Wanted: A Pollution Damage Revealing Mechanism

1. A Participatory Economy ⁴

The model of a participatory economy was originally designed over twenty-five years ago to promote economic justice, defined as economic reward commensurate with effort and sacrifice, and economic democracy, defined as decision-making power in proportion to the degree one is affected by a decision, while achieving economic efficiency, as traditionally defined by economists. The major institutions used to achieve these goals are: (1) public ownership of all productive resources, (2) democratic councils and federations of workers and consumers, (3) remuneration according to effort as judged by one’s coworkers, (4) balancing various tasks that comprise jobs for empowerment and desirability, and (5) a participatory planning procedure in which councils and federations of workers and consumers propose and revise their own activities until a feasible plan is reached.

Production is carried out by worker councils where each member has one vote, where a committee attempts to balance jobs for empowerment and desirability, and where workers’ efforts are rated by a committee of their peers which serve as the basis for consumption rights. Every family belongs to a neighborhood consumer council, each neighborhood council belongs to a federation of neighborhood councils the size of a ward or rural county, each ward belongs to a city consumption council, each city and county council belongs to a state council, and each state council belongs to the national federation of consumer councils. Different levels of consumer federations are responsible for requesting different levels of public goods during the planning procedure.

The participants in the planning procedure are worker councils, consumer councils and federations, and the iteration facilitation board (IFB). Conceptually participatory planning is quite simple: the IFB announces current estimates of the opportunity costs of using all natural resources, produced capital goods, and all categories of labor, and current estimates of the social costs of producing all goods and services. Consumer councils and federations respond with their own consumption requests. Worker councils respond with production proposals: listing the outputs they would provide and the inputs they would use to make them. The IFB then calculates the excess demand or supply for each resource, capital good, category of labor, produced good and service, and adjusts the estimate of the opportunity or social cost up or down in proportion to the percentage excess demand or supply. Using these new estimates of opportunity and social costs, worker councils, consumer councils, and federations revise and resubmit their proposals until (a) the proposal from each council and federation has been approved by the other councils and federations, and (b) there is no longer excess demand for any resource, capital good, category of labor, or produced good or service.

Essentially this procedure whittles overly optimistic, infeasible proposals down to a feasible plan in two ways: consumers requesting goods and services whose social cost is greater than their effort ratings warrant are forced to reduce their requests, or shift their requests to less socially costly items in order to win approval from other consumer councils, who otherwise will disapprove their requests as too greedy and therefore unfair to other consumers. Just as the social burden implied by a consumption proposal can be calculated by multiplying items requested by the social costs of producing them, the social benefits of the outputs a worker council proposes can be compared to the social costs of the inputs it requests using the estimates of opportunity and social costs from the planning procedure. Worker councils whose proposals have social benefit to social cost ratios less than one are forced to increase either their efforts or efficiency to win the approval of other worker councils, who otherwise will disapprove their proposals as inefficient uses of productive resources that can be put to better use by other worker councils. Moreover, since the average effort rating workers in a council can award one another is higher when the social benefit to cost ratio for their enterprise is higher, there is an incentive for worker councils to submit requests with high social benefit to cost ratios even as they also strive to make their working conditions as pleasant as possible. Under traditional assumptions it has been proved (Albert and Hahnel 1991: ch. 5) that as iterations proceed (requests to consume and proposals to produce different goods and services, and requests to use and supply different natural resources, capital goods, and categories of labor) all will move closer to mutual feasibility, estimates will more closely approximate true opportunity and social costs, and the plan reached will be a Pareto optimum. ⁵

Participatory planning is different from most conceptions of comprehensive, democratic, national economic planning. It is designed so as not to overburden the main planning process with meetings, and particularly meetings without a clear agenda and clear criteria for settling disagreements. There are no meetings of representatives from all worker and consumer councils and federations where attendees propose, debate, and eventually vote on what everyone will do. In other words, participatory planning is not a “one-big-meeting of delegates” approach to comprehensive, national, democratic planning. Nor is participatory planning a referendum approach to democratic planning, where citizens vote for a plan from a list of alternative national plans drawn up by experts based on whatever information they can gather and whatever priorities they thought were important. There are no government agencies which perform elaborate calculations required by decision makers, and no bureaucracies which manage the planning process. Instead, the participatory planning procedure provides for meaningful deliberation through a carefully structured, social, iterative process in which (1) estimates of opportunity and social costs emerge organically from the planning process, (2) workers and consumers discover how their choices affect one another, and (3) workers and consumers have a great deal of control over their own economic activities at the same time that they can protect themselves from socially irresponsible behavior by others.

