We interpret these results as follows. For the selected preference rations,
even with as little as 1 in 6 communities with a high preference for a clean lake,
the Pareto-optimal outcome is for a level of phosphorous loading that results
in an oligotrophic lake. And yet, for these same prefences, when the ratio of n2
to n1 is less than or equal to one to five, the probability of the green politician
being elected is 0.
On the other hand, when n2 to n1 is one to four or greater, the probability
of the politician being elected increases to very high levels, i.e. relatively close
to 1. This means that a relatively small proportion of the population can gain
enough power to influence policy when their preferences are strong enough. This
result can be attributed to the amount of lobbying effort that is expended when
communities attach a relatively high value to ecosystem services. Moreover, as
the proportion of green communities increases, the tax rate required to bring
the lake back to oligotrophic levels is lower, which also explains a lower lobbying
effort against a higher tax by farming communities.
In addition, the following can be derived with regard to the probability of the
optimal policy being applied. An ambitious politician will want to implement
the policy that will ensure that he is elected. To do this he will propose a tax
so as to maximize the probability of being elected, that is he will:
by changing τ .
max Pg
j 1 mj
ГП= i li + ГП= j mj
(42)
We find that for n1 = 2 and n2 = 2, to maximize his probability of being
elected, the benevolent politician would have to set the tax rate at τ = 11.40.
This tax increases the probability of election to one, that is, by proposing this
tax he is certain of being elected. Unfortunately, this tax will result in an in-
sufficient reduction in phosphorous loading levels and the lake will remain in its
eutrophic state. Recall that the skiba point is at (xF1, aF1) = (0.4084, 0.1021),
c.f. Section 2.2. For n1 = 2 and n2 = 2, the optimal levels of phosphorous
are (x*, a*) = (0.3472, 0.1007), which denotes an oligotrophic state of the lake.
To achieve the optimal level of phosphorous loading, the required tax rate is
τ* = 29.78. Therefore a proposed tax policy of τ = 11.40 would be far in-
ferior to that required to achieve the socially desirable level of phosphorous
loading. This may be an example that illustrates the observation by Lee (1985)
that “political objectives can be realized by establishing “acceptable” pollution
standards and many of them have little to do with protecting the environment.”
5 Conclusion
In summary, we have found that lobbying and the composition of the electorate
have an effect on the implementation of the socially optimal tax policy. When
a portion of the communities have a strong preference for a clean lake, as little
as one fifth, the probability of the politician being elected increases to very
high levels, i.e. relatively close to 1. This is an interesting result because it
implies that the number of green communities need not be very high, only
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