California Backs Plan for Big Cut in Car Emissions: Summary and Economic Analysis of a New York Times News Article
...more than the potential fuel savings. Automakers also state that in order to meet the standards set forth in the new plan, they would have to increase their average fuel economy in the state by 35 to 50 percent within 11 years; a pace not seen since the beginning of fuel regulation in the 1970s. The underlying reason to impose such strict emissions guidelines was presented by the board’s staff. They concluded that scientific research supports that car emissions caused the warming of the planet that in turn has contributed to a variety of health problems. In addition, they claimed that these warming gases could one day raise the overall temperature which would lead to rising sea levels, flooding, and a host of other environmental problems. Those speaking on behalf of the auto industry assert that there are no health benefits under the regulations and question whether global warming is even really occurring. Before the plan can take effect, legal hurdles such as lawsuits by the auto industry stand in the way and are sure to occur. While the auto industry and many environmentalists in California are bickering over how dangerous car emissions are, the underlying problem does not lie with the pollution itself, but with the negative externality it is creating. An environmental economist would say that an externality is occurring in California since driving a car generates effects on others for which no payment or compensation is made. Since the externality (car emissions) generates social costs, it can be labeled as having a negative effect. For instance, according to scientific research presented by the board, car emissions can cause health problems and could be leading to global warming. Since those who drive cars do not account for these social costs in the price of a car, society pays the costs by dealing with the car emissions created. Obviously, California regulators believe that the social cost is greater than the private cost of the pollution. If this were not the case, then there would not be a negative externality. It is important to note that regulators are not seeking to eliminate all car emissions with this plan. After all, the pollution that is produced from a car is essentially the byproduct of something that is of great value to people in California: a means of transportation. El...