Water pollution in the Des Moines and Raccoon Rivers
Summary
Upon successful completion of this exercise, students will be able to argue in favor of and against proposed policies to address water pollution problems.
CollapseContext for Use
Principles of Microeconomics
Early in Environmental Economics course
Early in Environmental Economics course
Description and Teaching Materials
Consider the issue of nitrate pollution by farms in Iowa fouling the Raccoon and Des Moines Rivers, the sources of drinking water for the City of Des Moines.
What policy measure should be enacted to remedy the problem?
A. Ban nitrate emissions from farms.
B. Tax each ton of nitrate emissions.
C. Assign property rights over the river water clearly to the City of Des Moines.
D. Assign property rights over the river water clearly to farmers.
What policy measure should be enacted to remedy the problem?
A. Ban nitrate emissions from farms.
B. Tax each ton of nitrate emissions.
C. Assign property rights over the river water clearly to the City of Des Moines.
D. Assign property rights over the river water clearly to farmers.
Teaching Notes and Tips
This AE should come toward the end of a unit on environmental economics in a micro principles course. Alternatively, the exercise might come at the beginning of a course on environmental economics course.
Before the exercise, I have students watch at home the following news clip on this issue: http://www.pbs.org/newshour/bb/will-pay-water-pollution-cleanup-divides-urban-rural-iowa/
I also have them answer some online questions about the news report.
1. What activities cause the externality at the center of this case?
2. Which parties outside of the market in which the externality arises bear the costs or enjoy the benefits associated with the activities?
There are numerous newspaper articles that could also be assigned, including these stories from the Storm Lake Times, which won a Pulitzer Prize for its coverage of the story: http://www.stormlake.com/tags/des-moines-water-works.
In the debriefing, I ask a reporter from each "camp" to explain why they made their recommendation. I then ask another reporter to support their answers with the appropriate model of the negative externality in an S-D framework, usually at the document camera at the front of the classroom and projecting around the room. I will ask yet another reporter to articulate why the policy recommended by the team is better than another. I will ask one of the reporters advocating assigning property rights to one party or another whether negotiation costs are small enough to allow a private efficient solution to the problem with clearly assigned property rights.
Before the exercise, I have students watch at home the following news clip on this issue: http://www.pbs.org/newshour/bb/will-pay-water-pollution-cleanup-divides-urban-rural-iowa/
I also have them answer some online questions about the news report.
1. What activities cause the externality at the center of this case?
2. Which parties outside of the market in which the externality arises bear the costs or enjoy the benefits associated with the activities?
There are numerous newspaper articles that could also be assigned, including these stories from the Storm Lake Times, which won a Pulitzer Prize for its coverage of the story: http://www.stormlake.com/tags/des-moines-water-works.
In the debriefing, I ask a reporter from each "camp" to explain why they made their recommendation. I then ask another reporter to support their answers with the appropriate model of the negative externality in an S-D framework, usually at the document camera at the front of the classroom and projecting around the room. I will ask yet another reporter to articulate why the policy recommended by the team is better than another. I will ask one of the reporters advocating assigning property rights to one party or another whether negotiation costs are small enough to allow a private efficient solution to the problem with clearly assigned property rights.
Assessment
This question or one like it will appear on the end-of-module quiz, though I usually give a bit more guidance to individuals taking quizzes by instructing them to model the situation by means of the S-D framework that includes marginal social costs and benefits, labeling market output and price, efficient level of output, and deadweight loss.
References and Resources
At home, before the exercise, I have students watch the following news clip on this issue: http://www.pbs.org/newshour/bb/will-pay-water-pollution-cleanup-divides-urban-rural-iowa/
I also have them answer some online questions about the news report.
1. What activities cause the externality at the center of this case?
2. Which parties outside of the market in which the externality arises bear the costs or enjoy the benefits associated with the activities?
There are numerous newspaper articles that could also be assigned, including these stories from the Storm Lake Times, which won a Pulitzer Prize for its coverage of the story: http://www.stormlake.com/tags/des-moines-water-works.
I also have them answer some online questions about the news report.
1. What activities cause the externality at the center of this case?
2. Which parties outside of the market in which the externality arises bear the costs or enjoy the benefits associated with the activities?
There are numerous newspaper articles that could also be assigned, including these stories from the Storm Lake Times, which won a Pulitzer Prize for its coverage of the story: http://www.stormlake.com/tags/des-moines-water-works.