Discuss the ways in which the market system may or may not adjust to correct for environmental disasters like the one in Santa Barbara

I think the market will adjust to the large abatement costs incurred during an environmental disaster. Large corporations like BP and Exxon Mobil were both able to rebound after they caused environmental disasters but it cost the corporations billions of dollars in order to ensure adequate clean-up is completed. Also, both corporations have high insurance policies in case an environmental disaster occurred. During the BP oil spill, small stores and shops along the beach would have been drastically impacted and unable to recover if BP had not paid billions of dollars in reparations. Once the cleanup is complete it may take some time but I believe people will still be willing to live in places previously impacted by an environmental disaster. All businesses dealing with these kinds of resources, such as oil, should budget in abatement costs, just in case of a disaster. 

As a country I believe we are moving in the right direction towards higher environmental quality. For example, vessels and facilities that contain oil now have response plans in place in order to respond to large oil spills and environmental disasters. If a response plan was followed, maybe the beach in Santa Barbara would not have been impacted as much. Also, government regulations now in place, ensure companies when starting up, incur abatement costs not originally thought about in case an environmental disaster takes places. I believe as a nation we should always strive towards both economic efficiency and to reduce as much pollution as possible. The best way, I believe, for the nation to be both economically efficient and emit low amounts of pollution is for large corporations to think ahead about what could happen. This way they are prepared and can mitigate both the effects on the environment and the abatement costs associated with the spill.