Water Quality Improvement Act Of 1970

  

Water quality sucked. At least in the post-WW2 era, when America thought its resources were endless, and that it could just crap all over the place with no recourse.

Mercifully, somebody finally took notice and started regulating the pigs.

One of the many regs that hit was the Water Quality Improvement Act of 1970, which gave the U.S. federal government more room to lay down the law (and created more laws, i.e. provisions) in terms of water pollution. The main issue was oil contaminating water, which was creating negative externalities from firms to humans, marine life, and other wildlife. See the more modern BP Oil Spill for details.

Fun fact: Politicos knew we had slob issues ages ago; they just didn't do much about it. Anemic laws started to come into existence as early as the 19th century, with an 1886 edict that created the River and Harbor Act. They were before their time.

Related or Semi-related Video

Econ: What are Property Rights and the R...6 Views

00:00

And finance Allah shmoop What our property rights and the

00:05

rule of incentives to finding property rights can sometimes help

00:11

groups of people solve problems Property rights are the rights

00:14

of legal ownership of a certain resource or property like

00:18

when you own a tree one that's throwing shade onto

00:21

another property Well that's legal shade throwing from one neighbour

00:25

to another The shade is an example of what we

00:28

call an externality to side effect from one party's activity

00:32

that affects another If the shade is considered a bonus

00:35

well nobody likes skin cancer you know Then it's a

00:38

freebie something they didn't pay for but are glad to

00:41

have Anyway I eat It's a positive externality If the

00:45

shade is considered a problem by the neighbour like go

00:48

well if they want to get their tan on well

00:51

then it would be considered a negative externality Well we

00:54

usually focus on negative externalities since people don't like them

00:58

A common example of a negative extra analogy in economics

01:01

runs when factories pollute nearby residential areas whether by making

01:06

the air quality horrible or leaking chemicals into ground water

01:10

which results in early deaths and dork while jaw dropping

01:13

medical bills and all kinds of other sadness Well positive

01:16

externalities air important too since they can result in moochers

01:19

mooching hard core If you've ever put more than your

01:22

fair share of work into a quote team unquote project

01:25

you know the drill You work hard only to see

01:28

other people than taking credit for work they didn't do

01:31

We call this the free rider problem where one group

01:35

gets benefits without paying any expenses or costs for those

01:39

benefits which fall on someone else You know we've all

01:42

been there on one side or another negative and positive

01:44

externalities both cause what we call dead weight loss which

01:48

measures how inefficient things are for society We prefer no

01:52

dead weight loss which would mean that everyone's paying for

01:55

what they're getting People who have to deal with negative

01:58

externalities would get paid for those externalities and people with

02:02

positive externalities would pay for the freebies they're getting When

02:05

it's clear what belongs to whom It's easier to work

02:08

out externality problems like the problem of the Chocolate River

02:12

use in Willy Wonka's Chocolate Factory Let's break it down

02:15

One group of people Loompas Chako Loompas make chocolate which

02:19

requires the Chocolate River Another group of Oompa Loompas Gobstopper

02:23

Loompas used the chocolate river for Transportacion Will the Chako

02:27

Lupas don't like that The Gobstopper Loompas are using the

02:31

river since they're polluting it that pollution is a negative

02:33

externality for the Chako Loompas Well the Chaka Loompas feel

02:37

like they were minding their own business Just making chocolate

02:40

you know that you eat And then the Gobstopper Loompas

02:43

just started polluting the river Well they have to take

02:46

extra time now in money to clean the pollution out

02:49

of the Chocolate River which they don't think is fair

02:52

Another reason that Chaka Loompas are mad is that the

02:54

Gobstopper Loompas are just using the river as transportation for

02:58

free Where the Chaka Loompas CIA Free Rider Problem The

03:01

Gobstopper Loompas CIA positive externality As long as nobody says

03:06

anything Polluters air incentivized to keep pollutant without paying for

03:09

it and moochers r incentivized to keep on mooching At

03:13

the Opal Opal lunch all things got tense before violence

03:16

broke out One Loompa Loompa who works with the squirrels

03:19

said You guys should just property rights so Mr Wonka

03:23

doesn't have to get involved again And that's just what

03:27

they did the belugas All agreed that the Chako Loompas

03:30

should have the property rights to the river and that

03:32

the Gobstopper Loompas should hey to use and well to

03:36

pollute the river The fees paid went towards paying for

03:40

the pollution filtering of the chocolate River I eat that

03:42

negative externalities The fees accounted for them using the river

03:46

as a positive externality too Since the Gobstopper Loompas had

03:50

to actually pay to use the river Now they were

03:52

more conservative with how they transported their gobstoppers resulting in

03:56

less pollution in the river for the Chaka Loompas toe

03:59

filter out as well as well the money to pay

04:02

for it resulting in an efficient market outcome This is

04:05

an example of how private property rights can solve externality

04:08

problems without public solutions and all kinds of congressional mandates

04:12

needed for public solutions are government interventions like the popular

04:16

cap and trade thing For example the idea that you

04:19

can internalize an externality with property rights and no need

04:22

for government intervention is thanks to Nobel Prize winner and

04:26

very smart human being Ronald Coast the coast there um

04:29

under the coast here um it doesn't matter to whom

04:32

property rights are assigned as long as they're assigned to

04:35

someone If they are then poof gnome or externalities Well

04:39

unfortunately the Coast serum of setting property rights to get

04:42

rid of things like negative externalities doesn't always work For

04:45

instance it's easy to assign property rights to a river

04:48

But what about to the air Well pollution start small

04:51

than spreads all the way across the globe No one

04:54

owns all the air so yeah it's a problem This

04:58

is what we call the assignment problem when it's hard

05:01

to ask Sign property rights to a thing There's also

05:04

something called the holdout problem Well what if some of

05:07

the Temple Loompas were stubborn and couldn't reach an agreement

05:10

on what to do when there's shared ownership There's the

05:13

potential for someone in the group to hold out because

05:16

they disagree with everyone else Congress Sorry just coughing Excuse

05:21

me There's something else that happens sometimes when you try

05:23

to use property rights to fix things transaction costs and

05:27

negotiation issues right Well the Coast theory assumes that negotiating

05:31

doesn't cost anything Big corporations might have the time and

05:34

money to go through court to settle disputes about the

05:37

pollution they're doing and not paying for But families don't

05:41

Which is why class action lawsuits are ah thing Transaction

05:44

costs are rial and can be a serious barrier when

05:47

there are problems You know like the assignment problem the

05:50

holdout problem and too high negotiation costs Well we turn

05:54

to public solutions than over private ones to solve those

05:58

externality issues If only things were as simple in the

06:00

real world as they are in Willy Wonka's chocolate factory

06:03

life would be better provided you keep away from the 00:06:06.407 --> [endTime] squirrels Of course Yeah they'Ll get you

Up Next

Finance: What is the Free Rider Problem?
10 Views

What is the Free Rider Problem? The free rider problem occurs when people take more than their contributed fair share of a common resource. In the...

Finance: What is the Process of a Bank Loaning Money?
107 Views

What is the process of a loan? Collateral. Do you have it? The bank lending you money wants to be sure that A) they get paid back, and B) they char...

Find other enlightening terms in Shmoop Finance Genius Bar(f)