Question

Consider the two following recent media headlines about the environment. Explain how, exactly, each of those stories represent an instance of the concept of ‘Government failure’.

1. Federal plan [on plastics] may need recycling. Just nine percent of the three million tonnes [of plastics] produced a year is re-used, with the rest ending up in landfills or, worse, entering the environment as pollution. – National Post, Thursday, October 5, 2020, page A1.

2. The carbon tax will need to rise if Ottawa wishes to make its [Paris Accord] targets. The Director of the Parliamentary Budget Office, Yves Giroux, estimates that the carbon tax will need to rise to $117 per ton [of carbon equivalent] by 2030 if it applies to all industries. – Ici Radio Canada, Thursday, October 8, 2020.

Answer 1

a) An initiative taken by a government when fail to reach a certain end and when government intervention results in ineffciency, it is called government faailure. In the instance given here, says that the implementation of the federal plan on recycling of plasic yeilded only 9% of 3 million tonnes produced in a year are re-used. This means only 270,000 tones of plastic were reused and the rest 91% of the plastic remained unattended. Most of that 91% ended up in landfills or entered the environment as pollution. This is a major instance off government failure, as resulting from this plan the anattended plactic wastes results in pollution.

b) Carbon di-oxide is a well-known pollutants. Most of the industries produce carbon- dioxide as a result of their production process. The government in order to cut down the volume of carbon- di-oxide may impose tax for producing it. However imposition of tax produces deadweight loss. Moreover imposition of such a huge tax of $117 would incure much heavy deadweight losses. This causes inefficiency, and hence accounts for market failure.