Externalities

The external costs of food waste

Over 4 million apples and over a million and a half bananas are thrown away in Britain every day. This video from Newsnight is excellent on the external costs of the food we throw away - estimated by some to be worth around £8 billion a year. Should we actively encourage food scavengers? What are the strategies we should be adopting to reduce the amount of food thrown away? This is a good topic to use to teach evaluation skills for AS microeconomics.

Bio-fuel curse and cure

Today marks the introduction of the new EU Renewable Transport Fuel Obligation and there has been a huge amount of coverage about the economic and environmental impact of the switch towards biofuel production.

Demand for recycled steel

One of the beneficial side effects of the boom in commodity prices is that the economcis of recycling materials has changed. This BBC video clip looks at the booming market for recycled steel, 95% of an old war ship can be used again as it is ripped apart in a shipyard in Belgium.

On the other hand, the soaring price of copper and other metals has seen a rise in theft - this article from the Guardian last week says that up to two dozen people have died in crime related to the stealing of copper in the USA over the last two years: “With copper prices rising from 80 cents a pound five years ago to $4 a pound, the wiring and pipework to be found in transport, buildings and electrical infrastructure is suddenly attractive booty for thieves.” Schools, hospitals and churches have not been immune to the rise of copper stealing - it is all a question of incentives!

Interrelated markets and climate change

An article in The Times recently explored the economic implications of reducing demand for oil and energy in the West.

Dioxin contamination and illegal dumping of waste

The Independent’s front page this morning offers a classic tale of externalities. For years residents of Campania have been found to be less healthy than residents in the rest of Italy. Mortality rates, particularly from some forms of cancer, are higher in the areas around Naples where the rubbish crisis is at its most severe. Now allegations are surfacing that the illegal dumping of waste in an area where waste management is under the control of the Mafia has caused excessive levels of dioxins to be found in Buffalo milk, one of the prime ingredients of mozzarella cheese beloved of pizza lovers around the world.

“The topping on a billion pizzas, the magic ingredient in a million salads, is at the centre of a major food scare involving pollution, corruption, the Mafia and southern Italy’s remarkable crisis in waste management.” In a separate piece, the Indy reports that “A recent report by Italy’s small business group estimated that the Mafia is the biggest business in Italy, with organised crime netting Mob bosses the equivalent of more than £63bn a year, or 7 per cent of the country’s gross domestic product.”

BBC news: Toxin scare hits mozzarella sales
New York Times: Italy’s Mozzarella Makers Fight Dioxin Scare

What shall we do with the drunken nation? Volumen Dos

[This is the concluding half of my two-parter on combating alcohol abuse in Britain. The first half, focusing on the price policies the government can use can be read here.]

What shall we do with the drunken nation?

Over the last week I’ve noticed quite a few alcohol-related articles on tutor2u (here and here). To extend the tradition, here’s my take on the subject:

It’s becoming quite clear that alcohol abuse is fast becoming a problem for Britain. Every day we see tabloids headlines screaming “A Nation of Alcoholics”, etc. Okay, perhaps the issue isn’t that bad but we definitely have to do something to curb this binge drinking “epidemic”. Being the pragmatist that I am, I’d like to examine a spectrum of policies the government have at their disposal and their likely consequences.

Would Increased Taxes on Alcohol Curb Binge Drinking?

There are a number of negative externalities caused by excessive drinking.  There are 1.2 million violent incidents each year attributable to alcohol misuse, alcohol related illnesses cost the NHS £1.7 billion per year, and £6.4 billion is lost to business in terms of lost productivity.  An article in today’s Telegraph argues that a small increase in the tax on alcohol could save thousands of lives a year.

Click on this link to read the article:  Taxes on Alcohol Should be Increasd to Curb Excessive Drinking.

But, is increasing the price of alcohol the best way to curb binge drinking, and internalise the negative externalities?  Or should there, as is the case with cigarettes, be labels on the drinks warning of the dangers?  Should alcohol advertising be banned?  Should bars be prevented from offering ‘happy hour’ promotions?  Has extended bar opening hours had any impact?  Should more be taught in school on the dangers of excessive drinking?

The Home Secretary, Jacqui Smith is considering giving police power to confiscate alcohol from anyone under the age of 18 carrying it in public:

Should the Police Have Powers to Confiscate Alcohol?

Congested skies

The front page of my Times this morning has a particularly striking picture of an aircraft seemingly about to land on the roof of some unsuspecting person’s three-bedroom semi detached. And contained with the article is a classic example of externalities and costs and benefits. The story is about a proposed reorganisation of holding stacks for aircraft using many of Britain’s busiest airports.

Shopping Makes You Fat (and it’s bad for the planet too)

The Sustainable Development Commission (SDC) has published a report highlighting the impact of supermarkets on the environment and public health. The BBC covers the issue here.

The SDC blames the food chain for 20% of greenhouse gas emissions in the UK and for contributing to unhealthy lifestyles.

Professor Tim Lang, the report’s main author, told BBC News: “When we go shopping, I don’t think we really recognise the enormous impact our food is having on the environment. It… has an impact on our health, the energy use, how we get there - everything that matters is actually happening beyond our control, but government’s got to get grip of that.”