Policy Options

There are several environmental problems that are associated with Buzzard’s Bay. Buzzard’s Bay is a public good, hence it suffers from overuse which comes from a lack of defined property rights. The Bay is open to all boaters who want to use it and there is no cost associated with the use. A possible policy to counteract this market failure would be the implementation of a boating fuel tax. The fuel tax would serve as a way of forcing boaters to internalize the negative externalities that are associated with their use of the Bay. The tax would reduce the number of boaters who use Buzzard’s Bay, which would reduce the amount of pollution that occurs as a result of boat use. The revenue that would be gained from the tax could be used to help rehabilitate areas of the Bay which are in current need. A tax would also be easy to implement- marinas in the Bay would just have to add it to the price of the fuel that they sell. However, a tax would probably be more difficult to implement politically. If the boating public felt the tax was too high and that they were shouldering too much of the environmental burden, then they would be able to influence politicians to modify it. In order to determine the efficient level of the tax it would be necessary to determine where the marginal costs of the tax is equal to the marginal benefits of decreased boating. The marginal costs of the tax to society could simply be measured by looking at the amount of the tax. The benefits would be much harder to measure directly, however they could be indirectly measured by the decrease in fuel consumption which occurs as a result of the tax (which would translate to decreased boating activity).

Critical nitrogen loading is another problem that is affecting Buzzard’s Bay. A solution to this problem would be the construction of a waste-water treatment plant for the Buzzard’s Bay watershed area, which would provide more effective treatment of the waste that is currently entering the Bay. The construction of this plant could be paid for by creating a sewer tax that the residents of this area would have to pay. Creating a tax would also probably be the easiest way to reduce the amount of nitrogen that enters the Bay. It would have a low implementation cost, and after the plant was built the costs associated with it would be minimal. A progressive tax based upon the amount of water usage could be used so that high volume users would pay for a larger portion of the construction costs. This would make the burden of paying for the plant more equitable for individual households. This form of control would also be easier to implement than a permit system and would have much lower monitoring costs.

Another problem that faces Buzzard’s Bay is the PCB contamination that exists in the sediments of New Bedford Harbor. The most probable solution to this problem is a federally funded clean-up effort, through the EPA’s Superfund. The amount of money that will need to be spent on this project makes it unlikely that a local community would be able to gather the resources necessary to do a sufficient clean-up. This is also related to the lack of defined property rights in the Bay; local governments will not be able to force those responsible for the pollution to participate in the clean-up. The federal government’s subsidization of the clean-up is the scenario that will most likely result in an effective clean-up of the Bay. A policy such as this will eliminate the problems that local governments would have in trying to pay for the clean-up. The only problem that they will face is trying to gain funding approval from the EPA for their proposed project. For both water treatment and PCB contamination a cost-effectiveness analysis would be the most sensible way to determine the efficient amount of pollution control. These problems both have a predetermined goal which if not achieved would almost make the projects meaningless. Benefit-cost analysis would not ensure that the necessary standards would be reached.