Natural resource policies and management practices often focus on addressing “spillover” effects of one person’s actions on other people.  For example, we discussed how logging practices might impact the livelihood of salmon fishermen in the Pacific Northwest of the United States.  A situation where logging results in erosion with consequential reduction in water quality and adverse effects on both recreational and commercial fishing.  We have considered the issue of how one farmer’s use of water from the Ogallala aquifer effects other users of the aquifer.  Property rights arrangements will dictate the extent to which these interactions persist and perhaps continue to degrade the resource, but so will the individual perceptions of the costs associated with the resource use.  In many of these situations, the private costs diverge significantly

Question #4:  Natural resource policies and management practices often focus on addressing “spillover” effects of one person’s actions on other people.  For example, we discussed how logging practices might impact the livelihood of salmon fishermen in the Pacific Northwest of the United States.  A situation where logging results in erosion with consequential reduction in water quality and adverse effects on both recreational and commercial fishing.  We have considered the issue of how one farmer’s use of water from the Ogallala aquifer effects other users of the aquifer.  Property rights arrangements will dictate the extent to which these interactions persist and perhaps continue to degrade the resource, but so will the individual perceptions of the costs associated with the resource use.  In many of these situations, the private costs diverge significantly from the social costs of resource use and extraction.  In a well-organized essay, using material from class, describe how socially efficient outcomes differ from private outcomes when such “spillovers” occur.  Feel free to use diagrams from class to support your explanation.  Describe policy options that would help to realize a socially optimal outcome.  Your essay should explain the potential for private bargaining in realizing an optimal outcome for two parties attempting to resolve such spillover effects.