Private costs to firms (land, labour and capital) is the firm’s priority costs and social costs are not an issue for them unless they are promoting something environmentally friendly, healthy option etc.
Other negative social costs include domestic violence, drink driving, vandalism to name a few are seen as societies’ problems and not the companies. There are positive externalities as well as negative ones where both the production and consumption of something are positive. A good example of this would be vaccination programs; this whole process is all about preventing disease.
In a free market economy any company which has a greater than 25% of the market share (in UK) is classed as a monopoly. They keep this situation going by severely barring entry to the market through patenting, branding, licenses and ownership of key sites. There are usually no close substitutes and monopolies go for maximum (abnormal) profits even if it means keeping production low to allow demand to be greater that supply. This of course is all detrimental to society and consumer’s ultimately losing out. The government try to limit the detrimental effects by using fiscal policy to control the monopolies. There is a monopoly Commissions Board which monitor the behaviour of the monopolies and through taxes and budgeting regulate quotas, licenses etc. to try and keep them under control.
Overall the government try and tackle these market failures by implementing laws, bans, taxes and persuasion tactics to try to reduce consumption through campaigning be that lobbying, advertising (infomercials) and awareness programs.
One particular area the government has to be heavily involved in, is environmental issues.
"The new coalition government has agreed on their environmental policies for the next parliament"
(The Ecologist)
The government has agreed on policies to change many ways the current environmental policy is carried out. The area is vast and covers a huge and diverse array of challenges.
The government has agreed a strategy to link environmental policy with innovation to reduce detrimental environmental impact whilst trying to keep a balance for economic and social factors.
The coalition government has agreed to:-
Establish a smart grid.
Establish feed in tariff systems using renewable energy.
Recycle energy from waste.
Make banking investments more environmentally friendly.
Provide grants for home energy improvements (draughting, loft insulation, double glazing, water tank insulation and cavity wall foam injections).
Promote wind turbines, solar water heating and solar electricity through incentives both domestic and business.
Encourage investment in marine energy and large scale alternative power sources, nuclear, wind and solar on huge scales.
Build new power stations with regulated more efficient emissions.
Establish a high speed rail network.
Cancel third runway at Heathrow with no additional ones for Gatwick and Stanstead.
Importing or possession of illegal timber is to become a criminal offence.
Restore biodiversity and provide areas for the growth of 'the natural habitat'.
Mandate a national recharging network for electric and plug in hybrid vehicles.
Change the way tax is collected from airlines to taxing the plane as a whole and not the passengers.
All these areas have their own agenda and they have targets and budgets for how much they should be reducing by and a timescale for implementing, amending and forward planning for greater efficiency.
New techniques and technology are being developed to allow the government to maximise resources and minimise waste. This allows for products and processes that require less raw materials, water and energy and produce less waste also reusing the waste which is produced. The government have introduced a framework combining all their strategies to extract the most productive use out of finite and renewable energy natural resources whilst trying to educate the population to reduce waste and change consumption habits.
The environment is an issue that the majority of people discuss in some way or other and most people would like to be able to 'do their bit'. But overall, the success or failure of the environmental policy is largely down to finding a balance. The policy tools used which include environmental taxes, trading systems and voluntary agreements and participation present the government with barriers as not everyone can participate or want to participate. Experts have concerns over how little research has been carried out on some of the policies and are unconvinced of the efficiency and effectiveness of some of them. Others disagree about how policies are to implemented and feel that there will be a detrimental effect on competition.
According to Tony Grayling of the Institute of Public Policy Research Renewable Energy, "the government is way off target"
(The Guardian 2004)
Dr Jeremy Leggett CEO of environmental group Solar Energy argues that “there is a huge gap in what the government are saying and what the policies are actually doing". (Alok Jah the Guardian 2007)
Penny Shepherd CEO of UKSIF specialising in green investments along with other business leaders, investors and campaigners believes David Cameron's dramatic promise to lead the greenest ever government has been followed by u-turns and delayed policies and has delivered a thumbs down to the governments record on environmental issues.
(F. Harvey & D Carrington The Guardian 2011)
If we are to believe these experts which have spanned 2004 through 2011, then there appears to be little hope for the government to have their environmental policies hailed a success.
REFERENCES
Alok Jah, Science correspondent: Environmental lobbyist demand action from government mired in half policies; The Guardian Newspaper Mon 28th May 2007
Economic Help: cited at http://www.economichelp.org: Accessed 15th Sept 2011
Environmental Policy: cited at http://www.parliament.uk/documents: Accessed 15th Sept 2011
Environmental Scorecard: The Guardian 9th Dec 2004
Fiona Harvey & Damian Carrington: Business and campaigner attack coalition's environmental record; The Guardian Newspaper 22nd April 2011
Renewable Energy in the Public Sector: Nov 2009 Vol 4 No.2: Publisher Stationary Office, London
The Ecologist: cited at http://www.theecologist.co.uk: Accessed 14th Sept 2011