TAILIEUCHUNG - Water Pollution Taxes: A Good Idea Doomed to Failure?

The Clean Water Act was amended in 1977 and again in 1987 to extend the deadlines for promulgation of and compliance with the standards. In addition, in 1987 the EPA was ordered to promulgate effluent guidelines for additional point source categories. The Clean Water Act was in the vanguard of a major change in the federal government’s regulation of economic activity. Up until the late 1960s, federal regulation tended to be economic, concerned with such matters as regulating the prices of goods or services produced by industries thought to be natural monopolies and whose activities crossed state. | Water Pollution Taxes A Good Idea Doomed to Failure James Boyd May 2003 Discussion Paper 03-20 RESOU RCES FOR THE FUTURE Resources for the Future 1616 P Street NW Washington . 20036 Telephone 202-328-5000 Fax 202-939-3460 Internet http 2003 Resources for the Future. All rights reserved. No portion of this paper may be reproduced without permission of the authors. Discussion papers are research materials circulated by their authors for purposes of information and discussion. They have not necessarily undergone formal peer review or editorial treatment. Water Pollution Taxes A Good Idea Doomed to Failure James Boyd Abstract Water pollution taxes or effluent fees have long been advocated by environmental economists as a regulatory approach to cost effectively achieve water quality improvements. The article reviews the arguments in favor of taxes and traces the history of the idea in . policy debates. Particular attention is given to the institutional challenges presented by a tax system and its application in watershed contexts where transport phenomena are important. The article also addresses the question of why effluent taxes are so rarely seen in practice. Key Words water quality effluent fees market-based incentives JEL Classification Numbers Q25 Q28 Contents 1. The Existing Approach to Water Quality 2. Effluent Tax Proposals A Brief 3. First-Best Taxation vs. the Charges and Standards 4. So Why Not Taxes .11 Political The Transport Problem .13 5. Doomed to Failure .18 .

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