The New York Times:
LAST month Jerry Brown, the Democratic governor of California, issued the drought-racked state’s first-ever mandatory water reductions. “As Californians, we must pull together and save water in every way possible,” he said.
Conserving water requires large-scale cooperation, just like reducing carbon emissions or eradicating measles through vaccinations. When you water your garden less, take public transportation instead of your car or vaccinate your children, you’re taking on personal cost (an uglier garden, a slower commute, a grumpier child) for the benefit of society.
The “Pigouvian” approach to encouraging cooperation, named after the economist who first suggested it nearly a century ago, is to change the price — i.e., the personal cost of cooperating: Make water more expensive, tax carbon or pay people to vaccinate their kids.
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