Pollution/Coasian Solutions

Recently, a coal power plant in Alexandria run by the company GenOn has closed.  The coal plant had been in operation for 63 consecutive years, and drew public protest due to the large amounts of pollution it released into the air.  Ultimately, the plant was closed not due to the activism but the "changing economics" of running a large coal plant.

The article demonstrates the difficulty of implementing Coasian solutions to externalities in the real world, where property rights are not clear and many costs and benefits are not easily quantifiable.

GenOn's Alexandria coal plant, described as a air polluter, had a clear negative production externality.  The smog it produced was not only unsightly, but, according to activists, had significant deleterious long-term health effects.  Yet it was one that was never resolved through private or government channels; the problem simply went away on its own due to other considerations.  Partly this is due to unclear property rights.  There is no mention of a court case where a ruling was made in one way or another about the plant's right to pollute the air (or de facto air ownership).  Presumably, no mutually beneficial transfer payments would be made until such a case has been heard and property rights established.  Secondly, it is impossible to quantify the damage the smog caused to the community not only due to logistical considerations, but because one cannot force people to reveal their true preferences.  While negative health effects may be approximated through hospital bills from conditions related to smog exposure, such estimates would be tentative at best (causality in medicine is often complex and unclear).  Additionally,  costs would be greater than simply the medical bills, but would include opportunity cost of lost time due to illness, and some compensation for lost utility from healthiness itself.  The cost of the "unsightliness" of the plant is similarly difficult to quantify, because there is no current mechanism to force people to reveal their true preferences.