Sunday, May 17, 2009

Unintended consequences

A theme that we'll see several times throught this course is that of unintended consequences.

When we undertake a policy action for the purpose of something good, we often create ancillary effects that are bad. Luckily, the tools of economics often can help us predict these outcomes.


Subsidizing ethanol from corn raises food corn prices and actually creates more pollution. oops.

CAFE standards mandating high MPG for automobiles decreases the marginal cost of driving so people drive more, creating more pollution. oops.

and from today's USA Today: Protecting one species harms another species. oops.

Other examples?


Alyssa said...

On April 30th the NC Senate passaged Senate Bill 832, which permits the construction of groins along North Carolina shorelines and jetties at our inlets.

On May 5th the NC Senate passed SB 998, placing a moratorium on the attempt by the Coastal Resources Commission (CRC) to enforce North Carolina law by ordering removal of a handful of the sandbag seawalls lining our coast.

These two decisions go against the CRC's ban on coastal hard structures, enacted in 1985.

Allowing hard structures along our coastlines will retain economic interests in beach-front property ownership and tourism economy, but at a huge price to our coastlines. Hard structures, though protecting property and buildings, have proven to be quite destructive, leading to further beach erosion and in some cases the beaches have disappear altogether. Just look at New Jersey's coastline.

Alyssa said...

Sorry, I posted that before reading today's articles. My apologies for double dipping.

Another example could be the push for renewable energy & futher development of nuclear technologies. I believe push for nuclear has abatted somewhat, but if nuclear development was to continue there could definitely be some unintended consequences in the storage of radio-active wastes and future leakages issues. Nuclear energy is not as "clean" as many would like us to believe.

Kendyll Goeman said...

Converting corn, sugarcane, and rapeseed seems like an excellent alternative to harmful greenhouse gases. However, Biofuels have an unexpected opposition. Humanitarian aid organizations in Africa place partial blame on Biofuels for the increase in maize prices. Humanitarian groups have struggled to feed Africans in their time of war and hardship. One of the examples given by Dr. Schuhmann was the pollution caused by ethanol. Ethanol also leads to hunger and price increase. Converting maize to ethanol may reduce fossil fuel use, but “many African food aid recipients would rather eat that maize" (Spring).