2. A Pollution Demand Revealing Mechanism (PDRM)

First, we must add pollutants to our list of produced “goods,” and in each iteration of the planning procedure the IFB must quote the current estimate of the damage caused by releasing a unit of each pollutant along with current estimates of all opportunity and social costs. Just as the estimates of opportunity and social costs for resources, capital goods, labor, and produced goods are arbitrary in round one, the initial estimates of damages from pollutants can be arbitrary as well. The whole point is that nobody needs to calculate what damages from different emissions are, any more than anyone needs to calculate opportunity and social costs of different resources, capital goods, labor, and produced goods in a participatory economy. Instead, once the PDRM described in this section is incorporated into the participatory planning process, arbitrary initial damage figures will be modified in successive iterations until reasonably accurate estimates of actual damages for pollutants are achieved when a feasible plan is finally reached, just as initially arbitrary estimates of opportunity and social costs are modified to achieve reasonably accurate estimates of the opportunity costs of using scarce resources, capital goods, and labor, and the social costs of producing different goods and services during the planning process. ⁶

Second, when enterprises make proposals they must also include the amount of any pollutants they wish to emit. The damages from emissions will then be calculated by multiplying the number of units of a pollutant times the current estimate of the damage from one unit announced by the IFB. These damages will be added to the cost of using the inputs the enterprise has requested when calculating the overall social cost of the enterprise’s proposal, to be compared with the social benefits of the outputs it proposes to produce. Enterprises wishing to emit more than one pollutant will be charged according to the current estimate of damage from each pollutant they propose to emit, just as enterprises supplying multiple products are credited for each product according to its indicative price. It is not necessary for enterprises to know in advance the effects of various pollutants because that information is provided by the estimates of damages in each round of the planning procedure, which become increasingly more accurate as the planning procedure proceeds. Just as worker councils are guided by indicative prices for outputs what to produce, and by indicative prices for inputs how to produce it, they will be guided by estimates of damages quoted for how much of different pollutants to emit. ⁷

Third, we create “communities of affected parties,” or CAPs, which comprise all who are damaged by emission of a particular pollutant. For example, there would be a CAP for volatile organic compounds and nitrous oxide emissions that cause smog in the Los Angeles area. There would also be a CAP for coarse particulate matter affecting Angelinos. Whether or not those two CAPs include the same or somewhat different populations would depend on any differences in dispersal patterns. There would also be a CAP for pollutants contributing to smog, and a CAP for coarse particulate matter pollution in the Kansas City area where wind and temperature conditions are quite different than they are in Los Angeles, and demand by worker councils in Kansas City for permission to release these pollutants may be different as well. ⁸

Now we are ready to include CAPs along with worker and consumer councils and federations as “actors” who participate in each round of the planning procedure. Enterprises who wish to emit a pollutant, and CAPs who are damaged by a pollutant, participate in the planning procedure by responding to the “signal” from the IFB about the current estimate of the damage caused by a unit of a pollutant ⁹ as follows:

Enterprises propose how much of a pollutant they want to emit, knowing they will be charged for those emissions an amount equal to the current estimate of the damages per unit times the number of units they propose to emit. This means damage from emissions becomes part of production costs and is included in estimates of the social costs of producing goods and services.

Communities of affected parties propose how many units of a pollutant they are willing to allow to be released, taking into account that the CAP will be compensated by an amount equal to the current estimate of the damages per unit times the total number of units the CAP allows to be released. In other words, the CAP has a right not to be polluted at all if it so chooses. On the other hand, if the CAP chooses to authorize a given quantity of emissions, members of the CAP will receive “credit” for damages suffered. This “sacrifice” from exposure to pollution is added to whatever “sacrifices” CAP members made as workers when calculating how much consumption it is fair for them to enjoy.

Why would this procedure yield reasonably accurate estimates of the damage caused by different pollutants, and therefore lead to reasonably efficient levels of pollution? In most cases it is reasonable to assume that as emissions increase the cost to victims of additional pollution rises and the benefit to producers of additional pollution falls. In which case the efficient level of pollution is the level at which the cost of the last unit emitted – the damages to all victims – is equal to the benefit from the last unit emitted – the satisfaction consumers gain from the additional goods and services that can be produced because an additional unit of emission was permitted.

