Public Economics

free essayMarine biological diversity conservation falls under International environmental public goods (IEPG) if its benefits spill over to the advantage of other countries. However, marine biological diversity is an impure public good both at the local and global levels. Impure goods refer to the type of goods that are either partially excludable or rival and divisible, and it can easily occur especially when they are local products. If a good is impure, therefore, its access is controllable, and only specified individuals are allowed to enjoy it. Regarding the aspect of divisibility, it implies that an individual with the opportunity to harvest the benefits can do it to an extent of diminishing the benefits to others. On the contrary, when a good is publically pure, it means that it cannot be excluded, and everyone has an opportunity to enjoy the benefits it delivers. Relatively, pure pubic goods are indivisible such that, individuals with an opportunity to utilize it cannot diminish the value available for others (Bulte, Kooten and Swanson 6).

Externalities Associated With Impure Public Goods

Externalities refer to a cost or benefit that affects a third party who was not willing to incur that cost or enjoy those benefits. When it is a cost, it is referred to as a negative externality, but when it is a valuable benefit; it is called a positive externality. The case at hand is marine biodiversity, which is classified under impure public goods. Marine biodiversity possesses both negative and positive externalities. A negative externality arises in three categories, that are, economic, social, and environmental costs (Bulte, Kooten and Swanson 13). An economic cost externality occurs when some costs incurred on water purification, inspections, and treatments have taken a significant weight on states and municipality budgets. Often, industry discharges and improper methods of fishing cause aquatic damage, but the whole society incurs the clean-up cost. Under social cost externality, the third part is exposed to the dangers of contaminated waters, and the measure to treat the waters is limited. This scenario occurs in developing countries. Finally, are the environmental costs, which arise when the aquatic ecosystem is damaged, and little is done to regenerate and purify the contaminated waters (Bulte, Kooten and Swanson 18).

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Positive externalities that can result from marine resources are also classified as economic, social, and environmental benefits. Economic benefits occur when the users obtain commercial benefits such as fisheries, water transport, and irrigation for agricultural purposes. The marine environment provides social benefits such sporting activities and beach resorts. Another positive externality is the environmental benefits, which provide the advantage to the whole community. If a marine environment is well-managed and conserved, the neighboring community will not suffer from pollution effects. Positive externalities are the outcome of the invested negative externalities, and they are considered effective when the supply is abundant to suppress the burden of costs (Arriagada and Perrings 8).

The Technology of Public Good Supply

Marine biodiversity being the international environmental public goods is further classified into two categories, which are the “best shot” supply technology, additive supply technology and a weakest link supply technology. Marine conservation requires appropriate incentives, and thus a proper understanding of the technology of supply. Supply of marine resources are said to be additive if the total benefit derived is the sum of all the small amounts consumed by different parties from different countries. For example, a regional river that runs through several countries tends to provide economic significance in those countries separately, and its value is the sum of all the benefits consumed in each country. For best-shot supply, marine resources can derive an optimal local benefit because of an efficient investment from the best user. For instance, along the shared river, one country can boost the significance of the rivers to another user country equally. The weak link supply effect occurs when one country produces the least contribution to the conservation of the aquatic life, and it results in limiting other users despite their better contribution.

Types of Economic Incentives (Positive and Negative) Created For Impure Public Goods.

Economic incentives are essential to any conservation program to maximize the sustainability and efficiency of public property. The first type of incentive created for impure public goods is the financial incentives such as tax subsidies on conservation tools like emission control. The government facilitates this by reducing taxes on machines and chemicals that are used in aquatic conservation. The discharge of tax tends to reduce the cost of maintenance and motivates the users when the harvest pays off the costs with a profit. Another positive economic incentive is the subsidies for pollution control, in which the government offers rewards to companies that have managed to reduce emission instead of charging a polluter for emission. The third familiar economic incentive created for impure public goods is the liability rule. Under the liability rule, the governments formulate rules that target the producers and manufacturers characterized by continuous waste emission, and the rules apply to all the identifiable polluters. The polluters are held accountable to ensure wastes and emissions are managed and disposed of properly thereby protecting the aquatic environment (Arriagada and Perrings 7).

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Adverse economic incentives tend to cause market failures when the consumers of public goods fail to integrate the implemented incentive with their decision-making. The problem emerges when the information disclosure approach is employed as an economic stimulus. The targeted stakeholders are all the beneficiary users of marine resources who are expected to behave in the socially responsible way after along the information provided. The users end wasting the effort played by the government by ignoring the information provided. However, some countries have come up with mandatory reporting strategy whereby all the stakeholders are expected to present their compliance with mandatory information disclosure program. The underutilization of information about conservation leads to poor decision-making whereby the beneficiaries fail to tap a maximum advantage from the marine resources (Bulte, Kooten and Swanson 13).


The subject of marine conservation is practiced with economic application to limit cases of negative externalities, negative economic incentives, and the aspect of free riding. The value of public goods becomes more effective if it creates an effect of consumer surplus. The consumer’s surplus arises when the positive externalities exceed negative externalities. Public goods are rarely pure because the government tries to place controls to reduce the pressure on its consumption. Impure public goods should be available either in an additive form or in the best shot to benefit all the users equally.