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Discussion 1: Externalities and the Private Market

The concept of externalities is much debated in the field of economic and public policy. The most common examples discussed involve environmental issues such as different types of pollution. According to a recent study, "Being hit by an SUV instead of a mid-sized sedan increases your risk of death by over 50%" (Anderson, 2014, para. 1). This is an example of a negative externality because persons in the mid-sized sedan are bearing an external cost of the much heavier SUV. For this Discussion, consider other examples of negative externalities from the Hyman (2014) course text and your experience.

Post by Day 3 an explanation of the relationship between externalities that affect the environment and the private market. Your explanation should include your response to the following:

- Describe how positive and negative externalities that affect the environment can prevent efficiency, including examples and references.
- Explain why it is necessary to take a global perspective on negative externalities that affect the environment. Justify your response.
- Give at least two examples of private market reaction to externalities that affect the environment.
Be sure to support your post with specific references to the Learning Resources and other peer-reviewed sources and provide full APA-formatted citations for your references.

Discussion 2: Paying at the Pump to Reduce Emissions

One proposal to reduce automobile emissions involves "pay-at-the-pump insurance." Individuals would pay, for example, an added $0.25 per gallon of gasoline, with proceeds going toward an insurance fund. This additional fee would replace buying auto insurance through one or two lump sum payments a year with a pay-as-you-go plan. The consumer would buy insurance based on the number of miles traveled by car (Khazzoom, 2000). Essentially, this plan would mean that the less you drive, the less you pay (Lifsher & Roosevelt, 2010).
The negative externality of driving a car fueled by carbon-rich fossil fuels is replaced by the positive externality of walking or riding the bus that relieves road congestion and contributes to healthier people. The environmental effect includes reducing greenhouse gas emissions as well as increasing health. The economic effect is more accurately pricing the cost to the motorist of each vehicle mile traveled.
Post by Day 3 an analysis of the "pay-at-the-pump insurance" proposal. Your analysis should include the following:
- An explanation of the expected environmental effects of the proposal
- An analysis of other effects, such as economic effects that could justify the proposal
- An analysis of who might bear a disproportionate share of the costs of this tax; justify your response
Be sure to support your post with specific references to the Learning Resources and other peer-reviewed sources and provide full APA-formatted citations for your references.

Annual Budget: Externalities and Local Government Policy

Reading though the budget and budget preparation documents of your local government jurisdiction, you will find evidence of many positive and negative externalities. For example, education spending generates a positive externality because a city or county with a well-educated workforce can attract and retain industries that offer good-paying jobs. Similarly, park and recreation spending generates a positive externality because people want to live in places with attractive amenities. However, negative externalities are also present. A community that hosts a nuclear waste facility may benefit by the creation of jobs and increased economic activity, but they come at the cost of potential contamination.
From the Annual Budget of your local jurisdiction, respond to the following in a 2- to 3-page paper:
- Identify 2-3 externalities, as defined by Hyman (2014), that are generated by the policies and actions adopted by this jurisdiction through the Annual Budget.
- For each externality, assess if they are negative or positive.
o How is the jurisdiction attempting to mitigate negative effects or capitalize on positive effects? Explain.

MY LOCAL JURISDICTION:

Name of jurisdiction: The name of jurisdiction is El Paso County, Texas. The seat of El Paso County is the city of El Paso.

Web address of the jurisdiction: The web address of the jurisdiction

Description of the jurisdiction: The jurisdiction is a county in the US state of Texas. It is dominated mainly by the city of El Paso which is the seat of the local government. The county has a population of 800,000 (El Paso County Budget, 2017). This makes it the sixth most populated county in the state of Texas. The local government provides a number of services to citizens. These include the Sun Metro, Mass Transit System; museums and parks; police services; public health services; public library; maintenance of streets; water utility; and aviation services. The city council also provides a number of other community and environmental services.

Population: As aforementioned, according to the 2010 census, the population of El Paso County is approximately, 800,000. Most of the population resides in El Paso city.

Total Expenditure: Total expenditure in the most recent complete year, 2016, for which data is available was $ 1.126 billion. For the year 2017, the budgeted expenditure is $ 900.324 million, while in 2018 the budgeted expenditure is $ 896.357 million. This shows that the county is trying to control its expenditures. This has been done mainly to control the fiscal deficit of the local government (El Paso County Budget, 2017). For 2017 and 2018 the budgeted expenditures have been matched with budgeted revenues for the years. Property taxes are the biggest and most important source of revenue for the county of El Paso. Charges for the various services that the county government provides to its citizens, such as water utility services, account for second biggest source of revenue. They are followed by sales tax, which are the third biggest source of revenue for the local government. Other sources of revenue of El Paso county are penalties and interests; franchise fees; fines and forfeitures; license and permits; intergovernmental revenues; revenues from county participation; rents; enterprise revenues, etc. Personal services make up the biggest expenditure of the county government in a year. Personal services mean the costs of wages, salaries and other fringe benefits that are given to employees. Contractual services make up the second biggest chunk of expenditures.

These are the expenditures for the various services that the county outsources to outside vendors or contractors. Capital outlay is another significant expenditure category for the county (El Paso County Budget, 2017). Capital outlay means expenditure on acquisition of equipment, construction and land acquisition. Other expenditure categories of the county are materials and supplies; operating expenditures; non-operating expenditures; intergovernmental expenditures, etc. The services provided by El Paso County are very similar to the services provided by the jurisdiction chosen by the colleague.

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