Renewable energy has become a topic of great debate in recent years. On the surface, it appears to be the answer to the arising problem of resource depletion, pollution, and climate change. Beneath the surface, both literally and figuratively, externalities lurk. In the Pacific Northwest, the Chinook Salmon holds a high spot on the ecological totem pole. The salmon proves to be a keystone species, supporting the bears, birds, and other wildlife in the region, as well as a valuable food source for tribes in the area. For example, the Spokane Tribe of Washington, which has inhabited Washington for many centuries, relies heavily on salmon as a primary food source. Without it, there are threats of starvation. While this may not effect you or I directly, millions of lives are changed drastically, even, and especially, those who don’t benefit from the hydroelectric power itself.
A Pigouvian tax is an excellent solution to some problems, but not to others. You can’t pay a bird to compensate for his endangerment, or toss the environment some cash for depleting it’s ecological keystones. These are considerations that must be weighed when constructing and employing renewable energy generators.
A Pigou tax would be a great solution to a problem such as solar panels. Many people complain about them being an “eyesore” to their beautiful landscape. Chances are, if these people are compensated for their aesthetic discomfort, they will be pleased, and so will the environment. With energy production such as photovoltaics, the cost to the environment is minimal compared to that of hydroelectric power, or even wind power, which both cause a significant threat to ecological stability.
Some goods, such as public goods, are not as easily weighed out as a product such as renewable energy. For example, bike paths are numerous in the Vail Valley. Each and every one of us pay for these bike paths through our taxes. Whether or not the bike paths are a public good could be debated. In order to be considered a public good, bike paths would have to be nonrival, meaning that one person using it wouldn’t affect another person using it. It would also have to be nonexcludable, meaning that anyone, even someone who didn’t contribute to its existence, could use it. If everyone who helped pay for it used the Vail Pass Summit bike path, there would surely be congestion, and the bike path would no longer be a public good, because everyone would be effected. However, it would still be nonexcludable. Therefore, it would be an open-access good. This is one example of a good that could be provided privately. National Parks require a payment or a parks pass in order to reap the benefits of the beauty they behold. It is up to the consumer to decide if it is worth it to pay for the view. Bike paths could potentially work in the same manner.
Tax dollars pay for both bike paths and national parks. Why couldn’t bikers be charged the same way national parks visitors are? It is not up to an individual where their tax dollars go to, but it seems fair that if it is something that is utilized by a person, they should have to help foot the bill.
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