What will happen if the IFB quotes an estimate of damages that is less than the amount at which the last unit of emission for some pollutant causes damages equal to benefits? In this case the CAP will not find it in its interest to permit as much pollution as sources would like to emit, i.e. there will be excess demand for permission to pollute, and consequently the IFB will increase its estimate of the damage caused by the pollutant in the next round of planning. If the IFB quotes an estimate of damages that is higher than the amount at which the last unit of emission causes damage equal to benefits, the CAP will offer to permit more pollution than sources will ask permission to emit, i.e. there will be an excess supply of permission to emit, and the IFB will therefore decrease its estimate of the damage caused by the pollutant in the next round. So when the IFB adjusts its estimate of the damages for a unit of emissions until the sum total of requests to emit a pollutant is equal to the permission granted by the CAP to emit that pollutant, it appears we will end up with a reasonably accurate estimate of the true damages caused by different pollutants and also come reasonably close to the efficient level of emission for each pollutant. In section 3 we examine possible perverse incentives that might conceivably interfere with this happy result.

3. Overcoming Perverse Incentives

It is instructive to begin an examination of hurdles that must be overcome if we are to achieve efficient levels of pollution by reviewing perverse incentives that prevent voluntary negotiations in market economies, including “Coasian negotiations,” from doing so. There are two crucial perverse incentives which prevent voluntary negotiations between polluters and pollution victims from achieving efficient levels of pollution, neither of which has to do with the transaction costs of carrying out negotiations. ¹⁰

Multiple victims: The first problem was recognized by Ronald Coase himself, and by many who have cautioned that Coasian negotiations are not the panacea that free market environmentalists would have us believe. Coase explicitly warned that his argument applied only in the case where there was one pollution victim, and not to situations where there were multiple victims since this introduced additional complexities (Coase 1960). While free market enthusiasts simply ignore their hero’s cautionary caveat, many who argue that efficient levels of pollution are unlikely to emerge from voluntary negotiations even if property rights are clarified emphasize the frequency of multiple victims as the primary reason.

However, most analysts, following Coase, treat the problems introduced by the existence of multiple victims of pollution as an addition to the transaction costs associated with negotiation. The rationale for doing so is that when there are multiple victims there will be additional costs of negotiation either because there are many more negotiations if the polluter must negotiate separately with each victim, or because there will be costs associated with identifying and inviting victims to join a coalition to negotiate with the polluter on behalf of all victims. But multiple victims create far more serious obstacles to reaching efficient agreements through voluntary negotiations than simply increasing the amount of time spent in negotiations and lawyer fees. The real problem with multiple victims is that, because of perverse free rider and hold out incentives, separate negotiations with individual victims are unlikely to occur, even if the potential efficiency gain is large; and because of a perverse incentive for victims to misrepresent damages negotiations with a victim’s coalition will predictably yield inefficient outcomes as well.

When there are multiple victims we should not expect separate negotiations between the polluter and each individual victim to lead to an efficient outcome. If the polluter has the property right each victim has an incentive to deny any harm in hopes that other victims will step forward and pay the polluter to abate: the free rider problem. If the victims have the property right each victim, and some who are not truly victims, have an incentive to exaggerate harm and threaten to veto any deal unless he or she receives the entire payment the polluter is willing to offer all victims collectively: the hold out problem. In both cases separate negotiations will end in failure and there will be too little abatement and too much pollution. But this is not because the transaction costs of multiple negotiations are prohibitive. It is because the existence of multiple victims creates perverse free rider or hold out incentives for victims that will lead separate negotiations predictably to break down.

Therefore, when there are multiple victims the only hope for successful negotiations lies in organizing a coalition of victims to negotiate with the polluter as a group. But there are two reasons multiple victims of pollution are predictably unable to organize a coalition to negotiate effectively with a polluter; again, neither of which has anything to do with the transaction costs of identifying victims and issuing them invitations to join a victim’s organization. The first problem arises even when each true victim is damaged to the same extent, but there is no easy way to verify who is truly a victim and who is not. If the polluter has the property right every victim has an incentive to deny their true status as a victim and hope other victims will join the coalition and contribute money to pay the polluter to cut back on emissions. On the other hand, if the victims have the property right everyone has an incentive to claim they are a victim, even if they are not, in order to receive part of the payment the polluter will offer. In either case there is an incentive for people to lie about whether they truly are victims. When the polluter has the property right a voluntary coalition will have fewer members than it should, lack the funds it should have to pay for abatement, and consequently there will be too little abatement. When victims have the property right a voluntary coalition will have more members than it should, the demand for compensation will be inflated, and consequently there will be too little pollution.

