Wednesday, December 26, 2007

Ports and Social Costs

Yesterday the LA Times had a story on the "greening" of the two big ports in LA:,1,1611877.story?coll=la-headlines-california

Two paragraphs stand out:

A month ago, they [the ports of Long Beach and San Pedro] approved a joint mandate to replace the area's fleet of 16,800 dirty cargo trucks with new or retrofitted models by 2012. Last week, the two ports approved a cargo fee to raise $1.6 billion to put the cleaner trucks into service.


The stakes are indeed high. The clean trucks program could yield a cumulative economic benefit of $5.9 billion from reductions in premature deaths, lost work time and medical problems, according to the Southern California Air Quality Management District.

If these numbers are remotely correct, then the policy of requiring the clean trucks is a no-brainer. Yet there is still a question about whether it will in fact get done, for reasons given in the remainder of the story.

The Coasian solution is to just assign property rights and step aside. If the people living near the port have the property rights, they can insist that the trucks get cleaner, and if the port is still profitable in the aftermath of incurring the costs, the port will continune to operate with lower levels of pollution (otherwise it will shut down, but this is highly unlikely); if truckers have the rights, the neighbors should find it worthwhile to pay for the trucks to get cleaner. The problem, though, is a coordination problem--it is difficult to get everyone to cooporate to get to the best economic outcome. This is why sometimes regulations really are the only practical method for getting something close to an economically efficient outcome.

1 comment:

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