Introduction
Impure public goods such as the marine resources remains undersupplied owing to the nature of such goods. Marine management officials are increasingly recognizing the significance of impure public goods. The challenge of marine conservation raises a serious need of reframing the standard problems within the context of the private benefits (that arises from commercial activities) to include non-market public goods. A wealth of evidence on terrestrial and marine resources establish that policy instruments serve to contribute to the marine conservation. Fisheries represent a perfect example of the traditional marine conservation framework. All the standard policies on the governance of fisheries aimed at addressing a common problem; overfishing, which results from two main features the first being the rival in fish consumption. Undoubtedly, the amount/value of fish caught by one party cannot be shared by another party. Second, it is not practically easy to exclude any party from accessing the resources. The fact raises serious concern about the need to conserve the marine resources owing to their nature of an impure public good. It is worth noting that consumers, rather than deriving utility from the good itself, derive utility from the good’s characteristics. The essay, therefore, aims at providing an analysis of the incentives for marine biodiversity conservation within the context of an impure public good.
What key difference exist in the consumption of say a hamburger and a public road? The answer to the question provides a succinct answer to the nature of impure public goods. Two salient features that characterize public goods are non-excludability and non-rival in consumption otherwise known as non-sub tractability. The two features serve to distinguish public goods from the conventional economic private goods. Non-excludability implies that once the government provides a public good, it proves practically difficult to exclude any party from enjoying the benefit resulting from the goods. The fact owes to the joint consumption of such goods. For instance, once the government provides streets light, it is impossible to deter someone from the streets from using the lights.
Non-rival in consumption, which characterizes only some of the public goods, means that once the government/supplier provides a public good, it is impossible to exhaust/deplete it. Arriagada and Perrings (798) extenuates this to mean that one party enjoyment of the good does not diminish the benefit/amount available to other parties. However, there exist some hybrid goods that possess the features of public and private goods but whose consumption exhibit non-rivalrous aspect. Such goods are impure public goods otherwise known as quasi-public goods. The goods do not satisfy the non-rival and non-excludability characteristic of public goods; they are partially rival or partially excludable (Arriagada and Perrings, 799). For example for the marine resources, although it proves hard to exclude some members from using it, the government can enact measures such as licenses to deter some parties from using the resources. Besides, if one party pollutes the environment, it reduces the other parties’ satisfaction from using the same resources.
Owing to the nature of the public goods, it becomes impossible to charge a price to the different individual consuming such goods. Consequently, it proves difficult for the private markets to guarantee an efficient supply/production of such goods (Squires et al., 4). As such, oversupply and insufficiency of such goods results. The fact owes to the existence of externalities and “free-riding “incentives. That is, some parties enjoy the benefits of the good without contributing to the total marginal cost of the provision of the goods; they free ride on other parties efforts. At this point, it is prudent to explore the concept of the efficiency of the private exchange for a better understanding of the externalities associated with impure public goods. Private exchange occurs when a buyer and a seller exchange goods and services for a price. In such a market, for all the units produced, the value to consumers supersedes the cost of the production. However, the production of an impure public good involves externalities.
The externalities occur when one party’s activity in the production or consumption of the good affect (either positively or adversely) the well-being of some uninvolved parties with the market price failing to reflect the relevant costs. There exist two types of externalities which are positive externalities and negative externalities. While the former creates a benefit/gain to the uninvolved parties, the latter leaves the uninvolved parties worse of (Example, pollution). It is worth noting that the positive externalities represent infeasible benefits/gains that the supplier cannot charge. (Arriagada and Perrings, 801) notes that negative externalities serve to undermine social benefit. Also worth noting is the fact that positive externalities result in the underproduction while negative externalities result in overproduction. In such a situation, the market allocates the resources insufficiently, hence the need for government intervention. Most economists base their argument for government intervention on the idea that market cannot guarantee an efficient supply of public goods because of the presence of externalities.
Three supply technologies handle the supply of impure public goods. That is additive supply technologies, best shot technologies, and weakest link supply technologies. The understanding of the supply technologies plays a crucial role in the classification of impure public goods. More importantly, such an understanding plays an indispensable role in the development of incentives appropriate in achieving allocation efficiency (Arriagada and Perrings, 799. First, for the ‘best shot’ supply technologies, the most effective/efficient supplier determines the benefits to other parties. For instance, U.S.A funds the CDCP (Center for Diseases Control and Prevention); however, benefits accrue to all nations. Contrary to the ‘best shot’, the benefit resulting from the least effective supplier limits the benefits to all other parties/countries in the case of “weakest link” for instance HIV control. Considering the ‘additive’ technologies, as the name suggests, the sum of the amounts of the public good socially available to different parties represent the socially available quantity of good say X.
Given the failure of the private market to sufficiently meet the supply of impure public goods; there arises a serious challenge on how to achieve the optimum level of the marine resources. Traditionally most governments, in an attempt to achieve sufficient allocation, adopted command-and-control policies. The policies made it mandatory for the players to observe certain specifications; otherwise, they would face sanctions. Other governments employed moral suasions in convincing players to act in socially desirable ways. However, the methods, though significant in addressing the challenge, proved insufficient. It is at this point that economic incentives come in to push for socially desirable goals aimed at higher economic efficiency.
According to Bulte et al. (4 and 5), such incentives include incentive-based policies/mechanisms such as user fees, taxes, liability rules, and subsidies. To the producer/supplier; while taxes and user fees serve as negative incentives, subsidies, sanctions, fines, penalties, and tradable rights (Bulte et al., 4) serves as positive incentives. Other economic incentives include, but not limited to, tradable permits and deposit-refund systems. The economic incentives mainly serve as a guide to resource users to address the benefits and costs not captured by market prices. Consequently, resource allocation efficiency results.
In conclusion, a wealth of evidence establishes that there has been an undersupply of impure public goods such as the marine resources and a lack of concern for the conservation of marine biodiversity. As such, conservation and efficient supply of impure public goods such as the marine resources call for a collective action aimed at overcoming the private firm’s inability to supply such goods and to correct the resulting externalities.
Works Cited
Arriagada Rodrigo and Perrings Charles. “Paying for International Environmental Public
Goods”. A Journal of the Human Environment 40, (2011): 798 – 806
Bulte Erwin, Kooten Cornelis, and Swanson Timothy. Economic Incentives and Wildlife
Conservation. Research Paper, 2003.
Squires Dale, Carden Kristin, Khan Ahmed, Vestergaard Neil, and Smith Martin.
Rethinking Marine Conservation: From Solving the Commons Problem to Conservation and Management of Public Goods. Research Paper, Duke University, 2012.
