Question

Pulp and paper production is the third largest industrial polluter to air, water, and land in the United States. The main components of pulp mill related pollution are chlorine and chlorine based materials, sulfur, hydrogen sulfide and sulfur dioxide. With regard to water pollution, chlorine and compounds of chlorine are used in the bleaching of wood pulp, especially chemical pulps produced by the kraft process or sulfite process. Plants using elemental chlorine produced significant quantities of dioxins that are persistent organic pollutants that are one of the most toxic human-released pollutants. The used process water from a pulp mill contains a lot of organic material such as lignin and other organic material from the trees, including chlorinated organic material. The presence of these organic substances results in high biological oxygen demand (BOD) and dissolved organic carbon (DOC). There are 24 paper and pulp mills located along the Lower Fox River in Wisconsin. The Fox River is the largest tributary of Lake Michigan. There are many communities along the banks of the Fox River, such as Green Bay and the Fox Cities, that are directly impacted by pollution from these pulp and paper mills. In addition, the Fox River is used almost daily for recreational activities.

(a) If the State of Wisconsin were to use a regulatory approach to control this pollution of the Fox River, what are some alternative standards it might consider? How would you rank these alternatives in terms of economic efficiency?

(b) If the State of Wisconsin were to use a Pigouvian tax approach to control this pollution of the Fox River, what are some alternative tax approaches it might consider? How would you rank these alternatives in terms of economic efficiency?

(c) What would a cap-and-trade approach look like? How would it be designed? (d) What would a Coasian solution look like? How well do you think it would work?

（Please type all the answer, do not handwriting,thanks!)

Answer 1

1. The pollutants emitting from the industries are the main cause of water pollution of the rivers. The waste materials are directly flushed into the river making the water contaminated. This contaminated water is causing a life threat to the sea life and it is actually disturbing the whole ecosystem. The measures which could be taken includes: 1. the waste material should not be directly flushed into the river. They must be recycled so that it can be cured and that cured water can be flushed into the rivers.2. Water treatment system must be planted so that fewer pollutants can be thrown in rivers. A water treatment plant is set once can be used for many years so it is also an economical way as there will be no extra cost can be incurred on the cleaning of the rivers.

2. Various other alternative measures can be taken such as levying pollution taxes and other marketable pollution permits. This will help in reducing the cost which is being imposed on the society. This will help in reducing the eminence of the pollution waste.

3. The cap and trade approach can be like putting a cap on the emission of the carbon related pollutants in the society and providing restrictions to it. The trade of the unused permits can be provided to those industries which want extra permit for emission of pollutants into the society.