Pesticide found to harm bees faces ban across EU

The European Food Safety Authority (Efsa) has concluded that neonicotinoids harm bees to the extent that an outright ban could be imposed. Clearly, we can conclude that the external costs of production, neonicotinoid is an insecticide used in farming, are so high that the socially optimal level of output is zero. Bees are important “as they pollinate three-quarters of all crops”. In recent years their numbers have plummeted and studies suggest that neonicotinoids are a significant cause. Expect any regulation or ban to increase costs to EU farmers. It will be interesting to see if the UK will adopt such measures, post-Brexit. If not, it could mean that British farmers see tariffs levied on any exports to the EU. I suspect, under current Environment Minister, Michael Gove, the UK will look to follow Efsa guidance.

Read the original Guardian article here.


Pub smoking ban: 10 charts that show the impact – BBC News

It’s 10 years since smoking in enclosed public spaces was banned in England. What has the impact been?

Source: Pub smoking ban: 10 charts that show the impact – BBC News

This is an excellent article, written by an old uni friend of mine, exploring the impact of restrictions on where people can smoke. Cigarettes are considered by economists as a demerit good, one that generates negative externalities through consumption. These externalities, costs to a third party, can occur in many ways, for example, the adverse effects on the health of bar workers. The ban has helped to reduce the number of people smoking in the UK, although it still remains predominantly a habit of the poor. However, it is important to note that changes to packaging legislation and increased duties may have helped to reduce the number too. A reduction in the number of smokers helps to reduce the pressure on the NHS of treating tobacco-related illness, although, of course, if people live longer then other, perhaps more expensive treamtents, need to be paid for. An unintended consequence has been the impact on pubs, a number are closing creating unemployment in the process. Again, however, other factors, such as a general reduction in alcohol consumption and cheaper substitutes, i.e. buying beer from a supermarket, will have had an effect.

This is a nice example of how a number of government interventions can be used to correct the market failure associated with a demerit good.

The Economist | Deep trouble

The Economist | Deep trouble

The deep sea is a frequently used example of common access resources that is over-exploited  – a case of ‘The Tragedy of the Commons’ originally coined by ecologist, Garrett Hardin. It stems from a simple idea that the benefits of over-fishing (increased revenues) are private while the costs are shared. Unfortunately, such an approach is unsustainable as a result of over-consumption and subsequent market failure. Technology is both a cause of the problem and a solution too. Larger trawlers increase catch size reducing the number left to breed. However, new technology can help to monitor, collect information and enforce regulation. One extreme proposal is to ban fishing in set zones, this has been effective in some trials allowing fish to ‘restock’ and improve sustainability. Clearly, an international agreement is required, but this is hard, especially given the current rise in nationalism and self-interest. The WTO are working on something, but have been doing so for several years.


Nimble entrepreneurs seek solutions to air quality crisis | The Guardian

With 55% of Chinese consumers looking to reduce pollution exposure and a London mayor focused on clean air policies, the market is growing

Source: Nimble entrepreneurs seek solutions to air quality crisis | Guardian Small Business Network | The Guardian

A standard market failure essay question would ask you to consider whether government intervention is required to correct a market failure or would it be best left to market forces. This article explores the role of the latter in the context of air pollution and the growth in the number of firms producing goods to both monitor and reduce the impact of air pollution.


Behavioural Nudges and Environmental… | tutor2u Economics

Here are some notes on environmental nudges given at a talk I attended by two members of the Behavioural Insights team.

Source: Behavioural Nudges and Environmental… | tutor2u Economics

Government responses to various market failures. Using knowledge of behavioural economics to nudge citizens to change to help achieve a more efficient allocation of resources.


The Economist | Information asymmetry: Secrets and agents

The Economist starts its series of economics briefs with information asymmetry, its beauty lies in its simplicity. Very recently my car failed its MOT. The garage called to say repairs would cost £580 – seeking to exploit my imperfect knowledge of prices and the mechanics of my car. A few phone calls later and I managed to find a local garage willing to do the same repairs for £400. A return call to the original garage found that they would match the price, a saving of £180. I suspect many would not have bothered, I almost said “go ahead” myself, converting consumer surplus into producer surplus in the process. George Akerlof, in his seminal work ‘The market for lemons’, explains that information asymmetry is a very common cause of market failure, when economic thinking at the time was that buyers and sellers had sufficient access to information to make rational decisions, clearly rubbish.


The world’s largest cruise ship and its supersized pollution problem | Environment | The Guardian

As Harmony of the Seas sets sail from Southampton docks on Sunday she will leave behind a trail of pollution – a toxic problem that is growing as the cruise industry and its ships get ever bigger

Source: The world’s largest cruise ship and its supersized pollution problem | Environment | The Guardian

Super-sized cruise-liners offer their owners significant economies of scale, which helps to bring down unit costs and prices, making cruising affordable to the masses. However, it comes with a social cost that is not reflected in the market price. Cruise ships emit very large levels of toxins that adversely effect the atmosphere, in particular where they dock. In addition to the noise and air pollution generated by the liner itself, local residents can also expect to see increased congestion as passengers come and go. Clearly some benefit from increased trade thanks to the spending of holidaymakers, but does this increased income cover the additional external costs?