A Classic Case of International Pollution With an Ideal Policy Solution
(Figure 13.5)

A total ban on dumping into the Danube, if effectively enforced, would force the paper mill to point D. Press "Show point D" to show this point on the graph. The complete ban costs more than it is worth. Allowing the first ton of pollution each year would be worth 720 euros to the paper company. However, downstream users lose only 60 euros of extra enjoyment and income at point C. Press "Show point C" to show the point on the graph. From a world viewpoint, the first ton of pollution should be allowed. In fact, if the figure correctly portrays the marginal benefits and costs, pollution up to 80 million tons adds to world well-being because the benefit to Germany from using the river as a drain for wastes exceeds the costs of doing that. An economist will insist that 80 million tons is the "optimal amount of pollution" in this situation.
Press "Continue" when you are ready to move on. The "Reset" button will clear the graph.