Examining Government Regulations
The primary purpose of government environmental programs is to direct resource use to achieve desired levels of "environmental quality. This is due largely to limited capital and time, along with difficulty in interpreting regulations. Programs should seek to promote efficiency in resource utilization regardless of the implications for income distribution. Other agencies should deal with the problem of adverse impacts on people with low income. The elimination of poverty should be a higher priority than environmental protection.
A problem with the program position is that the past performance of direct compensation suggests that the undesirable impact of environmental programs for a low-income group is not likely to be offset by government programs. The problem with the limitation is that postponement of corrective measures of environmental quality may involve vital matters of public health. Since neither of these extreme positions is acceptable, a more balanced approach to this problem is essential. There are special measures that have to be done in order to offset the negative impact that many of low-income families are facing in today’s society. People with higher incomes tend to demand a relatively large amount of environmental services, while people with lower incomes are inclined to desire a relatively large amount of non-environmental services - especially if job creation is involved. When environmental quality is treated as a public good, there is a tendency for the standard to be set higher than the standard preferred by people with low incomes and lower than the standard preferred by people with high incomes. The illustration provided here suggests that compensation may be needed to offset the negative impact of the proposed regulation on low-income citizens. The amount of compensation required depends on the magnitude of the impact.