Friday, August 7, 2009

Ineffective Environmental Policy

This article (click on link above) that I came across on The Economist talks about how the US govt's subsidy plan nicknamed "cash for clunkers" is not attaining the intended effect - reducing emissions.

Under this programme, any person trading in his/her old inefficient car for a new environmentally friendly one will get a discount funded by the US govt, however the policy is ineffective. Read why in the article.

The US govt had earmarked $1 Bn for the programme which got used up in 1 week against the intended time period of 2 months.

They are simply subsidising car purchases which in any case were bound to rebound after the recession during which purchases were at an all time low.

The US govt is simply feeding the pent up demand.