There are several methods of implementing environmental policy. Governments can use taxation, tradable permits or command and control mechanisms. Another method, and the subject of a recent Washington Post article, is to change consumer tastes.
Policies designed to effect the supply side of the market typically result in lower quantities but higher prices, often leading to the formation of black markets. Higher prices tend to induce more production, not less. Supply side policies also require government resources to enforce them; for the collection of taxes or the monitoring of market participants.
A concerted effort thirty years ago brought to the world’s attention the plight of dolphins that were drowning in tuna nets. We now see tuna labels adorned with the dolphin free logo.
The same exercise is now being focused on the effects of shark fin soup. It is estimated that 73 million sharks are killed each year for the production of this soup. As the Post article reports, a group at the University of Hong Kong has initiated a program of public awareness in an attempt to reduce the demand for this Chinese delicacy.
The benefit of demand side initiatives is that a reduction in demand causes the market price to fall, reducing the incentive to catch sharks. Demand side solutions also require less government involvement and a more efficient allocation of resources.
Reducing demand reduces the economic incentive to produce. Reducing production lessens the harmful effect on the environment. Saving sharks may not be as easy as saving dolphins however. After all, who is cuter; Flipper, or Jaws?
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