Even if the problem of distinguishing between who should be included in a voluntary coalition of victims is solved, there is another problem if it is clear that victims are affected unequally but there is no objective way to determine who is affected more or less. In this situation it is in the interest of members of a coalition of victims to misrepresent how much they are truly affected if individual contributions (when the polluter has the property right), or payments (when victims have the property right), are allocated according to how much one is affected. If polluters have the property right and victims who are more damaged are expected to contribute more to pay the polluter to abate, people will under-report their damage and there will be too little abatement. If victims have the property right and victims expect to receive higher payments if they report higher damages, people will over-report their damages and there will be too little pollution. Again, these problems are qualitatively different from inefficiencies that arise because the transaction cost of negotiations is greater than the benefit from correcting the inefficiency, and it is misleading to treat them as such.

Misrepresentation: The second problem has gone largely unnoticed in the literature on the Coase theorem which applies to the case of a single pollution victim. The problem stems from two mistakes common in the literature: (1) many misrepresent negotiations between a polluter and a single victim as a “market based solution” to environmental problems. But in Coasian negotiations the whole point is that there is no market, and therefore there are no market forces to drive outcomes to an agreement where emissions are adjusted to the point where the price paid per unit of emissions equates the marginal damage to the victim and the marginal benefit to the polluter. If the polluter and victim arrive at the efficient outcome through negotiations it must be for some reason other than that they are driven to do so by market forces. (2) Those who correctly analyze Coasian negotiations as one-on-one negotiations over how to divide a potential efficiency gain have failed to notice that Coase’s conclusion that the parties will settle on the efficient outcome hinges on an implicit assumption that is highly implausible, namely that both parties have what game theorists call “complete information,” an assumption that is far more restrictive and less plausible than the “perfect knowledge” assumption familiar to microeconomic theorists. In effect Coase assumes that both the polluter and the victim not only know what his or her own true marginal benefit or cost curve looks like, but also know what the other party’s true curve looks like as well. Hahnel and Sheeran (2009) demonstrate that only when this is the case, i.e. when both parties have “complete information,” is there any reason to believe that voluntary negotiations between a polluter and a single victim might reach an efficient outcome. In the far more likely event that this assumption does not hold, Hahnel and Sheeran (2009) demonstrate that if the true curve of the party with the property right is unknown to the other party, the party with the property right stands to gain by over-exaggerating how much pollution affects their interests, and as a result Coasian negotiations will predictably yield too much pollution if the polluter has the property right, or too little if the victim has the property right.

In light of widespread mistaken conclusions about what voluntary negotiations – including Coasian negotiations – can be expected to achieve, it is wise to carefully examine the participatory planning mechanism for possible perverse incentives. Specifically: (1) are there incentives for worker councils who emit pollutants to under-report actual emissions? (2) Are there incentives for either worker councils or CAPs to misrepresent how much they are affected in order to influence how the IFB will adjust estimates of pollution damages in subsequent rounds of the planning procedure? (3) Are there incentives for individuals to claim they are adversely affected, and therefore deserve to be included in CAPs, even when they are not injured? (4) Are there incentives for people who are truly adversely affected, and therefore deserve to be members of CAPs, to misrepresent the degree to which they are affected?

To the extent that workers live closer to their enterprise than stockholders do, members of worker councils in a participatory economy have more incentive to take damage from local pollutants into account than private owners would. ¹¹ However, this is not to say that worker councils do not have an incentive to under-report emissions. The participatory planning procedure “charges” enterprises for the damage their emissions cause. Therefore, to the extent that their emissions damage any who are not members of the worker council there is an incentive for enterprises in a participatory economy to disguise emissions, just as there is in market economies where emissions are regulated, taxed, or emission permits are required. If a worker council feels there is a low probability of detection, and/or penalties for under-reporting are insufficient, it might be tempted to under-report emissions to increase its social benefit to cost ratio – making it easier to get a proposal accepted during the participatory planning process, and increasing the average effort rating they can award members.

In sum, there may be reason to believe that absentee owners interested only in profits, operating in a social environment where anti-social, greedy behavior is expected, might be more inclined to pursue their private interest at public expense than worker councils functioning in an environment where social responsibility and solidarity are highly valued. But this does not mean a participatory economy eliminates the need for monitoring and enforcement with regard to emissions of pollutants.

