ENVIRONIVIENTAL QUALITY AND MARKET FAILURE

Abstract

The purpose of this paper is i) to characterize the environmental quality as an economic good, that has the particularities of a public good and an externality; ii) to show and describe many corrective instruments designed to obtain allocative efficiency. The approach concerns environmental problems in general, but is focused on water pollution in this sense, section II shows qualitative and quantitative aspects of water as a resource. Section III characterizes an externality and a public good, and shows that water quality has those characteristics, that are sources of market failure, as explained in section IV. Section V shows the many types of instruments (market and non-market based) designed to correct such market failures in the context of environmental quality problems.