At least from a reading of the newspapers, one gets the impression that environmental policies are an issue in which income class plays a significant role. The poor and the wealthy seem to assign different degrees of priority to environmental protection: the proposed construction of an oil refinery is likely to produce anguished cries from middle- and upper-income inhabitants of a potential site and yet be welcomed as a source of more remunerative jobs by residents whose earnings are low. Similarly, proposals to ban DDT have been received with somewhat less enthusiasm in underdeveloped countries than they have encountered in the wealthier nations. This should, of course, come as little surprise to an economist. Assuming environmental quality to be a normal good, we would expect that wealthier individuals would want to “buy” more of it.
In addition to these differences in the demand for environmental quality, distributive elements also enter when we consider how the costs of a policy of environmental protection are likely to be distributed among individuals with differing incomes. To reach firm conclusions on so broad a subject is difficult, because the methods that are used to finance such policies vary widely. Nevertheless, by making some reasonable assumptions and exploring the available evidence, environmental economists have made some estimates of the incidence of these costs.
Obviously, the distributive side of externalities policy is of interest in and of itself in a world in which inequality and poverty have assumed high priority among social issues.