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Plastic pollution is a pressing issue within modern society, however, there has been little success with economic policies surrounding micro-plastic pollution. This report examines the economics of micro-plastic pollution from tyre wear and tear and discusses the impact of this issue through the application of economic theory and models. Additionally, in seeking to rectify this issue, two possible policy solutions are presented.
Micro-plastic pollution from wear and tear of tyres, namely through private car travel, is a widespread social, economic and health issue.
According to Boomerang Alliance, by weight, tyre dust is the second most common plastic pollutant in Australia, at 18% (West, 2017). Additionally, other studies have said that this number could be as high as 10-20 percent worldwide (Kole, 2017) (Boucher & Friot, 2017). In Australia, this equates to about 24,000 tonnes of tyre wear each year (Parliament of Australia, 2016). Ironically, this problem has actually worsened through the creation of electric cars, which will be discussed below.
For humans, the most direct health effect of this pollutant is from airborne particles which can cause respiratory disorders if people become exposed to them.
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Although a majority of this waste ends up in the water, around 10 percent is created into airborne particles, adding to the ongoing problem of air pollution and respiratory difficulties (Quinn, 2018). However, the greatest risk is to marine animals when these particles enter the waterways, which subsequently can have secondary effects on humans if they are ingested (Vethaak, 2017). When these particles reach seawater, they absorb and concentrate toxic pollutants, becoming more poisonous to animals that may mistake them for food, causing long-term health effects.
Relatively cheap types of plastic lay an expensive burden on the economy when they become pollutants, costing the world up to $2.5 tn a year in marine ecosystem value (Hodal, 2019), and $17.3 billion worth of damage to these ecosystems per year (BioBag 2019).
The economic costs of pollution are borne by all levels of government, whether through infrastructure costs and clean-up or through the substantial cost on the environment. Businesses are also faced with crippling costs; damage to fisheries and infrastructure, plus their time and resources (Parliament of Australia, 2019). Hence, the social and environment benefit of private car travel is much lower than the private benefit.
The economic theory that relates to this issue is Negative Consumption Externalities. The impact of plastic pollution from the wear and tear of tyres into micro-plastic pollution is a negative externality of private car use, meaning it isn't of direct harm to those involved. The market for private car travel in equilibrium is based on two factors, private and social benefit, and demonstrates that negative externalities can interfere with the efficiency of this market.
Demand Curve 1 represents the marginal private benefit, while Demand Curve 2 represents the marginal social benefit, i.e. private benefits plus external benefits. If the actual supply curve where to be at D_1 (private), then this markets equilibrium would occur at Q_market and P_market. Although in this situation the marginal benefit would equal the marginal costs, consumption still occurs at an inefficient level as it does not consider social factors (i.e. pollution). If this demand curve was to reach an absolute equilibrium, then the externalities would need to be considered.
If these negative externalities were accounted for, this would cause a downward shift in the demand curve from D_1 (private) to D_2 (social). This shift in the demand curve means the new equilibrium would now occur at P_efficient and Q_efficient, which would be economically efficient, as all benefits have been considered - both private and external.
Deadweight loss is a result of this shift, as denoted by the shaded area, and is associated with economic inefficiency. At the private market equilibrium, the consumption level of private car travel was higher than the socially efficient level, meaning economic efficiency would be improved if there was less private car travel.
Therefore, the micro-plastic pollution through private car travel is a significant negative consumption externality. In order to solve this pressing issue, two solutions have been created to move the market to a more socially acceptable level of consumption and increase economic efficiency.
A potential policy solution is to create a plastic tax, with the cost of pollution being a private cost borne by producers. This type of tax would improve the economic efficiency and eliminate deadweight loss (Hubbard, 2016).
The introduction of a plastic tax would cause tyre producers to internalise the negative externality, hence removing the inefficiency (Hubbard, 2016). Another advantage of this tax is that it deals with the negative externalities and produces revenue for the government, which could go towards subsidizing other pollution costs (i.e. clean-ups), without creating inefficiencies in this market system (Sandmo, 2010).
In practice, a tax on producers is more administratively practical, and it shifts the supply curve up from S_1 to S_2, by the amount of the tax, since the tyre industry bears the costs of the micro-plastic pollution. The result of this shift will cause a decrease in the consumption of private car travel but increase the price that consumers pay, meaning the price paid and quantity consumed is shifted to Q_efficient and P_efficient, reflecting the cost of microplastic pollution from tyres.
A plastic tax of tyre producers would cause car manufactures to produce less cars and decrease the consumption in private car travel. This tax, which applies 'per-head', provides very little benefit in real life. This is due to the fact that tyres and cars in general have a very inelastic demand, meaning that a tax would be unlikely to lower consumption of these products. According to Frans Timmermans, Vice President of the European commission, a plastic tax would not be sustainable nor would it completely solve the microplastic problem. Instead, consumers' perceptions of the item and how it is produced needs to change (Harvey, 2017). Therefore, if a plastic tax was implemented, producers and consumers would have no other incentives to efficiently decrease micro-plastic pollution, although, it would result in an economic efficient outcome.
Another potential solution is to repave our current motorways with porous asphalt, which would reduce pollution rather than see a reduction in wear and tear. Although many people believe the easiest solution is to shift towards electric cars, these vehicles actually create 20% more plastic emissions due to their greater weight (Kole, 2017). Therefore, it is more appropriate to deal with the larger picture of pollution than to restrict the solution to such a small minority (0.2%) (Climate Works Australia, 2018). The potential solution should concern all motor-vehicle drivers and reduce micropolitan across all tyre-users.
In regard to the economic model, this would follow a very similar path to the plastic tax model (Figure 3), thereby improving both price and quantity, to be economically efficient; from P and Q market to P and Q efficient (Figure 4). Through this policy the deadweight loss is also eliminated, due to the shift in efficient distribution of goods and services in the market.
This innovation has already been used in countries such as Denmark, where 95% of their roads are paved with very open asphalt concrete. Porous asphalt has capabilities that allow it to capture and subsequently trap 95% of microplastics in the pores of the concrete (Kole, 2017). This means that 24,000 tonnes that was previously pollution is now reduced to only 1,200 tonnes, a substantial improvement. There would be little to no barriers to implement this solution in our country, but it would require significant resources.
This is not a short-term solution as it would take between 5 -10 years to repave a new highway using the preferred material, including planning time. In saying this, average road projects are extremely expensive and can cost up to $5.1 million per lane kilometer (Australian Government, 2017), with it also requiring biannual cleaning to ensure that the concrete is working effectively. This is a very expensive solution in terms of upfront costs but would reduce long term costs of pollution (i.e. clean-ups) through a dramatic decrease in micro-plastic pollution.
In conclusion, the economics analysis demonstrates that both solutions provided could have beneficial impacts on reducing the micro-plastic pollution from tyre wear and tear.
The Economics of Micro-Plastic Pollution From Tyre Wear and Tear. (2019, Dec 12). Retrieved from https://studymoose.com/the-economics-of-micro-plastic-pollution-from-tyre-wear-and-tear-essay
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