The Covid-19 Pandemic
has reeked economic havoc in the United States and throughout the world, and there
is one unforeseen cost of this pandemic that will likely not receive the necessary
attention until there is some end to the masked world we exist in today. There
is a large negative consumption externality from the purchase and use of disposable
masks. The UN estimates
that waste created as a byproduct of the pandemic (specifically masks) would
cause at least $40 million in damages to environmental industries such as
fishing, not even taking into account the direct environmental impact. People’s
livelihoods, and our planet’s health depend upon the health of our oceans, and
the pandemic has the potential to do great damage.
A negative consumption
externality of masks means that the social marginal benefit of the masks is
less than the private marginal benefit of masks. The socially optimal output level
of masks is far less than the current competitive market equilibrium output. During
this pandemic, we are are way overconsuming masks without internalizing the external
environmental cost of consuming them. As I researched this problem, I
found some companies that were making more sustainable masks, or companies that
were donating a portion of profits to Covid relief funds, but none that were focused
on allocating some resources from the revenue of their masks towards the environmental
cost mask waste has caused. Since this externality is a global issue, using a
Coasian solution would be difficult to realize. On one hand, perhaps taxing the
consumer for the purchase of masks and using those funds to offset the environmental damage would equalize the social marginal benefit and
the private marginal benefit. On the other hand, while we recognize the current
overconsumption, as a society, we do not want people to stop wearing masks right now. In
the end, this may be an externality we cannot deal with until the end of the
pandemic, but it is important to at least recognize its existence and impact.
1 comment:
I think you're absolutely right that there is a negative externality of consumption of masks due to the potential environmental damage that disposable masks can have. However, there is also a positive externality of consumption in that 1 person wearing a mask can help protect the health of everyone else he/she/they come into contact with. This effect is compounded when you think about contact tracing as well. By wearing a mask you protect person a, b, and c who you saw at the grocery store. Then person d, e and f who person a met at the coffee shop, person g, h and i who live with person b, and person j, k, l, m, and n that went to person c's birthday party are all protected. The same way contact tracers have to think about following the virus is equally as useful when thinking about how many people are protected by wearing a mask. Additionally, all the work that is saved by mask wearing could be considered as marginal social benefit. Contact tracers wouldn't have to make as many calls, hospitals wouldn't be so full, etc. Therefore, the marginal private benefit might be lower than the marginal social benefit and the situation could be more reminiscent of flu shots, a good notoriously associated with positive externalities of consumption.
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