Comment on “Decision Problems in the Control of Acid Precipitation: Nonconvexities and Irreversibilities“

Abstract

Crocker and Forster have presented evidence that the marginal damage function does not meet the assumption of a monotonically increasing function required by conventional benefit-cost analysis of air pollution control measures. If this condition exists over the relevant range of acid deposition, then only all-or-nothing solutions may be optimal. The optimal solution would either require extremely tight restrictions on emissions or that nothing be done, thereby allowing selected waterways to become chronically acidified. All intermediate or compromise solutions will be less efficient. This poses difficult problems for policy makers. However, further examination of this issue has indicated that, although this is a concern requiring careful evaluation, it may not be as likely to occur as Crocker and Forster imply. In particular, the fact that the marginal damage function appropriate for benefit-cost analysis is one that is aggregated across different waterways and different categories of damage (i.e., materials damage and terrestrial damage) will serve to reduce the likelihood of this problem occurring. Still, it is an empirical and scientific issue with important policy implications. The observations by Crocker and Forster will be relevant to policies that are applicable on a waterway by waterway basis (e.g., liming), but will likely not bemore » important for policy options dealing with reductions in precursor emissions.« less