Think of one of the problems of negative externality in either the use or the supply of
impure public goods that you have experienced/ witnessed in Tanzania. By using the
theory of public goods and externalities, give an analysis of the problem and a discussion
of possible private and government solutions. Which solutions, private or government,
would you recommend to solve the problem?
One of the problems of negative externality in the use of impure public goods that I have witnessed in Tanzania is the over-exploitation of natural resources. This is a problem that is particularly prevalent in rural areas, where people rely heavily on natural resources such as forests, rivers, and lakes for their livelihoods.
The theory of public goods and externalities explains this problem by noting that natural resources are a type of public good, meaning that they are non-excludable and non-rivalrous. This means that anyone can access them, and that one person's use of the resource does not reduce the amount available for others. However, this also means that there is no incentive for individuals to conserve the resource, as they do not bear the full cost of their use. This leads to over-exploitation of the resource, resulting in negative externalities such as environmental degradation, loss of biodiversity, and reduced access to the resource for future generations.
To address this problem, both private and government solutions can be employed. Private solutions include the use of market-based instruments such as taxes, subsidies, and tradable permits, which can be used to internalize the external costs of resource use and incentivize conservation. Government solutions include the implementation of regulations and laws to limit resource use, as well as the establishment of protected areas and the enforcement of sustainable harvesting practices.
In my opinion, the most effective solution to this problem is a combination of private and government solutions. Market-based instruments can be used to incentivize conservation, while regulations and laws can be used to ensure that these incentives are enforced. This approach would ensure that the resource is managed in a sustainable manner, while also providing economic benefits to those who use the resource responsibly.