Question

The highway departments and airports need some substance that will melt ice from roads and runways so that traffic may continue to flow safely when winter storms hit. Here are some options that are available:

Road salt costs about $30 per ton, and it works fast. More than 10 million tons are spread each year in the United States. It is corrosive to concrete, asphalt and metal, thus eating roads, bridges, and car bodies. It contaminates drinking water, and kills tress and plants. Studies suggest that this damage costs from $600 to $1,000 per ton of salt to correct.

Calcium magnesium acetate, a commercial deicer, is made from limestone and vinegar. It costs about $650 per ton and takes about 15 minutes longer than salt to melt large ice patches. It usually lasts somewhat longer. Scientist think it may actually do some good for soil and plant life and it is not corrosive.

Contrast  financial cost and social cost involved with using these products. Which costs should be used for government decision making? Why?

Answer 1

If we see the 2 alternatives available:

1. Road salt: Financial cost: low i.e. $30 per ton but in contrast, Social cost is high as It is corrosive to concrete, asphalt and metal, thus eating roads, bridges, and car bodies. It contaminates drinking water, and kills tress and plants.

2. Calcium magnesium acetate: Financial cost: high i.e. $650 per ton. Social cost: -ve as it may actually do some good for soil and plant life and it is not corrosive.

The government should use the Social cost for decision making as it is a long term cost compared to one time financial cost. And the social harm once done will lead to additional financial cost to be undone. Hence they should go for the 2nd option as there are positive social impacts and is good for long run.