In most cases there will be many different enterprises asking to emit a pollutant in an area, none of which is likely to have information about how much the members of the CAP supplying the emission rights are truly affected. So not only would polluters lack information about the supply curve for emission rights necessary for strategic maneuvering, their status as one among many seeking emission rights would prevent them from taking advantage of any such information even if they had it, unless they were able to form a “polluters cartel.”

On the other hand, in a participatory economy there is a single supplier of emission rights for any pollutant: the community of affected parties. If a CAP knew what the aggregate demand curve for emission rights looked like, instead of treating the indicative price quoted by the IFB as a given it might be tempted to behave like a monopolist in a market where the monopolist knows the market demand curve. In this case the CAP would supply fewer emission rights than are socially optimal to gain what is traditionally called “monopoly profits,” even though this means the loss of some of what is traditionally called “producer surplus” due to failure to grant permission to emit additional units for which the CAP would have been paid more than the damage they caused its members. ¹² Therefore, if a CAP is willing to ignore the directive to behave as a price taker, and if a CAP knows what the aggregate demand for emission rights looks like, a CAP might restrict emissions below the optimal level. ¹³ While this would be undesirable, one must admit that at least it would be an interesting new problem to contend with: an economic system with a potential tendency to pollute too little. ¹⁴

If extra individual consumption rights are distributed equally to all members of a CAP, there is no incentive for anyone to exaggerate damages. Only if a CAP tried to distribute more individual consumption rights to members who were presumed to be more adversely affected is it possible that individuals would seek to take advantage by exaggerating their damages.

Conventional wisdom in public economics long held that there was no way around this perverse incentive to “report untruthfully.” However, path-breaking work by Clark, Groves, Ledyard, and others in the 1970s revealed that, surprisingly, this turns out not to be the case (Clark 1971; Groves and Ledyard 1977; Groves 1979). ¹⁵ The key is to break the link between an individual’s reported damage and how much she receives by using a formula to assign compensation based not on her own declared damages, but instead on the damages reported by others in the CAP. For example, an individual’s payment could be set equal to the average payment minus the sum total consumer surplus reported by all others in the CAP. In this way: (1) an individual cannot affect the size of her own payment by her own reported damages because her reported damages do not appear in the formula for calculating her compensation. (2) By misreporting damages an individual would only cause the total amount of emissions to deviate farther from what she would truly prefer. (3) Yet an individual reporting more damages than others would receive a higher payment since what is subtracted for her is lower than what is subtracted for others because what is subtracted for others includes her higher damages; while an individual reporting less damages than others would receive a lower payment since what is subtracted in her case is higher than what is subtracted for others because what is subtracted for others includes her lower damages. In any case, a CAP that wished to award more consumption rights to members who are more damaged could avoid creating perverse incentive to exaggerate claims by using any of a half dozen incentive compatible mechanisms now available.

In sum, monitoring emissions and enforcement of agreements is necessary in a participatory economy, just as it is in any economy for restrictions on pollution to be taken seriously. If a community of affected parties willfully ignored the rule to treat indicative prices parametrically during planning, and if the CAP had a great deal of knowledge about the demand for emission rights upon which to base strategic maneuvering, it might restrict emissions somewhat below efficient levels. Therefore, monitoring and penalizing participants for failure to treat prices parametrically seems advisable. Incentives for members of CAPs to exaggerate damages can be overcome either by equal awards or using any of a number of incentive compatible mechanisms for differential awards. Which leaves only the perverse incentive to illegitimately claim membership in a CAP as a serious issue to be dealt with, presumably through some appropriate adjudication process.

Before concluding it is helpful to review why problems that arise in voluntary negotiations in market economies, including Coasian negotiations, are less likely to arise in the participatory planning procedure with the PDRM described. There are two lessons to be learned from a careful analysis of problems that arise when there are multiple victims: (1) it is unrealistic to leave it up to multiple injured parties to self-organize to defend their interests. They need help to overcome the transaction costs of self-organizing. (2) They also need help to prevent them from falling victim to perverse incentives to misrepresent themselves. The proposed PDRM confronts these problems head on. First, it creates a powerful incentive for affected parties to apply for membership in a CAP since victims receive compensation in a participatory economy. But since this creates a perverse incentive for people to falsely claim damage, it is proposed that time and resources are allocated to where they are most needed: scientific and medical testimony must be marshaled, along with testimony by those whose status as victims is well-established, to review petitions for membership that may be exaggerated.

