At the same time we get news from the USA that polluters are gearing towards a legal challenge of US EPAs involvement in cleaning up some of their most important estuaries. Polluters figure that success of clean up actions in the Chesapeake Bay will necessarily imply a need for such actions elsewhere – most notably on the Mississippi Delta – , which will prove enormously costly for the fertiliser, pesticide and other agricultural and non-agricultural related industries.
What is the relevance to the ‘entitlement’ debate in Australia, and to the Australian environmental protection activities? Firstly, it is well known in the economics literature that polluters will behave preemptively in order to protect their ‘entitlement’ to pollute. They would increase pollutant emissions or the rate of natural resource use when they face a prospect of future regulation. I wrote about this some years ago in the Australian Economic Papers (Ancev, 2006). When regulation comes in and forces them to cut back, polluters would still hold to their initial ‘entitlement’ despite the mandated reduction. The US example quoted above is just a case of a flagrant, ‘in your face’ preemptive behaviour of the same sort. Polluters feel that they have an ‘entitlement’ to pollute, and they are going to protect that ‘entitlement’ through legal action.
Secondly, the significance to Australia is in light of the current debate about allowing polluting activities to take place on the Great Barrier Reef. It makes one wonder whether allowing pollution of the reef now might entrust the sense of ‘entitlement’ to pollute within industry. And when we try to clean it up sometime in the future, we might face a legal action motivated by the need to protect those ‘entitlements’! We better get a good lawyer!

Author: Tiho Ancev

Tiho Ancev is a Professor of Agricultural and Resource Economics in the School of Economics, University of Sydney. His main research areas are agricultural, environmental, natural resource and energy economics. Tiho’s main contributions have been in water economics and policy, economics of energy, economics of air pollution and climate change policies, and economics of precision agriculture and agricultural input use. He has published widely on these topics in top international peer reviewed journals. Tiho has led and contributed to national and international research projects in these research areas. He is currently the Managing Editor-in-Chief of the Australian Journal of Agricultural and Resource Economics.