ECS2606
Environmental Economics
NAME: Mayibongwe P.S Msibi
STUDENT NUMBER:59005971
ASSIGNMENT #2 SEMESTER 2
DECLARATION OF ORIGINALITY
Student Name: Mayibongwe P.S Msibi
Student Number: 59005971
1. I understand what plagiarism is and am aware of the University’s policy in this regard.
2. I declare that this assignement is my own original work. Where other people’s work has been used
(either from a printed source, Internet or any other source), this has been properly acknowledged and
referenced.
3. I have not used work previously produced by another student or any other person to hand in as my own.
4. I have not allowed, and will not allow, anyone to copy my work with the intention of passing it off as his
or her own work.
Signature:
Date: 18 September 18
, Question 1
Discuss the difference between subsidies and transfer payments
In accordance with (Barry C. Field, Martha K. Field 2017), subsidies as well as transfer payments are
both incentive based methods used to encourage pollution reduction by firms which are implicit to
have environmental uses through their production of services or goods.
These incentive-based methods are designed to mitigate the downsides of the standards approach
to pollution control. However, these differ in the way they are planned, implemented and executed
by the government body or agency. Subsidies are policy based and monitored by a government
established body or authority whereby the firms are charged a price for emissions released into the
environment for each unit of emission.
The firms are given the opportunity to devise strategies that will abate their emissions at their own
discretion and for every unit of that the source or firm cuts back they are given a subsidy towards
the effort.
By allowing polluters to determine how best to diminish emissions helps to give the firms a strong
incentive to use privately acquired information they have or can acquire about pollution control
costs of alternative energies instead of having the authorities determine how it can be done (Barry
C. Field, Martha K. Field 2017).
As mentioned above, the difference in the planning and execution of these incentive-based
strategies are significant.
Transfer payments are taxes, payments made by the responsible contaminators to the public sector
and eventually to those in society who are benefited by the subsequent public expenditures. The
polluter itself may be a recipient of some of these benefits.
Transfer payments are therefore not a social cost of the policy. Thus, the social costs of compliance
are the polluter’s total abatement costs. Social costs of compliance include only the real resources
used to meet the environmental target; they do not include the tax bill. (Barry C. Field & Nancy D.
Olewiler 2011)
Environmental Economics
NAME: Mayibongwe P.S Msibi
STUDENT NUMBER:59005971
ASSIGNMENT #2 SEMESTER 2
DECLARATION OF ORIGINALITY
Student Name: Mayibongwe P.S Msibi
Student Number: 59005971
1. I understand what plagiarism is and am aware of the University’s policy in this regard.
2. I declare that this assignement is my own original work. Where other people’s work has been used
(either from a printed source, Internet or any other source), this has been properly acknowledged and
referenced.
3. I have not used work previously produced by another student or any other person to hand in as my own.
4. I have not allowed, and will not allow, anyone to copy my work with the intention of passing it off as his
or her own work.
Signature:
Date: 18 September 18
, Question 1
Discuss the difference between subsidies and transfer payments
In accordance with (Barry C. Field, Martha K. Field 2017), subsidies as well as transfer payments are
both incentive based methods used to encourage pollution reduction by firms which are implicit to
have environmental uses through their production of services or goods.
These incentive-based methods are designed to mitigate the downsides of the standards approach
to pollution control. However, these differ in the way they are planned, implemented and executed
by the government body or agency. Subsidies are policy based and monitored by a government
established body or authority whereby the firms are charged a price for emissions released into the
environment for each unit of emission.
The firms are given the opportunity to devise strategies that will abate their emissions at their own
discretion and for every unit of that the source or firm cuts back they are given a subsidy towards
the effort.
By allowing polluters to determine how best to diminish emissions helps to give the firms a strong
incentive to use privately acquired information they have or can acquire about pollution control
costs of alternative energies instead of having the authorities determine how it can be done (Barry
C. Field, Martha K. Field 2017).
As mentioned above, the difference in the planning and execution of these incentive-based
strategies are significant.
Transfer payments are taxes, payments made by the responsible contaminators to the public sector
and eventually to those in society who are benefited by the subsequent public expenditures. The
polluter itself may be a recipient of some of these benefits.
Transfer payments are therefore not a social cost of the policy. Thus, the social costs of compliance
are the polluter’s total abatement costs. Social costs of compliance include only the real resources
used to meet the environmental target; they do not include the tax bill. (Barry C. Field & Nancy D.
Olewiler 2011)
