In the example provided in class on Thursday and Friday, we looked at the marginal costs and benefits of different levels of pollution reduction for a river. Professor Weaver drew the conclusion that instead of cleaning one river to 100%, Fort Wayne could clean three rivers to the ideal (economically thinking) percentage of 69%. However, the cleaning of one river to 100% is still profitable. Therefore, what about the option that Fort Wayne cleans one river to one hundred percent and then uses the $230,000 of profit from cleaning the first river to then clean the other two rivers to 100% and overall make $468,000 of profit, for the marginal cost of double the time to complete the entire project?
Let's talk about this in class today.
In short, those returns are not instantaneous. If we only have $111k to utilize, on the margin, we can clean more if we only clean each river to, ~70%.
In short, those returns are not instantaneous. If we only have $111k to utilize, on the margin, we can clean more if we only clean each river to, ~70%.