The PDRM also deals with potential perverse incentives to exaggerate damages by people who legitimately belong to a CAP. CAPs must allocate benefits to individual members in one of two ways: (1) either give all members equal benefits, or (2) use an incentive compatible formula for calculating individual benefits that does not include a person’s own self-declared damages. The first is much simpler, and in most cases where degrees of damage are similar, or difficult to know, should be acceptable. Whenever members of a CAP do not find this satisfactory they are free to engage in a more elaborate system of dividing compensation among themselves, provided truthful reporting is incentive compatible with the formula they use.

The major lesson to be learned from a careful analysis of incentives in Coasian negotiations is that private information generates perverse incentives in one-v-one adversarial negotiations. The participatory planning procedure attempts to overcome this problem by substituting a parametric procedure for one-v-one negotiations. Instead of two players engaged in an adversarial game of divide the pie, where private information can be used to one’s advantage, the planning procedure directs players to respond to price signals “parametrically.” Monitoring and enforcement of this rule for CAPs as well as other participants in the planning process is recommended. Although, if players have no way of knowing that the current round may not be the final round, manipulative behavior may prove counterproductive in any case.

4. Conclusion

Under traditional assumptions a participatory planning procedure which includes the PDRM will: (1) reduce pollution to reasonably “efficient” levels, i.e. allow emissions up to the point where the marginal social cost of emissions is equal to the marginal social benefit, as argued in section 2; (2) satisfy the “polluter pays principle” since worker councils are charged for the damage their emissions cause which is incorporated into the price consumers of their products must pay; (3) compensate the victims of pollution for damage suffered since members of each CAP receive consumption credit for damages suffered from each pollutant; and (4) induce polluters and victims to truthfully reveal the benefits and costs of pollution because the PDRM is reasonably “incentive compatible,” as argued in section 3. Uncorrected markets accomplish none of these four goals. And while in theory markets could reduce pollution to efficient levels if corrective Pigovian taxes were set equal to the magnitude of the negative external effect, or if emissions were capped at socially efficient levels and emitters were required to own permits, because markets are not incentive compatible for polluters and pollution victims, markets provide no reliable way to estimate quantitatively how high corrective taxes should be, or at what level to cap emissions.

However, it is important not to be overly enthusiastic about our results. In the real world the PDRM described here would be most relevant, and therefore most useful, for local pollutants whose effects are not lethal, are relatively well understood by victims, and do not extend far into the future where people who are not in the CAP will also be affected. Obviously, there are many pollutants which do not fit this description for which different policies would presumably be more suitable. Nor is this PDRM any help whatsoever in addressing our most pressing environmental problem today: incipient climate change due to an over-accumulation of greenhouse gases in the upper atmosphere. Unless some means is found to overcome powerful free rider incentive problems associated with reductions in national emissions, unless countries can soon agree on fair reduction quotas, and unless the advanced economies launch a massive Green New Deal to make their economies carbon neutral in the most rapid technological “reboot” in human history, solutions to all other environmental problems may soon become irrelevant. Nonetheless, coming up with a procedure that would induce victims to reveal truthfully what they believe their true damages are from pollution is not a trivial accomplishment.

An important caveat: the participatory planning procedure, which can and should include the PDRM described here, is part of an overall economic system that is very egalitarian. In a participatory economy consumption rights are allocated according to the effort or sacrifices people make in their work as well as need. This means that while there may be differences in the average incomes of different communities of affected parties, those differences will be much smaller than in any historical economy. Unfortunately, in an inegalitarian economy the pollution damage revealing mechanism in this article would unfairly allocate pollution to poorer communities. Consequently, it would not be advisable to append the PDRM described in this article to economies that are not highly egalitarian. If there are rich and poor communities, poor communities would be more inclined to bolster their income by offering to tolerate more pollution than rich communities would agree to tolerate even if their preferences for environmental amenities and for income were identical. Only if communities have comparable incomes is it advisable to allow them to express whatever differences of opinion they may have about the dangers of different pollutants, and whatever differences in preference they may have for income versus environmental amenities, as the above procedure allows them to do. In The Political Economy of the Environment James Boyce (2002) elaborates on a number of ways that a more egalitarian distribution of wealth and income would benefit the environment. One more environmental advantage of egalitarianism should be added to his excellent list: an egalitarian economy creates an opportunity to implement a pollution damage revealing mechanism that is sorely needed if we are to manage our relations with the natural environment sensibly, whereas inegalitarian economies make this impossible because they would turn any such mechanism into a transmission vehicle for increasing environmental injustice.